Bermuda-based ESG Re Limited reported a net loss of $6.9 million for 2005, compared to a net loss of $12.4 million for 2004 in its recently released financial results.
The reported noted that that the “main factors contributing to the 2005 results included the following:
1. An underwriting profit of $14.6 million in 2005 compared to $14.4 million for 2004. This sustained improvement in our underwriting result can be attributed to:
— Continued growth in our Direct Marketing segment in both Asia and Spain with gross premium writings of $54.2 million and underwriting profits of $12.1 million in 2005 compared to $43.4 million and $9.0 million respectively in 2004.
— A diminishing role for our Reinsurance segment, which contributed an underwriting profit of $1.0 million in 2005, compared to $4.5 million in 2004; this decrease was largely due to lower premium volumes and discontinued business in this segment.
2. Administrative expenses which decreased from $27.3 million in 2004 to $22.3 million in 2005. Operational expenses were on target with expectations.
3. A loss of $0.9 million from an impairment of our investment in the subsidiary Imedi-L International Company Ltd. Following a review of the financials for this entity for 2004 and subsequent information provided for 2005, a write down was processed in the fourth quarter of 2005.
Total revenues for 2005 were $95.9 million, compared with $84.3 million for 2004. ESG Re indicated that revenues for 2005 have increased due to continued growth in its direct marketing operations.
In assessing the results for the financial year ended 31 December, 2005, Alasdair Davis, CEO commented: “We have reviewed the reinsurance regulations proposed by the Irish Financial Regulator, particularly as regards the level of capital required to support premiums written. In light of that review and given our success in Direct Marketing, we have decided to exit the traditional reinsurance segment of our business. We will write no new business in this segment, but will continue to run out the existing business over the next thirty months.
“We are now essentially a direct marketing company with reinsurance capability as opposed to a reinsurance company with direct marketing capability. This is an area where we have a track record of success, in both market and financial terms. We have the requisite direct marketing skills and people to further develop and expand on our successes in this area.”
The nnual Report is available on the Company’s Website at: www.esg-world.com.
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