Catlin’s Interim Statement Highlights Premium Gains

November 12, 2010

The Bermuda-based Catlin Group Limited’s interim management statement highlighted some significant premium increases in certain lines.

The bulletin said: “Group-wide net premiums earned increased by 13 percent in the nine months ended 30 September 2010. Approximately half of this increase is attributable to increases in premium volume and higher rates relating to business written in 2009 but not earned until 2010, with the remainder attributable to the embedded growth arising from the 2006 acquisition of Wellington Underwriting plc.”

Catlin summarized developments up to September 30 as follows:
— 13 percent increase in net premiums earned
— 29 percent increase in gross premiums written by non-London underwriting hubs; — 2 percent decrease in gross premiums written by London hub
— 43 percent of total gross premiums written by non-London underwriting hubs
— 0.5 percent decrease in average weighted premium rates across Group’s underwriting portfolio demonstrates underwriting discipline in competitive marketplace
— Generally benign loss activity during third quarter
— Estimate of Chilean earthquake, Deepwater Horizon losses unchanged
— 2.9 percent year-to-date total investment return
— Investment portfolio remains liquid and defensively positioned

Gross premiums written increased during the nine-month period ended by 9 percent to $3.3 billion. However, Catlin explained that “gross premiums written by the London underwriting hub decreased by 2 percent as the Group continued to reduce the volume of business underwritten in the London wholesale market because of competitive conditions for certain classes of business. Gross premiums written in London as at 30 June 2010 had similarly decreased by 2 percent. ”

It explained that the “29 percent increase in gross premiums written by the Bermuda, US and International underwriting hubs reflects the opportunities for profitable growth available to Catlin as it pursues its strategy of expanding distribution outside the London market and as new underwriting teams hired in recent years gain traction.

“Gross premiums written by these hubs accounted for 43 percent of the Group’s gross premium volume at 30 September 2010, compared with 36 percent at 30 September 2009.

Catlin described loss activity during the third quarter as “benign, with negligible insured losses incurred from Atlantic hurricanes despite an above normal season in terms of storm activity. Claims incurred by the Group arising from the 4 September earthquake that struck New Zealand’s South Island are not material.”

The Group’s combined losses from the Chilean earthquake in February and the Deepwater Horizon explosion are “estimated at approximately US$180 million, net of reinsurance and reinstatements, unchanged from the Group’s original estimates.” Operating expenditures remained in line with expectations for the nine months.

Chief Executive Stephen Catlin commented: “I am pleased to report that all areas of the Catlin Group performed well during the third quarter. Our Bermuda, US and International underwriting hubs continue to report meaningful and profitable premium growth, with the non-London hubs now accounting for 43 percent of the Group’s total gross premiums written.

“Whilst there have been a large number of Atlantic storms during the current hurricane season, so far the Group has incurred no losses from these events, and overall loss activity was benign in the third quarter. Our estimate of the two major losses that occurred earlier this year – the Chilean earthquake and the Deepwater Horizon oil rig explosion – has not changed during the third quarter.

“Catlin is on track for a good performance in 2010, despite the two large losses early in the year. Investment performance has been satisfactory in an uncertain economic environment. Whilst the rating environment is also challenging, we believe there are still good margins available for many classes of business. We look forward with confidence, especially with regard to the continued profitable growth of our underwriting hubs outside London, including the development of Catlin Re Switzerland.”

Source: Catlin Group

Topics USA Profit Loss Underwriting London Earthquake Bermuda

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