Catlin Group Limited, the Bermuda-based specialty property & casualty insurer and reinsurer, has issued its interim management statement for the nine-month period ended September 30, 2014, which shows premiums reported and not financial results.
The interim statement includes the following highlights:
- 11 percent increase in gross premiums written
- 6 percent increase in net premiums earned
- 54 percent of total gross premiums written by the non-London/UK underwriting hubs
- 2.9 percent decrease in average weighted premium rates across underwriting portfolio
- 1.9 percent year-to-date total investment return.
In detail, Catlin reported gross premiums written of US$4.89 billion for the nine-month period ending September 30, 2014, an 11 percent increase over the US$4.42 billion reported for the same period in 2013.
After taking into consideration items such as foreign exchange movements and the increase in the value of multi-year contracts written during the first nine months of 2014, the underlying growth in gross premiums written was 5 percent, the company said.
Net premiums earned rose by 6 percent to US$3.08 billion during the nine-month period of 2014, compared to US$2.90 billion for the same period in 2013. The underlying growth in 2014 was 3 percent.
Underwriting Hubs
Gross premiums written by the company’s four underwriting hubs rose by 11 percent during the nine-month period ended September 30, 2014.
London reported gross premiums written of USD$2.23 billion for the nine-month period, compared to USD$2.0 billion in the same period last year. After adjusting for foreign exchange movements, the increase in multi-year contracts and other items, gross premiums written by the London hub rose by 3 percent, the company said.
In the United States, Catlin report gross premiums written of USD$1.09 billion in the nine-month period, compared to USD$994 million in the same period of 2013.
The Bermuda hub’s gross premiums written came to USD$537 million, down slightly from last year’s nine-month total of USD$541 million.
The company reported USD$1.03 billion in gross premiums written for its international business (Asia-Pacific, Europe and Canada), compared with USD$881 million reported for the nine-month period in 2013.
Rating Environment
Average weighted premium rates across the group’s underwriting portfolio decreased by 2.9 percent during the nine months ended September 30, 2014, compared to a 3.2 percent decrease for the period ended June 30, 2014.
Rates for catastrophe-exposed business classes decreased by 6.9 percent, while rates for non-catastrophe classes were virtually flat (0.3 per cent decrease). On the other hand, the company reported that rates for casualty business classes increased by 3 percent during the quarter.
Catastrophes and Single-Risk Losses
The group incurred claims from two catastrophe events during the third quarter: Hurricane Odile, which struck the Baja California peninsula of Mexico in September, and the flooding in the state of Jammu and Kashmir in northern India in September. Three large single-risk losses were sustained during the quarter: the loss of Malaysian Airlines Flight MH17 over Ukraine in July, the aircraft losses caused by fighting at the Tripoli airport in July and a fire at a US sawmill in July.
There has been one catastrophe event so far in the fourth quarter: Cyclone Hudhud, which caused damage to eastern India and Nepal in October.
Investment Management
Total cash and investments amounted to US$9.45 billion at September 30, 2014, a 4 percent increase from the US$9.08 billion reported for the same period last year. Total investment return for the 2014 nine-month period was US$171 million (September 30, 2013: US$65 million). The year-to-date total investment return was 1.9 percent (September 30, 2013: 0.7 percent). Investment return includes all mark-to-market adjustments.
The 1.4 per cent return from fixed income securities was driven by interest income during the year. The 10.6 percent return from other invested assets was mainly driven by strong performance by equities during the first half of the year.
Catastrophe Losses Below Expectations
“Catlin continues to perform well across the business. Gross premiums written are rising in accordance with our business plan, with continued strong growth from our US, European, Asia-Pacific and Canadian hubs,” said Catlin Chief Executive Stephen Catlin.
“The group incurred two catastrophe losses and three large single-risk losses during the third quarter including the two aviation-related losses on which we commented in the first- half results announcement. Despite these events, aggregate catastrophe and large single- risk losses are still below expectations for the nine-month period,” he continued.
“Rating levels are still adequate for most classes of business, and rates across our entire portfolio decreased by 2.9 per cent during the nine-month period. We still firmly believe that our highly diversified portfolio – both by underwriting hub and by class of business – provides Catlin with significant advantages during a period of decreasing rates in wholesale markets.”
Source: Catlin Group Limited
Topics Catastrophe USA Profit Loss Pricing Trends Underwriting Aviation London
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