ADV.L Regulatory News (ADV)

24 Oct 2006 07:01

Advent Capital (Holdings) PLC24 October 2006 For publication in the United Kingdom only. Not for release, publication, or distribution in or into any other jurisdiction including the United States, Canada, Australia, South Africa, The Republic of Ireland or Japan. Advent Capital (Holdings) PLC ("Advent" or the "Company") TRADING UPDATE Advent, the specialist Lloyd's Insurer, is pleased to provide an update on itsthird quarter trading results and on Syndicate 780's 2007 business plan Market conditions in the Company's principal lines of business continued to berobust in the third quarter of 2006. These attractive market conditions areexpected to continue through the 1 January 2007 renewal season. Although the2006 hurricane season is not yet over, we continued to experience a benignclaims environment such that at 30 September 2006 the net notified loss ratiofor Syndicate 780's 2006 year of account was 11.6%, one of the lower such ratiossince the 1993 year of account. Syndicate 780 - Net notified loss ratio at 9 months (excluding IBNR) Year of 1993 1994 1995 1996 1997 1998 1999account% net 9.9% 19.2% 9.4% 17.9% 13.9% 26.8% 30.6%notified Year of 2000 2001 2002 2003 2004 2005 2006account% net 20.2% 33.0% 5.0% 9.1% 23.5% 20.4% 11.6%notified For the nine months ended 30 September 2006, there has been some adversedevelopment in the 2005 hurricanes gross loss estimates while the net lossestimates have been relatively stable. In US dollar terms, the Company's grossshare of Syndicate 780's net loss estimates increased by 3.0% from US$143.5million at 31 December 2005 to US$147.8 million at 30 September 2006 while insterling terms, the net loss estimates decreased slightly from £79.7 million at31 December 2005 to £79.0 million at 30 September 2006 due to the weakening ofthe US dollar. 2005 Hurricane summary loss estimates(US$ millions) 30 September 2006 31 December 2005Advent Share Gross Ultimate Net Ultimate Gross Ultimate Net Ultimate $ $ $ $ Hurricane Katrina 193.4 81.8 196.0 85.7Hurricane Rita 69.8 36.5 51.5 20.4Hurricane Wilma 72.9 29.5 53.4 37.4 Advent share of loss - US$m 336.1 147.8 300.9 143.5Advent share of loss - £m 179.7 79.0 167.4 79.7 The net loss estimate for Hurricane Rita has increased by US$16.1 million since31 December 2005, principally due to increased energy and assumed reinsurancelosses. The decrease in the net loss estimate for Hurricane Wilma of US$7.9million is principally due to a reinsurance recovery of US$20 million whichresponded when the market loss estimated exceeded US$10 billion, partiallyoffset by increases in the gross loss estimates. We also experienced other adverse development, net of reinstatement premiums, of£3.6 million on prior years' attritional losses for the nine months ended 30September 2006, principally related to 2005 year of account and Syndicate 2's2001 year of account. For the 2006 year of account, Syndicate 780's business plan return was a targetof 20% of capacity which included a provision for catastrophe losses of 16% ofcapacity for estimated catastrophe losses in an average year. For the 2006 yearof account, Syndicate 780's net premiums written on catastrophe-exposed businessamounted to £47.2 million, of which £33.8 million has been earned at 30September 2006 at a net incurred loss ratio (including IBNR) of 36%. Netnotified catastrophe claims for the 2006 year of account, principally relatingto US tornados, amounted to £2.2 million at 30 September 2006. The Company willreassess the 2006 loss ratios, including for catastrophe exposed business, atthe end of 2006 once the occurrence of any catastrophe events in the fourthquarter is known. Updated Syndicate Forecast Third Quarter position of Syndicates 2 and 780 Following a review of figures at 30 September 2006 the forecast results for theunderwriting years of account applicable are: 2004 Year of Account 2005 Year of Account Q3 Q2 Q3 Q2Syndicate 780 (17.5% - 22.5%) (17.5% - 22.5%) (72.5% - 82.5%) (72.5% - 82.5%) 2001 Year of Account 2002 Year of Account Q3 Q2 Q3 Q2Syndicate 2 (52.26%) (49.95%) 11.73% 11.84% i) Figures are as a percentage of underwriting capacity and do not includeMembers Agents fees. ii) 2001 and 2002 accounts of Syndicate 2 remain open at 31 December 2005. 2007 Business Plan Advent Underwriting look to implement the 2007 Business Plan of Syndicate 780based upon a projected gross premium income target of £130.5 millionrepresenting an increase of 15% against the projected gross income for 2006.The Plan reflects Advent's continued focus on property insurance and reinsurancebusiness. Key components of the 2007 Plan against projected gross premium income for 2006: 2006 2007Class of business Projected GPI Plan £m £m Reinsurance linesTreaty 40.7 43.2Assumed 28.7 12.2Marine 4.1 2.6Aviation - 1.0Casualty and other 2.5 2.8 ---------------------------------- ---------------------------------- 76.0 61.8 Insurance linesProperty 26.0 40.7Energy 10.3 20.7Cargo and other - 6.0Personal Accident 1.1 1.3 ---------------------------------- ---------------------------------- 37.4 68.7 ---------------------------------- ---------------------------------- 113.4 130.5 ---------------------------------- ---------------------------------- The Business Plan is based upon the view that rates will remain attractive andsimilar to levels achieved in 2006. Some of the features to the Plan include: • Increase in Property Treaty business by 6% • Reduction in Assumed business of 57.5% • Increase in Property Insurance business by 56.5% • Introduction of three new lines of business, Cargo, Aviation and War in which the Syndicate has prior underwriting experience Underwriting Capacity Advent recently completed a successful capacity offer to buy out Syndicate 780'sthird party capital and will be the sole provider of capital to Syndicate 780for 2008 onwards. As part of the capacity offer, third party capital has the opportunity toparticipate for the 2007 Underwriting Account under a Limited TenancyArrangement. Some £27 million out of the £29.9 million of third party capacityhave accepted the 2007 Limited Tenancy offer. The overall capacity of Syndicate 780 for 2007 (2006 - £153 million) is stilldependent upon a number of factors which would not expect to be finalised for anumber of weeks, namely: i) Syndicate 780 Individual Capital Assessment (ICA)ii) Capital requirements for Advent Capital (No. 3) Ltdiii) Final capacity figures provided by third party capital Enquiries For further information please contact: Advent Capital HoldingsKeith Thompson 020 7743 8200Chief Operating Officer Trevor Ambridge 020 7743 8200Chief Financial Officer Zoe Bucknell 020 7743 8200Company Secretary Neil Ewing 020 7743 8200Investor Relations Pelham Public RelationsCharles Vivian 020 7743 6672Gavin Davis 020 7743 6677 This information is provided by RNS The company news service from the London Stock Exchange