Last checked at 8 May 2009 07:00
CATLIN GROUP LIMITED ISSUES
INTERIM MANAGEMENT STATEMENT
HAMILTON, Bermuda - Catlin Group Limited ('CGL'; London Stock Exchange), the international specialty property/casualty insurer and reinsurer, issued its interim management statement at the conclusion of the Company's Annual General Meeting, held 7 May 2009 in Bermuda.
Highlights
8 per cent increase in gross premiums written on a constant currency basis at 31 March 2009
6 per cent increase in average weighted premium rates across Group's underwriting portfolio
Further rate increases anticipated as year progresses
Total investment return of 0.6 per cent (2.6 per cent annualised) during first quarter (31 March 2008: 0.6 per cent; 2.4 per cent annualised)
9 per cent increase in cash and investments to US$6.74 billion
Defensive asset allocation continues
Successful completion of Rights Issue
| US$m | 31 March 2009 | 31 March 2008 | Percent change(1) |
| Gross premiums written | 1,172.5 | 1,150.0 | 2% |
| Net premiums written | 895.8 | 767.2 | 17% |
| Investments and cash | 6,743.8 | 6,136.3 | 9% |
| Total investment return to 31 March | 0.6% | 0.6% | -- |
(1)Not adjusted for foreign exchange movements
Underwriting Operations
Gross premiums written increased during the first quarter of 2009 by 2 per cent to US$1.17 billion. Using constant exchange rates, gross premiums written rose by 8 per cent, which is in line with the Group's business plan.
The following table shows the breakdown of gross premiums written by source of business for the period ended 31 March 2009:
| US$m | 31 March2009 | 31 March 2008 | Percent change(1) |
| London/UK-originating business | 777.6 | 840.6 | (7%) |
| Catlin Bermuda | 147.2 | 134.2 | 10% |
| Catlin US-originating business | 117.2 | 86.0 | 36% |
| International offices | 130.5 | 89.2 | 46% |
| 1,172.5 | 1,150.0 | 2% |
(1)Not adjusted for foreign exchange movements
The decrease in gross premiums written arising from London/UK-originating business was created by currency fluctuations. Using constant exchange rates, gross premiums written arising from London/UK-originating business were approximately equal to the first quarter of 2008. The growth in gross premiums written by Catlin US and the Group's international offices was anticipated and demonstrates Catlin's commitment to further diversification of its underwriting portfolio and its past investment in building a global infrastructure.
The main factor behind the 17 per cent increase in net premiums written is the cessation at 31 December 2008 of the quota share reinsurance of the Catlin syndicate under which 12.5 per cent of gross premiums written was ceded to two Lloyd's syndicates capitalised by Names who formerly supplied capacity to Wellington Syndicate 2020.
Market conditions
The improved market conditions reported at 1 January renewals continued through the first quarter. Average weighted premium rates across the entire underwriting portfolio increased by 6 per cent in the period ended 31 March 2009. Average weighted premium rates for catastrophe classes of business rose by 10 percent, whilst average weighted premium rates for non-catastrophe classes increased by 4 per cent.
Claims and Operating Expenses
There were relatively few large losses during the first quarter of 2009, and overall claims experience was close to the Group's expectations.
Operating expenditures remained within budget during the first quarter.
Investment Management
Total investment return for the period ended 31 March 2009 was 0.6 per cent, representing an annualised investment return of 2.6 per cent. Investment return is calculated after valuing all investments on a mark-to-market basis.
The Group continues to maintain the defensive asset allocation and liquidity levels that it adopted during 2008 in the light of the continued uncertainty in investment markets. The percentage of total cash and investments held in liquid assets - defined as cash, cash equivalents, government securities and fixed income securities with less than six months to maturity - was 59 per cent at 31 March 2009, compared with the Group's minimum liquidity guideline which calls for a holding of at least 40 per cent in liquid assets.
The Group's total cash and investments increased by 14 per cent during the first quarter of 2009 to US$6.74 billion from US$5.93 billion at 31 December 2008. The increase includes proceeds of approximately US$290 million from the Rights Issue announced by Catlin on 12 February 2009 and approximately US$460 million resulting from the third-party Names' share of the reinsurance to close of Wellington Syndicate 2020 into the Catlin Syndicate under Lloyd's three-year accounting rules.
Other Developments
Among other developments so far during 2009:
The Group on 26 March announced the successful completion of the fully underwritten £200 million Rights Issue. The funds raised through the Rights Issue put Catlin in a strong position to take advantage of profitable growth opportunities.
The Group in February announced an agreement with W. Brown & Associates Insurance Services under which W. Brown will underwrite general aviation insurance for US clients nationwide on behalf of Catlin US. The agreement, which was effective 1 April 2009, will provide a major new source of profitable premium volume for Catlin US.
On 1 May 2009 Catlin commenced underwriting selected classes of short-term life insurance and reinsurance through a newly established Lloyd's life syndicate (Syndicate 3002) and a Guernsey-domiciled branch of Catlin Bermuda. The life business written by Catlin complements the Group's existing book of accident & health business and is largely uncorrelated to the other risks underwritten by the Group.
Andrew McMellin has been appointed Deputy Chief Underwriting Officer for the Group and has been appointed to the Group Executive Committee. Andrew McMellin, who joined Catlin in 1999, will continue as a Group Underwriting Director responsible for casualty coverages.
The Group has established a new Enterprise Risk Management Initiative (ERMI) function, headed by Paul Martin, who was most recently Group Chief Actuary and has headed Catlin's actuarial function since 1997. ERMI enhances the Group's integrated approach to risk, capital planning, modelling and management built around economic capital. Among ERMI's responsibilities will be compliance with the new Solvency II regulations in the UK and Europe and related developments in Bermuda. Brian Bissett, formerly Deputy Group Chief Actuary and Head of Reserving since 2007, has succeeded Paul Martin as Group Chief Actuary. He joined the Group in 2001.
There has been significant global interest in the Catlin Arctic Survey, which began on 28 February. The Catlin Arctic Survey is a major scientific expedition whose aim is to determine, with a much greater degree of accuracy, when the floating Arctic sea ice could disappear as a result of global warming. Coverage of the survey has appeared on television broadcasts and in newspaper and magazine articles around the world.
Stephen Catlin, Chief Executive of Catlin Group Limited, said:
"Catlin performed well during the first quarter with both premium volume and claims experience meeting our expectations. We are particularly pleased with the continuing strong growth by Catlin US and our international offices.
"Our investment performance continues to be impacted by the uncertain conditions in the markets. We have chosen to maintain our defensive investment asset allocation with high liquidity levels whilst conditions remain volatile.
"Whilst we are satisfied with the rating environment during the first quarter, with rates rising significantly for property reinsurance and energy classes, we still believe that the reduced capital levels within the industry combined with investment market uncertainty will cause rates to increase further. However, we cannot at this point predict with precision the timing of rate changes of individual business classes.
"The successful completion of our Rights Issue gives Catlin additional capital to utilise as underwriting conditions continue to improve. We believe that Catlin is strongly positioned for profitable growth."
- ends -
For more information contact:
| Media Relations: | ||
| James Burcke, Head of Communications, London | Tel: Mobile: E-mail: | +44 (0)20 7458 5710 +44 (0)7958 767 738 james.burcke@catlin.com |
| Liz Morley, Maitland | Tel: E-mail: | +44 (0)20 7379 5151 emorley@maitland.co.uk |
| Investor Relations: | ||
| William Spurgin, Head of Investor Relations, London | Tel: Mobile: E-mail: | +44 (0)20 7458 5726 +44 (0)7710 314 365 william.spurgin@catlin.com |
Notes to editors:
1. Catlin Group Limited, headquartered in Bermuda, is an international specialist property/casualty insurer and reinsurer writing more than 30 classes of business through four underwriting platforms and an international network of offices. Gross premiums written in 2008 exceeded US$3.4 billion. Catlin shares are traded on the London Stock Exchange (ticker symbol: CGL). More information can be found at www.catlin.com.
2. Catlin's four underwriting platforms are:
The Catlin Syndicate at Lloyd's of London (Syndicate 2003), which is a recognised leader of numerous classes of specialty insurance and reinsurance. The Catlin Syndicate was the largest at Lloyd's in 2008 based on gross premiums written of US$2.4 billion. Catlin also operates a life syndicate (Syndicate 3002) at Lloyd's.
Catlin Bermuda (Catlin Insurance Company Ltd.), which is a leading participant in the Bermuda market, underwriting a diversified portfolio of property treaty, casualty treaty, political risk and terrorism, and structured risk coverages.
Catlin UK (Catlin Insurance Company (UK) Ltd.), which specialises in underwriting commercial non-life insurance for UK clients through a network of regional offices. Catlin UK also underwrites many other classes of commercial insurance.
Catlin US, which encompasses Catlin's operations based in the United States. Catlin US underwrites a wide variety of specialty property/casualty insurance and reinsurance products from a network of offices throughout the United Sates.
3. Catlin's international network of offices allows the Group to diversify further its risk portfolio and to work more closely with local policyholders and brokers. Catlin operates offices in Australia, Austria, Belgium, Bermuda, Brazil, Canada, China, France, Germany, Guernsey, Italy, Japan, Malaysia, Norway, the United Kingdom and the United States.
4. Catlin Group Limited is the title sponsor of the Catlin Arctic Survey, a major scientific expedition whose aim is to determine, with a much greater degree of accuracy, when the floating Arctic sea ice could disappear as a result of global warming. The Survey, during which three Arctic explorers will trek on foot 1,000 kilometres to the North Pole, began in February 2009. More information is available at www.catlinarcticsurvey.com.