Castelnau Group Regulatory News (CGL)

28 Nov 2007 07:01

Catlin Group Limited28 November 2007 FOR IMMEDIATE RELEASE 28 November 2007 Release 2007-20 CATLIN GROUP LIMITED TRADING STATEMENT HAMILTON, Bermuda - Catlin Group Limited ('CGL': London Stock Exchange), theinternational specialty property/casualty insurer and reinsurer, has issued thefollowing trading statement: Current Trading--------------- The Group continues to perform strongly, and this performance reflects continuedbroker support for Catlin's enlarged underwriting operations. Gross premiums written for the nine-month period ended 30 September 2007amounted to US$2.73 billion, compared with US$1.24 billion underwritten byCatlin on a stand-alone basis in the corresponding period of 2006 and a 6 percent increase from the US$2.58 billion written by Catlin and WellingtonUnderwriting plc combined during the first nine months of 2006 (on the basisthat Wellington supplied 100 per cent of Lloyd's Syndicate 2020's capacityduring 2006). Business retention continued to be strong during the third quarter, remainingconsistent with the favourable experience reported by the Group in its interimresults announcement. The increase in gross premiums written was achieved at attractive pricing levelsacross Catlin's book of business, even though weighted average premium ratesacross all classes of business decreased by 5 per cent during the nine-monthperiod. The Group's loss experience through 30 September 2007 has been benign, primarilyreflecting the relatively low incidence of catastrophe losses. Prior yearreserves have developed in line with expectations. Operating expenditures were within plan as at 30 September 2007. The Group has recently completed a comprehensive review of all individualsubprime-related securities in Catlin's investment portfolio. The Group expectsto take a total charge during 2007 of US$75 million against the value of thesesecurities. The Group has sold some subprime-related securities at close to bookvalue and now holds subprime-related securities with a book value of US$85million (prior to the charge), 85 per cent of which are collateralised debtobligations ('CDOs'). The book value of the subprime-related portfolio after thesales and the charge is US$12 million. The total amount of cash and investments held by the Group amounted to US$5.85billion at 30 September 2007. The effect of the proposed US$75 million chargewould reduce the Group's investment return to 3.6 per cent on an annualisedbasis as at 30 September 2007. Based on information currently available, the Group does not believe that itsinsurance and reinsurance portfolio is materially exposed to potential claimsarising from subprime-related issues. Although the ultimate level and nature ofthese potential claims are not known to the market at this time, the Group hadin the past largely withdrawn from business classes, such as financialinstitutions E&O and Fortune 500 D&O liability, that appear most likely to beaffected. Other Developments------------------ •On 1 October 2007 A.M. Best upgraded the outlook assigned the Catlin Group and various underwriting units to stable from negative. A.M. Best added that it expected Catlin "to produce an excellent technical result at year-end 2007". • The Group is in the process of establishing a representative office in Sao Paulo, Brazil. With the establishment of this office, the Catlin Group will have 40 offices in 17 countries. Outlook------- Stephen Catlin, chief executive of Catlin Group Limited, said: "Catlin has made real progress during 2007, which is particularly pleasing giventhat the acquisition of Wellington was not yet complete at this time last year.The Group has benefited from strong business retention following theacquisition, attractive underwriting margins and a benign level of losses.Catlin has also enjoyed benefits from the increased scale created by theacquisition, and we continue to strengthen our underwriting teams and supportfunctions to take advantage of new opportunities. "The Group is on track to meet its targets in 2007. Whilst we have taken thedecision to write down the value of the small portion of the investmentportfolio exposed to the subprime sector, we expect the profit impact of thewritedown to be offset broadly by the low incidence of catastrophe losses in thesecond half of 2007. "We currently expect that weighted average premium rates may decrease by as muchas 10 per cent during 2008, although rate movements will vary considerably amongthe more than 30 classes of business that Catlin underwrites. However, webelieve that rate adequacy will remain good across most of these businessclasses. We will benefit in 2008 from further embedded growth arising from theWellington acquisition, as well as continued growth in the classes of businesswe already write from Catlin US and our network of international offices.Furthermore, we can expect to realise at least US$100 million in after-taxsynergy savings arising from the acquisition. "We look ahead to the remainder of 2007 and beyond with confidence." Presentation to Investors and Analysts-------------------------------------- Catlin management this afternoon will hold a presentation for investors andanalysts in London on topics including the impact of third-party capital onfuture net premium earnings patterns; the Group's risk appetite, includingdisclosure of catastrophe threat scenarios; and the disclosure of data relatingto accident year loss development. An announcement will be issued later todaysummarising the information to be discussed at the presentation. Furtherinformation regarding the presentation will appear on the Group's website(www.catlin.com) on 29 November. - ends - For more information contact: Media Relations:James Burcke, Tel: +44 (0)20 7458 5710 Mobile: +44 (0)7958 767 738Head of Communications, London E-mail: james.burcke@catlin.com Liz Morley, Maitland Tel: +44 (0)20 7379 5151 E-mail: emorley@maitland.co.ukInvestor Relations:William Spurgin, Tel: +44 (0)20 7458 5726Head of Investor Relations, London Mobile: +44 (0)7710 314 365 E-mail: 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 worldwide through four underwriting platforms and an international network of offices. Gross premiums written in 2006 exceeded US$2.6 billion. Catlin shares are traded on the London Stock Exchange (ticker symbol: CGL). More information about Catlin 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 is the largest at Lloyd's in 2007 based on premium capacity of £1.25 billion. • 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. It also writes other classes of business written by the Catlin Syndicate. • 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 U.S. Catlin US includes Catlin Insurance Company Inc. and Catlin Specialty Insurance Company Inc. 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. Besides its offices in the UK, US and Bermuda, Catlin operates offices in Canada, Australia, Singapore, Malaysia, Hong Kong, China,Guernsey, Germany, Belgium, France, Spain, Italy, Switzerland and Austria. This information is provided by RNS The company news service from the London Stock Exchange