Kin Group Regulatory News (KIN)

19 Jan 2005 07:30

Kiln PLC19 January 2005 Kiln plc Trading statement Kiln plc today made the following update on trading conditions. Underwriting conditions remained favourable in 2004 and the initial stages ofthe 2005 renewals season indicate that underwriting discipline in the market isbeing maintained. 2004 Pricing Index Overall, prices on business written during 2004 were down only 2.3% from 2003levels. We achieved overall price increases in about one third of the classes wewrite, such as our Accident & Health classes, Products and Airport Liabilitiesin the Aviation sector and Marine Hull. The largest price reductions were in theNorth America Open Market Property and Offshore Energy classes. 2005 renewal season The impact of the US hurricanes served to firm up pricing in a number ofinsurance sectors in which Kiln specialises; in particular our energy accounthas again seen price rises following losses in the Gulf during Hurricane Ivan.Pricing in Kiln's Catastrophe Reinsurance portfolio is down only marginally inthe US overall, and by some 5% around the rest of the world. In general, lastyear's pattern of very modest reductions seems set to repeat itself in thoseareas unaffected by the catastrophes of 2004, confirming the prospects for 2005remaining an attractive underwriting year. Hurricane update The impact of the US hurricanes and Japanese typhoons on Kiln's book of businessis still expected to be in the range of £10m to £15m. Many of the anticipatedclaims from these events have now been paid by us or notified to us and ourforecasts of our ultimate losses from these events remain materially unchanged. The tsunami Despite the enormity of the tsunami catastrophe, we do not expect it to have anymaterial financial impact on Kiln; nor do we anticipate any major claims fromeither our Property or Reinsurance accounts, although the Accident & Healthaccount may be affected to a limited extent. Capacity and ownership for 2005 Kiln's overall capacity for 2005 increased slightly from £681 million to £703million, and the proportion of our ownership of that capacity also increasedfrom 38% to 40%, increasing our ability to generate profits from an underwritingenvironment that remains attractive for Kiln's specialist portfolio of business. The employee trust The transaction announced by the Kiln Employee Trust at the end of last year toreduce its holding in Kiln plc has now been completed. The Trust's shareholdingin Kiln plc now stands at 4.39%, down from over 9%. Investments Our investment strategy at Kiln is designed to protect the capital used tosupport our underwriting. Given the macro-economic environment, we continue toinvest both syndicate and company funds in a mixture of cash and short datedbonds so as to protect this capital. Returns at year end were approximately4.8% for sterling assets, 1.1% for the US dollar and 3.0% for the Canadiandollar assets. Approximately 80% of syndicate assets are held in US dollars. Future dollar profit remittances are actively hedged to manage the foreignexchange exposure. The anticipated profit remittances for the 2002 and 2003years of account are substantially hedged. It is our strategy to hedgeprogressively as each year of account's profits become earned; the 2004 year ofaccount will therefore be hedged from mid-2005. CEO Edward Creasy commented: "Kiln continues to maintain its disciplined approach to underwriting and iswell-positioned to take advantage of the current favourable underwritingconditions; with strong profits in the pipeline, we are looking forward to thecoming year with confidence." 19 January 2005 Enquiries: Kiln plc Edward Creasy, Chief Executive Officer 020 7886 9000Kate Rogers, Head of Communications College Hill Tony Friend 020 7457 2020Roddy Watt This information is provided by RNS The company news service from the London Stock Exchange