Benfield Reports 2004 Preliminary Results; Profits Hit by Falling Dollar

The U.K.’s Benfield Group Limited, a leading independent reinsurance and risk intermediary, announced its preliminary results for the year ended Dec. 31, 2004. Profits were essentially flat as the company, which acquired the U.S. broker E.W. Blanch in May of 2001, was hit by the falling value of the dollar.

Benfield’s earnings were helped by a one-off sale of warrants it held in Montpelier Re, but, as the company earns around 75 percent of its income in dollars, the currency’s decline significantly impacted earnings when transposed into the pound.

Financial Highlights included the following:
— Profit before tax increased by £59.3 million ($114.3 million) to £90.4 million ($174.3 million), compared to £31.1 million ($60 million) in 2003.
— Diluted earnings per share increased to 20.81pence (app. 40 cents), compared to 6.26 pence (app. 12 cents) in 2003.
— Special dividend and share buy-back returned £45.6 million ($87.9 million) to shareholders.
— Group trading margin (note) increased to 29.1percent from 28.7 percent.
— Group trading result (note) increased by 0.7 percent to £88.8 million ($171.2 million) compared to £88.1 million ($169.8 million). The bulletin noted that “at constant rates of exchange trading result increased by 15.3 percent.”
— Group operating revenue decreased to £304.6 million ($587.3 million), compared to £307.7 million ($593.25 million) in 2003. At constant rates of exchange operating revenue increased by 5.1 percent.
— Profit before tax and exceptional items increased by £8.4 million ($16.2 million) to £68.6 million ($132.3 million), compared to £60.2 million ($116 million) in 2003.
— Diluted adjusted cash earnings per share (note) decreased to 18.85 pence (app.36 cents) from 19.05 pence (app. 36.7 cents) in 2003.
— Final dividend of 7 pence (app.13.5 cents) per common share, up from 6 pence (app.11.6 cents) in 2003.
— Total dividend of 20.5 pence (app.39.5 cents) per common share from 8 pence (app.15.4 cents) in 2003, including special dividend of 10.0p per common share

CEO Grahame Chilton commented: “For Benfield, 2004 has been a year of progress, achievement and the emergence of significant new opportunities that pave the way for the next expansion in the scope of our business. Financially, our performance has achieved the combination of top line growth at constant rates of exchange while improving the Group’s margins and delivering a very substantial return of capital to shareholders.

“Our global infrastructure, technical skills and transactional capabilities mean we are well placed to continue to build on our position as the world’s leading independent reinsurance intermediary while pursuing new prospects for growth in the corporate risk sector. The 2005 year will be a challenging one for the business. But it will also be an exciting one, not least because we will continue to broaden our horizons and expand our capabilities in the risk and capital management arena.”

Benfield’s Chairman John Coldman indicated: “Benfield has had another successful year and has once again delivered on its long-term commitment to achieve growth, industry leading margins and significant returns for investors. Our people have unparalleled energy, enthusiasm and appetite for rising to new challenges. They will find opportunities where many would see problems, and will come up with solutions where many would believe there were none to be found.”

Topics Profit Loss