Catlin Group 2010 Profits Fall to $406 Million on Cat Losses

The Bermuda-based (London headquartered) Catlin Group Limited reported net profits before tax in 2010 of $406 million, compared to $603 million in 2009, primarily due to a significant increase in catastrophe losses last year. However the group’s combined ratio rose only slightly in 2010 to 89.8 percent from 89.1 percent in 2009.

Catlin listed other earnings highlights as follows:
• 5 percent increase in net underwriting contribution1 to US$683 million (2009: US$651 million) despite increased catastrophe-related losses
• 16 percent return on net tangible assets in US dollars (2009: 33 percent)
• 16 percent increase in net tangible assets per share in sterling to £4.24 [$6.79] per share (2009: £3.64 [$5.83])
• Non-London hubs produced 46 percent of net underwriting contribution (2009: 39 percent)
• 10 percent increase in net premiums earned to US$3.2 billion (2009: US$2.9 billion)
• 52 percent attritional loss ratio (2009: 54 percent)
• 90 percent combined ratio (2009: 89 percent); 7.2 percentage points relate to catastrophe losses (2009: nil)
• US$144 million release from prior year loss reserves, equal to 3 percent of opening reserves (2009: US$94 million; 2 percent of opening reserves)
• 2.7 percent total investment return produced by liquid asset portfolio (2009: 5.9 percent)
• 6 percent increase in annual dividend to 26.5 pence (28.8 US cents) per share (2009: 25.0 pence; 40.0 US cents)

The bulletin also noted the following “Operational Highlights:”
• All underwriting hubs produced meaningful net underwriting contributions
• Strict underwriting selectivity in the light of increased competition; average weighted premium rates decreased by one percent across Group’s underwriting portfolio (2009: 6 percent increase)
• Global underwriting infrastructure and focus on disciplined underwriting positions Group for profitable growth in competitive market environment

Sir Graham Hearne, Chairman of Catlin Group Limited, noted “Catlin continued to produce good results for shareholders in 2010, with profit before tax amounting to US$406 million, equal to a 16.3 percent return on net tangible assets.

“Shareholder value increased significantly during the year: net tangible assets per share in sterling rose by 16 percent, whilst book value per share increased by 14 percent. The total 2010 dividend of 26.5 pence per share is a 6 percent increase over the prior year, reflecting our confidence in the Group’s prospects. Since its initial public offering in 2004, Catlin has increased its annual dividend by 145 percent and paid more than £400 million [$643 million] to shareholders.”

Chief Executive Stephen Catlin commented: “All of Catlin’s underwriting hubs performed well during 2010, despite increasing market competition and a high incidence of natural catastrophes. The underwriting contribution from our non-London hubs continued to grow, producing 46 percent of the Group’s total underwriting profits in 2010. These hubs provide a diverse spread of business and are demonstrating their capacity to provide profitable growth to the Group.

“We managed our portfolio carefully during 2010. Premium rates decreased by only one percent in a highly competitive market. Our attritional loss ratio was 51.6 percent, more than 2 percentage points better than in 2009. Overall, the Group’s loss ratio held steady during 2010 in spite of the significant increase in catastrophe-related losses during the year.

“Over the years, Catlin’s goal has been to build a business for the future. Our focus on underwriting discipline and investment in our non-London underwriting hubs enabled us to produce strong results in 2010 despite the catastrophe losses and the low interest rate environment. Catlin is positioned to prosper in the current competitive environment and to take full advantage when conditions improve.”

Source: Catlin Group

Topics USA Profit Loss Underwriting London