Interim Management Statement

RNS Number : 8987W

Catlin Group Limited

13 November 2014

 



13 November 2014                                                                                              Release 2014-18

CATLIN GROUP LIMITED
INTERIM MANAGEMENT STATEMENT

HAMILTON, Bermuda - Catlin Group Limited ('CGL'; London Stock Exchange), the international specialty property/casualty insurer and reinsurer, has issued its interim management statement for the nine-month period ended 30 September 2014.

Highlights at 30 September 2014

·     11 per cent increase in gross premiums written

·     6 per cent increase in net premiums earned

·     54 per cent of total gross premiums written by the non-London/UK underwriting hubs

·     2.9 per cent decrease in average weighted premium rates across underwriting portfolio

·     1.9 per cent year-to-date total investment return

US$m	Nine months ended 30 Sept 2014	Nine months ended 30 Sept 2013	Percentage change
Gross premiums written	4,890	4,417	11%
Net premiums earned	3,080	2,901	6%
Investments and cash	9,452	9,078	4%
Total investment return to 30 September	1.9%	0.7%	--

Underwriting Operations

Gross premiums written increased during the period ended 30 September 2014 by 11 per cent  to US$4.89 billion (30 September 2013: US$4.42 billion). After taking into consideration items such as foreign exchange movements and the increase in the value of multiyear contracts written during the first nine months of 2014, the underlying growth in gross premiums written was 5 per cent.

Net premiums earned at 30 September 2014 increased by 6 per cent to US$3.08 billion; the underlying growth was 3 per cent. The Group had previously advised that growth in net earned premiums at year-end 2014 would likely be 4 to 5 absolute percentage points less than the growth in gross premiums written due to increased amounts ceded to third-party capital providers.

The following table shows the breakdown of gross premiums written by underwriting hub during the period ended 30 September 2014.

US$m	Nine months ended 30 Sept 2014	Nine months ended 30 Sept 2013	Percentage change
London	2,227	2,001	11%
US	1,094	994	10%
Bermuda	537	541	--
International (Asia-Pacific, Europe and Canada)	1,032	881	17%
	4,890	4,417	11%

After adjusting for foreign exchange movements, the increase in multiyear contracts and other items, gross premiums written by the London hub rose by 3 per cent.

Gross premiums written by product group during the period ended 30 September 2014 are shown in the table below.

US$m	Nine months ended 30 Sept 2014	Nine months ended 30 Sept 2013	Percentage change
Aerospace	244	243	--
Casualty	1,001	922	9%
Energy/Marine	758	672	13%
Property	573	483	19%
Reinsurance	1,918	1,725	11%
Specialty/War & Political Risk	399	372	7%

Gross premiums written increased among all product groups. The Group has carefully managed the Aerospace portfolio in the light of the rate competition during the first nine months of the year.  The increase in gross premiums written by the Reinsurance product group is attributable in part to the multiyear contracts underwritten during 2014 along with the continued growth of Catlin Re Switzerland. Excluding the multiyear contracts, the increase in Reinsurance volume is 5 per cent.

Rating Environment

Average weighted premium rates across the Group's underwriting portfolio decreased by 2.9 per cent during the nine months ended 30 September 2014 (30 June 2014: 3.2 per cent decrease). Rates for catastrophe-exposed business classes decreased by 6.9 per cent, while rates for non-catastrophe classes were virtually flat (0.3 per cent decrease). 

Rates for Casualty business classes increased by 3 per cent during the quarter.

Claims and Operating Expenses

The Group incurred claims from two catastrophe events during the third quarter: Hurricane Odile, which struck the Baja California peninsula of Mexico in September, and the flooding in the state of Jammu and Kashmir in northern India in September. Three large single-risk losses were sustained during the quarter: the loss of Malaysian Airlines Flight MH17 over Ukraine in July, the aircraft losses caused by fighting at the Tripoli airport in July and a fire at a US sawmill in July.

There has been one catastrophe event so far in the fourth quarter: Cyclone Hudhud, which caused damage to eastern India and Nepal in October.

Operating expenditures remained broadly in line with expectations during the third quarter.

Investment Management

Total cash and investments amounted to US$9.45 billion at 30 September 2014, a 4 per cent increase compared with US$9.08 billion at 30 September 2013.

Total investment return for the nine-month period ended 30 September 2014 was US$171 million (30 September 2013: US$65 million). The year-to-date total investment return was 1.9 per cent at 30 September 2014 (30 September 2013: 0.7 per cent). Investment return includes all mark-to-market adjustments.  

The Group's investment performance by major asset category during the period ended 30 September 2014 is analysed in the following table.

	Average allocation during period (US$m)	Nine-month  return (US$m)	Nine-month return (%)
Fixed maturities and short-term investments	7,026	98	1.4%
Cash and cash equivalents	1,530	3	0.2%
Other invested assets	660	70	10.6%
	9,216	171	1.9%

The 1.4 per cent return from fixed income securities was driven by interest income during the year. The 10.6 per cent return from other invested assets was mainly driven by strong performance by equities during the first half of the year.

Commenting on the Group's performance, Chief Executive Stephen Catlin said:

"Catlin continues to perform well across the business. Gross premiums written are rising in accordance with our business plan, with continued strong growth from our US, European, Asia-Pacific and Canadian hubs.

"The Group incurred two catastrophe losses and three large single-risk losses during the third quarter, including the two Aviation-related losses on which we commented in the first-half results announcement.  Despite these events, aggregate catastrophe and large single-risk losses are still below expectations for the nine-month period.

"Rating levels are still adequate for most classes of business, and rates across our entire portfolio decreased by 2.9 per cent during the nine-month period.  We still firmly believe that our highly diversified portfolio - both by underwriting hub and by class of business - provides Catlin with significant advantages during a period of decreasing rates in wholesale markets.

"Catlin has built an underwriting infrastructure capable of producing solid results over the long term across all types of market conditions. We continue to look ahead with confidence."

- ends -

For more information contact:

Media Relations:
James Burcke, Head of Corporate Affairs, London	Tel: Mobile: E-mail:	[phone] [phone] [e-mail]
Liz Morley, Maitland	Tel: E-mail:	[phone] [e-mail]
Investor Relations:
William Spurgin, Head of Investor Relations, London	Tel: Mobile: E-mail:	[phone] [phone] [e-mail]

Notes to editors:

1.  Catlin Group Limited, headquartered in Bermuda, is an international specialist property/casualty insurer and reinsurer that underwrites worldwide through six underwriting hubs. 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 has established operating hubs in London, Bermuda, the United States, the Asia-Pacific region, Europe and Canada. Through these hubs, Catlin works closely with policyholders and their brokers. The hubs also provide Catlin with product and geographic diversity. Altogether, Catlin operates more than 50 offices in 25 countries.

3.  Catlin's underwriting units are rated 'A' by A.M. Best and Standard & Poor's.

4.  Catlin is the title sponsor of the Catlin Seaview Survey, a major scientific expedition that is documenting the composition and health of oceans, particularly coral reefs, around the world. During 2012 the Survey investigated the Great Barrier Reef off Australia, while during 2013 it studied coral reefs near Bermuda and in the Caribbean. The 2014 Survey is focusing on the Coral Triangle in Asia. The impartial scientific data gathered by the Catlin Seaview Survey is intended to strengthen the understanding of how changes beneath the oceans' surface are impacting the rest of our planet. More information is available at www.CatlinSeaviewSurvey.com.

 

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