Interim Management Statement

RNS Number : 1299D

Catlin Group Limited

11 May 2012

 



CATLIN GROUP LIMITED
INTERIM MANAGEMENT STATEMENT

HAMILTON, Bermuda - Catlin Group Limited ('CGL'; London Stock Exchange), the international specialty property/casualty insurer and reinsurer, has today issued its interim management statement for the period ended 31 March 2012.

Highlights at 31 March 2012

·     12 per cent increase in gross premiums written

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

·     Average weighted premium rates for catastrophe exposed business increased by 10 per cent; average weighted premium rates across entire portfolio increased by 4 per cent

·     No catastrophe losses incurred during first quarter

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

·     Investment portfolio remains liquid and defensively positioned

US$m	31 March 2012	31 March 2011	Percentage change
Gross premiums written (see Note 2 on Page 7)	1,642	1,465	12%
Investments and cash	8,406	8,120	4%
Total investment return to 31 March	0.6%	0.4%	--

Underwriting Operations

Gross premiums written increased during the period ended 31 March 2012 by 12 per cent to US$1.6 billion (31 March 2011: US$1.5 billion). The percentage increase is virtually identical using constant rates of exchange.

The table below shows the breakdown of gross premiums written by underwriting hub during the period ended 31 March 2012:

US$m	31 March 2012	31 March 2011	Percentage change
London/UK	761	677	12%
US	301	258	17%
International (Asia, Europe and Canada)	395	311	27%
Bermuda	185	219	(16%)
	1,642	1,465	12%

Total gross premiums written by non-London underwriting hubs increased by 12 per cent in the first quarter and accounted for 54 per cent of gross premiums written by the Group (31 March 2011: 54 per cent):

·     Gross premiums written by the US underwriting hub increased by 17 per cent, largely the result of the continued growth in business classes established by the hub over the past five years.

·     The 27 per cent increase in gross premiums written by the International hubs reflects new reinsurance business written by Catlin Re Switzerland, which has entered its second year of operations.

·     The 16 per cent decrease in gross premiums written by Catlin Bermuda reflects the decision not to renew certain Property reinsurance contracts whose rates did not meet the Group's expectations. The aggregate capacity relating to those contracts is expected to be utilised later in the year.

Gross premiums written by product group during the period ended 31 March 2012 are shown in the table below.

US$m	31 March 2012	31 March 2011	Percentage change
Aerospace	85	78	9%
Casualty	265	224	18%
Energy/Marine	212	192	10%
Property	128	115	11%
Reinsurance	788	739	7%
Specialty/War & Political Risk	158	128	23%

Gross premiums written increased in all product groups as a result of both organic growth and the impact of rate increases.  The growth in Casualty underwriting was primarily driven by continued growth in the UK Motor portfolio, a business class for which the market environment continues to improve.

Rating Environment

Rates increased during the first quarter for many classes of business, particularly catastrophe-exposed business. Average weighted premium rates across the Group's underwriting portfolio increased by 4 per cent during the three months ended 31 March 2012. Average weighted premium rates for catastrophe-exposed business increased by 10 per cent. Average weighted premium rates for non-catastrophe classes rose by more than 1 per cent.  

Further rate increases were experienced during 1 April renewals.

Claims and Operating Expenses

The Group incurred no catastrophe losses during the first quarter.

The Group incurred one large single-risk loss during the quarter: the grounding of the cruise ship Costa Concordia on 13 January. As announced in February, the Group estimates that losses arising from this event will amount to approximately US$35 million, net of reinsurance.

Operating expenditures remained in line with expectations during the period.

Investment Management

Total cash and investments amounted to US$8.41 billion at 31 March 2012, a 0.2 per cent increase compared with US$8.39 billion at 31 December 2011 and a 4 per cent increase compared with US$8.12 billion at 31 March 2011.

Total investment return for the period ended 31 March 2012 was US$47 million (31 March 2011: US$33 million). The year-to-date total investment return was 0.6 per cent at 31 March 2012 (31 March 2011: 0.4 per cent). Investment return is calculated after valuing all investments on a mark-to-market basis. Investment performance during the first quarter was aided by gains relating to fixed income assets as a result of generally narrower credit spreads, partially offset by losses relating to US Treasury securities as yields increased during the period.

The Group's investment performance by major asset category during the period ended 31 March 2012 is analysed in the table below:

US$m	Average allocation during period	Quarterly  return	Quarterly return %
Fixed income	5,920	39	0.7%
Cash and short-term investments	2,289	7	0.3%
Other invested assets	220	4	1.9%
Overlays	24	(3)	(10.6%)
	8,453	47	0.6%

During the first quarter, the Group's fixed income portfolio decreased by US$271 million, primarily as funds were required to meet cash flows and dividend payments. The percentage of total cash and investments held in liquid assets - defined as cash, cash equivalents, government securities and fixed income securities with less than six months to maturity - was 57 per cent at 31 March 2012 (31 December 2011: 62 per cent; 31 March 2011: 59 per cent).

Other developments

·     The Group has established three new offices in 2012. The China Insurance Regulatory Commission in April granted Catlin permission to open and operate a wholly owned representative office in Beijing. Whilst no business will be underwritten from the Beijing representative office, its establishment will allow Catlin to liaise more closely with relevant departments of the Chinese government and insurance industry organisations, as well as conduct market research regarding insurance and reinsurance in China.

During the first quarter Catlin's European underwriting hub established an underwriting office in Rotterdam, Netherlands, whilst Catlin US opened an underwriting office in Annapolis, Maryland.

·     Catlin announced in February that it would be the title sponsor of the Catlin Seaview Survey,  a major scientific expedition later this year that will include the first comprehensive study to document the composition and health of sections of the Great Barrier Reef across an unprecedented range of depths. The scientific data gathered by the Catlin Seaview Survey will strengthen the understanding of how climate change and other environmental changes are likely to affect ocean ecosystems like the Great Barrier Reef.

·     Sir Graham Hearne, who has served as the Group's Chairman since February 2003, retired from the Board of Directors on Thursday at the conclusion of the Annual General Meeting. John Barton, who was appointed to the Board in December, has succeeded Sir Graham as the Group's Chairman.

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

"Catlin performed well during the first quarter of 2012, thanks to continued growth in gross premiums written and the absence of catastrophe losses. Nearly all areas of the business continue to grow, including our US and International underwriting hubs.

"It is gratifying that the market is heading in the right direction for nearly all classes of business after last year's unprecedented series of catastrophe losses. I am also pleased to report that rates for Japanese reinsurance renewals at 1 April were slightly ahead of our expectations. We expect market conditions to continue to improve as the year progresses.

"Finally, I would like to thank Sir Graham Hearne for his many contributions to Catlin whilst serving as the Group's Chairman for the past nine years. We will all miss his counsel, charm and experience. On behalf of the Board and Catlin's employees, I wish Sir Graham well in his future endeavours. John Barton succeeded Sir Graham as the Group's Chairman following yesterday's Annual General Meeting. John brings with him a wealth of experience at the top levels of companies in the insurance industry and other sectors, and we at Catlin look forward to working with John to continue to build a business for the future."

- ends -

For more information contact:

Media Relations:
James Burcke, Head of Communications, 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 writing more than 30 classes of business worldwide through six underwriting hubs. Gross premiums written in 2011 amounted to US$4.5 billion.

2.   Gross premiums written at 31 March 2012 reflect an accounting change relating to the timing of recognition of premiums for quota share reinsurance treaties underwritten by Catlin US. Gross premiums written for the period ended 31 March 2011 have been adjusted for the purpose of this interim management statement to enable a consistent comparison. The impact of this accounting change over the full year 2012 is expected to be insignificant.

3.   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 20 countries.

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

5.   Catlin shares are traded on the London Stock Exchange (ticker symbol: CGL). More information about Catlin can be found at www.catlin.com.

6.   Catlin is the title sponsor of the Catlin Seaview Survey, a major scientific expedition later this year that will include the first comprehensive study to document the composition and health of sections of the Great Barrier Reef across an unprecedented range of depths. The scientific data gathered by the Catlin Seaview Survey will strengthen the understanding of how climate change and other environmental changes are likely to affect ocean ecosystems. More information is available at www.catlinseaviewsurvey.com.

 

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