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Kiln Ltd (KIN)

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Thursday 22 November, 2007

Kiln Ltd

Trading Statement

Kiln Ltd
22 November 2007


Kiln Ltd


Trading statement and updated syndicate forecasts

Kiln Ltd ('Kiln'), the specialist insurance and reinsurance group, is today
providing an update on current trading conditions and Kiln's wholly owned
managing agency, R J Kiln & Co Limited ('R J Kiln'), has released updated
forecasts for the 2005 and 2006 years of account for its four syndicates at
Lloyd's.


Kiln Group chief executive officer Edward Creasy commented:

'2007 is shaping up to be another good year for Kiln, and going into 2008 rates
remain at acceptable levels across our specialist portfolio. Nevertheless, we
intend to remain resolutely disciplined, both in terms of our underwriting
stance and our capital management activities, in order to continue to generate
attractive returns for our shareholders.'


Underwriting conditions

Rating levels across the portfolio of specialist business that Kiln renews
continue to hold up well. Rates for Kiln Syndicate 510 as at 16 November 2007
are, on average, 98% of those at the same time last year. The table below shows
the detail of rates in each of the classes underwritten by the syndicate, in the
context of the market since 2002, itself a strong underwriting year.


Premium rating index of Kiln Syndicate 510
2002 as base year

                                    2003        2004        2005        2006          2007      2007 over 2006
                        2002           %           %           %           % (at 16/11/07)       (at 16/11/07)
                           %                                                             %                   %
Accident &            100.00      107.47      111.60      111.51      111.87        111.35                99.5
Health                                                                                                    
Property              100.00      104.89      102.87      101.48      114.08        111.63                97.9
Reinsurance           100.00      102.49       99.77       99.62      133.63        138.05               103.3
Marine                100.00      107.35      101.80      105.10      131.08        125.56                95.8
Aviation              100.00      102.32       99.52       98.61       95.78         87.40                91.3

Total 510             100.00      104.88      102.44      101.99      118.24        115.89                98.0


In terms of loss activity, 2007 is following a similar pattern to that of 2006,
and is in stark contrast to 2005, as the following table showing gross incurred
loss ratios indicates:


Gross incurred loss ratio to 30 September (net of acquisition costs)

                                                                  2004        2005        2006        2007
                                                                     %           %           %           %

Syndicate 510 Reinsurance                                           12          67           2           8
Syndicate 510 Property                                              34          68          26          25
Syndicate 510 Marine                                                14          57          11           8
Syndicate 510 Aviation                                              11          21          16           6
Syndicate 510 Accident and Health                                   18          20          15          38
Syndicate 308                                                       32          26          19          38
Syndicate 557                                                       10          69           4           6
Syndicate 807                                                       26          44          13          19

Total Kiln Underwriting Limited                                     21          58          14          16


The 2007 Atlantic windstorm season has been relatively benign and, although
there was weather-related insured damage in the year to 30 September in the UK,
mainland Europe and the Far East, catastrophe losses in 2007 have, as in 2006,
been less than expected.


Gross written premium

Gross written premium for the nine months to 30 September 2007 is £343.0 million
(2006: £336.6 million) which is an increase of around 2% on the same period last
year. As anticipated in our 2007 interim results announcement, premium volumes
have been depressed partly by the weakness in the US dollar, in which currency
we receive over 60% of our premiums, as well as by our continued commitment to
maintain underwriting discipline. The following table shows the comparative
premium volumes and the effect of foreign exchange rates.


Gross written premium to 30 September

                                                       2007   2006 (at 2007 exchange   2006 (at 2006 exchange
                                                                              rates)                   rates)
                                                         £m                       £m                       £m

Kiln Ltd                                              343.0                    316.4                    336.6
100% Kiln Syndicate level                             648.2                    700.1                    744.7

Note: the average US dollar exchange rate over the nine month period to 30
September 2007 was 1.99 (2006: 1.82).



Investment and foreign exchange management

Investment performance in the third quarter was strong, driven by recent market
turbulence that led to a flight to quality, thereby benefiting Kiln's portfolio.
The investment return for the nine months to 30 September stands at 4.1%.


Investment Performance
                                      Average third quarter Third quarter investment  Investment return to 30
                                                     assets                  returns                September
                                                         £m                        %                        %

Cash and equivalents                                    221                      1.3                      4.0
Fixed interest securities                               336                      1.9                      4.2

Total                                                   557                      1.7                      4.1

Note: this table shows the blended investment returns on corporate owned assets
and on our share of the syndicates' assets.

This performance has been helped by the strength of government bonds and,
importantly, by avoiding significant exposure to lower rated corporate bonds.
Kiln does not hold any investment in equities and has no direct holdings of
sub-prime investments. The credit profile of the portfolio is detailed below:


Credit Profile
                                                                      AAA               AA                  A
                                                                        %                %                  %

Group                     Cash                                         92                8                  -
                          Fixed interest                               83               15                  2
Syndicate                 Cash                                         96                4                  -
                          Fixed interest                               93                5                  2

Note: credit ratings relate to the institution or fund with which the cash is
invested and to the issuer of fixed income securities.


Kiln has partially hedged its US dollar exposures; the floating rate
subordinated debt of US$65 million is hedged in terms of interest rate and
exchange rate by matching cash deposits. In addition, Kiln has bought options
exercisable at US$1.988 to £1 to protect US$20 million against US dollar
weakening; these expire in September 2008


R J Kiln capacity

Lloyd's has approved the syndicate business plans for the 2008 year of account
submitted to it by R J Kiln, the Lloyd's managing agency owned by Kiln Ltd. As
has previously been reported, Kiln's overall capacity at Lloyd's in 2008 will be
£847 million, which is a reduction of 14%. This reduction is further evidence of
our continuing commitment to managing our business through the cycle by means of
rigorous underwriting discipline.


Auctions and Funds at Lloyd's

Kiln Underwriting Limited ('KUL'), the corporate name that owns capacity on
behalf of Kiln Ltd, has maintained its level of ownership of capacity on Kiln
Syndicate 510 at 53%. Prices were particularly high at the capacity auctions in
September and this, combined with low volumes of capacity available for trading,
meant that the company decided not to increase its proportionate ownership of
the syndicate.

The Economic Capital Assessment ratio for KUL for 2008, which is the level of
capital that Kiln is required to hold in order to operate at Lloyd's, has
increased to 50% from 47% of capacity in 2007, reflecting our view of the
softening pricing environment we foresee in 2008.


Capital management

Kiln is committed to a strategy of active capital management. Following the
planned sale of its successful investment in W. R. Berkley Insurance (Europe),
Limited, combined with R J Kiln's lower capacity at Lloyd's in 2008, the company
expects to have surplus capital of approximately £60 million by the year end,
which it intends to return to shareholders. This will be achieved, subject to
shareholder approval, by means of a share buyback through a tender offer of £45
million and ongoing market purchases under the existing share buyback authority.
The relevant circular and tender offer will be posted to shareholders in
mid-December and the EGM will be held in mid-January 2008.


R J Kiln updated syndicate forecasts

The Kiln managing agency, R J Kiln, submitted the following revised syndicate
forecasts to Lloyd's today:


2005 Year of Account Forecasts

2005 Account                                  Capacity             Forecast Range   Previous forecast as at
                                                                                                   June 2007
                                                    £m                          %                          %

Syndicate 510                                      545               (5.7) - (0.7)              (5.7) - (0.7)
Syndicate 557                                       48             (16.1) - (11.1)            (17.4) - (12.4)
Syndicate 807                                       99               (7.2) - (2.2)              (7.8) - (2.8)
Syndicate 308                                        9                14.1 - 19.1                 8.5 - 13.5


2006 Year of Account Forecasts

2006 Account                                  Capacity             Forecast Range   Previous forecast as at
                                                                                                  June 2007
                                                    £m                          %                          %

Syndicate 510                                      625                 12.9 - 17.9                12.9 - 17.9
Syndicate 557                                       54                 18.8 - 23.8                18.0 - 23.0
Syndicate 807                                      110                 10.2 - 15.2                11.6 - 16.6
Syndicate 308                                       13                  3.8 - 8.8                  3.2 - 8.2

The forecasts set out above take into account all managing agency and Lloyd's
charges. The current forecasts are expressed at 30 September 2007 exchange
rates. The previous forecasts, which were announced in August, have been rebased
to the same exchange rate (US$2.04 and C$2.02 respectively).


22 November 2007


Enquiries:

 Kiln Ltd
 Edward Creasy, chief executive officer              +44 (0)20 7886 9000
 Peter Haynes, group chief financial officer         +1 (441) 278 4440
                                                     (Please note GMT - 4 hours)
 Kate Rogers, head of communications                 +44 (0)20 7886 9000

 College Hill                                        +44 (0)20 7457 2020
 Tony Friend
 Roddy Watt





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