Interim Management Statement

RNS Number : 6583S

Catlin Group Limited

11 November 2013

 



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 period ended 30 September 2013.

Highlights at 30 September 2013:

·     8 per cent increase in gross premiums written

·     11 per cent increase in net premiums earned

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

·     1 per cent increase in average weighted premium rates across underwriting portfolio

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

US$m	Nine months ended 30 Sept 2013	Nine months ended 30 Sept 2012	Percentage change
Gross premiums written	4,417	4,082	8%
Net premiums earned	2,901	2,623	11%
Investments and cash	9,078	8,902	2%
Total investment return to 30 September	0.7%	1.8%	--

Underwriting Operations

Gross premiums written increased during the period ended 30 September 2013 by 8 per cent to US$4.42 billion (30 September 2012: US$4.08 billion). Net premiums earned as at 30 September 2013 increased by 11 per cent to US$2.90 billion (30 September 2012: US$2.62 billion).

The following table shows the breakdown of gross premiums written by underwriting hub during the period ended 30 September 2013:

US$m	Nine months ended 30 Sept 2013	Nine months ended 30 Sept 2012	Percentage change
London/UK	2,001	2,014	(1%)
US	994	848	17%
Bermuda	541	493	10%
International (Asia-Pacific, Europe and Canada)	881	727	21%
	4,417	4,082	8%

Total gross premiums written by the non-London/UK underwriting hubs increased by 17 per cent in the period ended 30 September 2013. These hubs accounted for 55 per cent of gross premiums written by the Group (30 September 2012: 51 per cent).

Gross premiums written by product group during the period ended 30 September 2013 are shown in the table below.

US$m	Nine months ended 30 Sept 2013	Nine months ended 30 Sept 2012	Percentage change
Aerospace	243	262	(7%)
Casualty	922	776	19%
Energy/Marine	672	621	8%
Property	483	431	12%
Reinsurance	1,725	1,623	6%
Specialty/War & Political Risk	372	362	3%

The trends relating to Catlin's six product groups that were highlighted in the Half-Yearly Financial Report largely continued during the third quarter. Gross premiums written increased in all product groups at 30 September, with the exception of the Aerospace product group where Catlin continues to reduce volume in the light of competition in the sector.

The significant increase in volume for Casualty classes of business reflects growth in business written by the US and International hubs on the back of a favourable rate environment for many classes of Casualty business, as well as continuing growth in UK Motor business. The increase in Property gross premiums written was the result of growth in Non-Marine Facultative business as well as selected rate increases in the aftermath of Windstorm Sandy. 

Rating Environment

Average weighted premium rates across the Group's underwriting portfolio increased by 1 per cent during the nine months ended 30 September 2013. Rates for catastrophe-exposed business were flat over the period, whilst rates for non-catastrophe classes of business increased by 2 per cent.  Rates for most classes of US Casualty business continued to increase during the period.

Claims and Operating Expenses

There was one catastrophe event during the third quarter: the hailstorms that occurred in Germany in July.  In addition, the Group incurred two large single-risk losses during the period: the crash of an Asiana Airlines Boeing 777 at San Francisco International Airport in July and a food-related product recall in the United States in September.

Including these events, the Group's losses arising from catastrophe and large single-risk loss events amounted to US$148 million, net of reinsurance and reinstatement premiums, during the nine-month period ended 30 September 2013.

Operating expenditures remained in line with expectations during the period. If the Group's performance at the end of the year is in line with the performance as at 30 September 2013, corporate expenses -  which primarily include profit-related compensation -  will likely be greater in 2013 than they were in 2012.

Investment Management

Total cash and investments amounted to US$9.08 billion at 30 September 2013, a 2 per cent increase compared with US$8.90 billion at 30 September 2012.

Total investment return for the period ended 30 September 2013 was US$65 million (30 September 2012: US$156 million). The year-to-date total investment return was 0.7 per cent at 30 September 2013 (30 September 2012: 1.8 per cent). Investment return includes all mark-to-market adjustments.  The investment return for October was good in a volatile market.

The Group's investment performance by major asset category during the period ended 30 September 2013 is analysed in the table below:

	Average allocation during period ended 30 Sept 2013 (US$m)	Return during period (US$m)	Return during  period (%)
Fixed income	5,578	(24)	(0.4%)
Cash and short-term investments	2,628	12	0.5%
Other invested assets	542	77	14.2%
	8,748	65	0.7%

The performance of the fixed income portfolio on a GAAP basis has been constrained primarily by mark-to-market losses resulting from higher interest rates in May, June and August.  The losses have offset the income produced by the portfolio. The performance of other invested assets, which includes the Group's special situations and risk portfolios, have performed well, producing a 14.2 per cent return during the nine-month period.

However, when measured in economic terms, Catlin's investment performance continues to be solid. The positive contribution of the investment portfolio, combined with the reduction in the discounted value of liabilities resulting from higher interest rates, added to the Group's economic value.

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 53 per cent at 30 September 2013 (30 June 2013: 55 per cent; 30 September 2012: 57 per cent).

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

"Catlin continued to make good progress during the third quarter of 2013 across  the business. Gross premiums written increased by 8 per cent at 30 September, with strong growth continuing to be produced by our non-London/UK underwriting hubs.  Weighted average premiums rates continue to increase across the portfolio, and rating levels for most classes of business are good.  There have been no truly major catastrophe events during the year, although smaller events and large single-risk losses continued to accumulate during the third quarter.  Overall, our underwriting performance has been strong.

"Catlin has built an underwriting infrastructure capable of producing good results across all types of market conditions. In addition, rising interest rates are good for Catlin in the longer term. We look ahead with confidence."

- 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 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 22 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 coral reefs around the world. During 2012 the Survey investigated the Great Barrier Reef off Australia, whilst during 2013 it is studying coral reefs near Bermuda, in the Caribbean and elsewhere in the world. The scientific data gathered by the Catlin Seaview Survey is intended to 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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