Interim Management Statement

RNS Number : 0298H

Catlin Group Limited

14 May 2014

 



Release 2014-8

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 31 March 2014.

Highlights at 31 March 2014

·     9 per cent increase in gross premiums written

·     9 per cent increase in net premiums earned

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

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

·     No catastrophe losses incurred during the first quarter

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

US$m	Three months ended 31 March 2014	Three months ended 31 March 2013	Percentage change
Gross premiums written	2,014	1,843	9%
Net premiums earned	1,032	948	9%
Investments and cash	9,060	8,562	6%
Total investment return to 31 March	0.9%	0.5%	--

Underwriting Operations

Gross premiums written increased during the period ended 31 March 2014 by 9.3 per cent (8.5 per cent at constant exchange rates) to US$2.01 billion (31 March 2013: US$1.84 billion). Net premiums earned in the first quarter increased by 8.9 per cent (7.5 per cent at constant exchange rates) to US$1.03 billion (31 March 2013: US$948 million). Due to increased amounts ceded to third-party capital providers, the growth in net earned premiums at year-end 2014 will likely be 4 to 5 absolute percentage points less than the growth in gross premiums written.

The following table below shows the breakdown of gross premiums written by underwriting hub during the period ended 31 March 2014:

US$m	Three months ended 31 March 2014	Three months ended 31 March 2013	Percentage change
London	823	781	5%
US	372	356	5%
Bermuda	225	208	8%
International (Asia-Pacific, Europe and Canada)	594	498	19%
	2,014	1,843	9%

Total gross premiums written by non-London underwriting hubs increased by 12 per cent in the first quarter of 2014 and accounted for 59 per cent of gross premiums written by the Group (31 March 2013: 58 per cent).

Gross premiums written by product group during the period ended 31 March 2014 are shown in the table below.

US$m	Three months ended 31 March 2014	Three months ended 31 March 2013	Percentage change
Aerospace	80	78	3%
Casualty	371	330	12%
Energy/Marine	230	214	7%
Property	176	158	11%
Reinsurance	998	903	11%
Specialty/War & Political Risk	161	161	--%

Gross premiums written increased among all product groups, although the Group continues to manage the Aerospace portfolio carefully in the light of continued market competition.  Gross premiums written by the Reinsurance product group in part reflects the continued growth of Catlin Re Switzerland. The increase in gross premiums written by the Energy/Marine product group reflects new business development in the Asia-Pacific region. The growth in Casualty classes reflects the favourable rate environment and continued growth of US professional lines business.

Rating Environment

Average weighted premium rates across the Group's underwriting portfolio decreased by 2 per cent during the three months ended 31 March 2014. Rates for catastrophe-exposed business classes decreased by 6 per cent, while rates for non-catastrophe classes increased marginally.  Rates for Casualty business classes increased by 6 per cent during the quarter.

Claims and Operating Expenses

The Group incurred no catastrophe losses during the period ended 31 March 2014.  There was one large single-risk loss: the disappearance of Malaysian Airlines Flight MH370.

Operating expenditures remained in line with expectations during the period, although expenses relating to profit-related bonuses and incentive-based employee share compensation were higher than expected, reflecting the Group's favourable performance.

Investment Management

Total cash and investments amounted to US$9.04 billion at 31 March 2014, a 6 per cent increase compared with US$8.56 billion at 31 March 2013.

Total investment return for the period ended 31 March 2014 was US$79 million (31 March 2013: US$48 million). The year-to-date total investment return was 0.9 per cent at 31 March 2014 (31 March 2013: 0.5 per cent). Investment return includes all mark-to-market adjustments.  

The Group's investment performance by major asset category during the period ended 31 March 2014 is analysed in the table below:

	Average allocation during period (US$m)	Quarterly return (US$m)	Quarterly return (%)
Fixed income	6,103	35	0.6%
Cash and short-term investments	2,316	4	0.1%
Other invested assets	731	40	5.5%
	9,150	78	0.9%

The 0.6 per cent return from fixed income securities was driven both by interest income and mark-to-market gains as a result of narrower credit spreads. The 5.5 per cent return from other invested assets was mainly driven by strong performance by equities.

Board of Directors

Claus-Michael Dill and Beatrice Hollond were elected as Non-Executive Directors at the Group's Annual General Meeting on 13 May. They have become members of the Board of Directors' Audit, Compensation, Nomination and Investment Committees. Bruce Carnegie-Brown, who has served as Senior Independent Non-Executive Director since August 2010, retired from the Board at the conclusion of the Annual General Meeting. He is succeeded as Senior Independent Director by Nicholas Lyons, who has been a Non-Executive Director since August 2008. Mr Carnegie-Brown is succeeded by Fiona Luck as Chairman of the Compensation Committee.

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

"I am pleased to report that Catlin has achieved a good performance during the first quarter of 2014. Gross premiums written increased across all of our underwriting hubs, with continued strong growth from the International hubs.  In addition, there were no catastrophe losses during the quarter and overall loss activity was generally benign.

"Rating levels are still adequate for most classes of business. Average weighted premium rates for catastrophe-exposed classes of business decreased by 6 per cent during the first quarter, but from record levels and we believe there is still good margin to be found in many of these classes.  Rates for all other business classes increased marginally, although average weighted premium rates for Casualty classes rose by 6 per cent.

"I would like to express my thanks to Bruce Carnegie-Brown, who retired at the Annual General Meeting, for his contribution as the Group's Senior Independent Director and Chairman of the Compensation Committee. I would also like to welcome Claus-Michael Dill and Beatrice Hollond, who were elected by shareholders to the Board at the AGM.

"Catlin has made a good start to the 2014 underwriting year. We remain committed to our global operating strategy, which stresses underwriting discipline, diversification and capital preservation, and we continue to 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 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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