10th Feb 2014 13:35
LONDON (Alliance News) - Catlin Group Ltd Monday said strong underwriting discipline and diversification were behind a 27% increase in pretax profits for its recent financial year, while it welcomed increasing levels of competition as the insurance market softens and more capital enters the industry.
In a statement, the specialty property-and-casualty insurer and reinsurer, with underwriting hubs in North America, Europe, Asia Pacific and Bermuda, said it made a USD432 million pretax profit in 2013, compared with USD339 million in 2012.
The company responded by raising its annual dividend by 5.1% to 31.0 pence a share.
Catlin shares were Monday quoted at 558.00 pence, up 18.00 pence, or 3.3%, with Canaccord Genuity's Ben Cohen telling Alliance News the company Monday morning suggested to analysts that it could return capital to shareholders if it has another "in line or good year".
Catlin, which manages the largest Lloyd's of London syndicate, said its underwriting performance was behind the strong result, as its combined ratio, a measure of underwriting profitability, dropped to a low of 85.6% compared with 90.0% in 2012. Reduced claims for natural catastrophes, after a good year for insurers on that front, saw those losses fall to USD156 million for Catlin, from USD225 million in 2012.
"Catlin's net underwriting contribution exceeded USD1 billion for the first time in 2013 because of our steadfast focus on underwriting discipline and our investment in building underwriting hubs outside of the London market," Stephen Catlin, chief executive, said in a statement.
The company's focus on diversification also bore fruit, with its non-London underwriting hubs producing a net underwriting contribution of USD480 million, an 83% increase.
"I believe there are still good opportunities for Catlin, even in a softening market. Our diversified portfolio - by region and by product - allows us to see business that many of our competitors do not have the opportunity to write. Using our tested technical skills, we can select the business that we believe is most profitable. It also must be remembered that margins for most classes of business are still strong and that rates for some classes of business are still rising," Stephen Catlin added.
Over the course of the year, Catlin wrote USD5.31 billion in gross premiums, a 6.8% increase on 2012.
However, Catlin followed Beazley PLC in reporting a weaker investment performance, with fixed income portfolios suffering from rising interest rates in 2013.
By Samuel Agini; [email protected]; @samuelagini
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