5th May 2006 07:00
SVB Holdings PLC05 May 2006 NEWS RELEASE 5 May 2006 For immediate release SVB HOLDINGS PLC Q1 2006 syndicate forecasts and current trading Update on Novae Insurance Company Limited SVB Syndicates Limited, the Lloyd's managing agency owned by SVB Holdings PLC(SVB), today announces updated quarterly forecasts for its managed syndicatesfor the 2004 and 2005 Years of Account, and for the 2002 and prior run offyears. • All syndicate forecast ranges unchanged in Q1 • £2 million utilisation of exceptional provision in Q1, leaving £25 million carried forward • Overall rate increases averaged 3% in Q1 after allowing for assumed claims inflation In addition, the FSA has confirmed its conditional approval of Novae InsuranceCompany Limited ("NICL"). 2004 Year of Account Syndicate Capacity Owned by Current forecast Previous forecast £m SVB (%) % % 2147 286.4 100.0 6.0 - 11.0 6.0 - 11.0 1007 215.6 80.5 7.5 - 12.5 7.5 - 12.5 Syndicate 2147 is the shorter tail of the two syndicates. The net incurred lossratio after 27 months is 50% (2003: 31%; 2002: 41%). It includes the severewindstorm experience in 2004, with some modest impact also from 2005 windstorms. For Syndicate 1007, the net incurred loss ratio is 20% after 27 months (2003:9%; 2002: 18%). 2005 Year of Account Syndicate Capacity Owned by Current forecast Previous forecast £m SVB (%) % % 2147 286.0 100.0 (15.0) - 0.0 (15.0) - 0.0 1007 151.0 81.6 7.5 - 15.0 7.5 - 15.0 Syndicate 2147 includes the severe windstorm activity in 2005, the currentultimate assessment of which remains materially unchanged at £68 million. Thenet incurred loss ratio after 15 months is 104% (2004: 35%; 2003: 14%). This isa reduction from 120% at the 12 month stage due to an improving performance byother, non-property classes within the syndicate. While this reduction isencouraging, it is prudent to keep the forecast unchanged at this stage. Syndicate 1007 has virtually no exposure to the hurricanes. The net incurredloss ratio after 15 months is 7% (2004: 6%; 2003: 2%). This is at an early stage of development, although the favourable terms and conditions on which this business was written in 2005 give cause for encouragement. The forecast is unchanged. 2002 Run Off Year of Account Syndicate Capacity Owned by Current forecast Previous forecast £m SVB (%) % % 1007 150.8 55.4 (20.0) - (10.0) (20.0) - (10.0) 1241 168.9 99.7 (95.0) - (75.0) (95.0) - (75.0) The low level of activity in the discontinued casualty treaty account wasencouraging, nothwithstanding that the first quarter tends to be uneventful. At the Group level this prompted utilisation of the exceptional provision of £2 million (Q1 2005: £5 million), leaving some £25 million carried forward andavailable to absorb future potential reserve deterioration on DiscontinuedUnits. Discontinued business outside the exceptional provision also showed littleactivity in Q1. Where large claims have been settled, this has been achievedwithin reserves. Forecasts of the ultimate outcome for the 2002 Year areunchanged Current trading and prospects Rates for property catastrophe reinsurance have risen sharply in the US aswidely expected, although elsewhere property rate increases have been moremoderate. Rate increases for Property business as a whole are of the order of20%. Aviation reinsurance business continues to see renewal on expiring terms,notwithstanding a period of favourable claims experience. Rates for Specialtyand Liability classes remain subdued at present, but compare favourably withbusiness plan assumptions. Across all classes of business transacted by SVB,rate increases (after allowing for assumed claims inflation) averaged 3% in the first quarter. Update on NICL On 3 February 2006 SVB submitted an application to operate NICL as an FSAregulated insurance company. The FSA has confirmed that it has approved NICL'sapplication subject only to the FSA being satisfied that NICL's issued and paidup capital is not less than £100 million. SVB's current intention remains thatNICL should commence trading on Monday, 3 July 2006. Shareholders approved the Scheme of Arrangement announced on 28 March 2006 at anextraordinary general meeting held on 24 April. Assuming the Court sanctions theScheme of Arrangement on 17 May, the rights issue will proceed as plannedthereafter. Enquiries: Matthew Fosh - SVB Holdings PLC 020 7903 7300Nick Miles - M:Communications 020 7153 1535 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Novae Group