23rd Nov 2005 10:00
SVB Holdings PLC23 November 2005 For immediate release SVB HOLDINGS PLC Q3 2005 Syndicate Forecasts & Update on Provision for Discontinued Units SVB Syndicates Limited, the Lloyd's managing agency owned by SVB Holdings PLC(SVB), today announces updated quarterly forecasts for its managed syndicatesfor the 2003 and 2004 Years of Account as well as for the 2002 run-off accounts.In addition, some initial views are provided on trading to date in 2005 andprospects for 2006. • Estimated £6 million utilisation of the provision for discontinued units during Q3. Accordingly some £49 million of the provision established at 1 July 2004 remains unutilised. • The forecast loss for the 2002 run-off year for Syndicates 1007 and 1241 has deteriorated by five percentage points, including the impact from discontinued units. • Forecast profitability for the 2003 underwriting year for Syndicates 1007 and 2147 has improved. • Forecast profitability for the 2004 underwriting year for Syndicates 1007 and 2147 is unchanged. • For the 2005 underwriting year it is anticipated at this early stage that Syndicate 2147 will deliver a small loss due to the impact of Hurricanes Katrina, Rita and Wilma; a satisfactory profit is expected from Syndicate 1007. Following the windstorms positive effects on the rating environment are already beginning to emerge. 2004 Year of Account +---------+-----------+------------+----------------+----------------+| |Capacity |Owned by |Current Forecast|Previous ||Syndicate|£m |SVB (%) |% |Forecast || | | | |% |+---------+-----------+------------+----------------+----------------+| | | | | |+---------+-----------+------------+----------------+----------------+|1007 |215.6 |80.5 |7.5 - 12.5 |7.5 - 12.5 |+---------+-----------+------------+----------------+----------------+| | | | | |+---------+-----------+------------+----------------+----------------+|2147 |286.4 |100.0 |7.5 - 12.5 |7.5 - 12.5 |+---------+-----------+------------+----------------+----------------+ For Syndicate 1007 the current net incurred loss ratio at this stage (14%)remains highly satisfactory (2003, 4% at this stage; 2002 11% at this stage). Aspreviously advised, a lower level of utilisation of stamp capacity depresses theforecast range for profit as a percentage of stamp. The net incurred loss ratio of Syndicate 2147 (42%) continues to reflect theimpact of windstorm losses (2003, 20% at this stage; 2002, 33% at this stage).Nevertheless, a satisfactory level of profit is also projected for thissyndicate. 2003 Year of Account +---------+-----------+------------+----------------+----------------+| |Capacity |Owned by |Current Forecast|Previous ||Syndicate|£m |SVB (%) |% |Forecast || | | | |% |+---------+-----------+------------+----------------+----------------+| | | | | |+---------+-----------+------------+----------------+----------------+|1007 |151.0 |79.1 |17.0 - 22.0 |16.0 - 21.0 |+---------+-----------+------------+----------------+----------------+| | | | | |+---------+-----------+------------+----------------+----------------+|2147 |286.4 |100.0 |15.0 - 20.0 |14.0 - 19.0 |+---------+-----------+------------+----------------+----------------+ Syndicate 1007 continues to enjoy a favourable claims experience, evident in anet incurred loss ratio of 17% (2002, 25% at this stage). The positiveimplications for full year profit justify a further improvement to the forecastoutcome. Syndicate 2147 is shorter tail in nature and in this context a net incurred lossratio of 34% is also encouraging (2002, 47% at this stage). Again, this warrantsfavourable revision to the forecast outcome. 2002 Run off Year of Account +---------+-----------+------------+----------------+----------------+| |Capacity |Owned by |Current Forecast|Previous ||Syndicate|£m |SVB (%) |% |Forecast || | | | |% |+---------+-----------+------------+----------------+----------------+| | | | | |+---------+-----------+------------+----------------+----------------+|1007 |150.8 |55.4 |(10.0) - 0.0 |(5.0) - 5.0 |+---------+-----------+------------+----------------+----------------+| | | | | |+---------+-----------+------------+----------------+----------------+|1241 |168.9 |99.7 |(75.0) - (55.0) |(70.0) - (50.0) |+---------+-----------+------------+----------------+----------------+ An adverse impact on one of the 19 large contracts monitored within ourdiscontinued book has exerted a negative impact on both syndicates, and this isthe principal reason for the estimated £6 million utilisation of the provisionfor discontinued units in Q3. Both syndicates have also suffered some adversedevelopments from certain of the high profile US investment bank claimscurrently approaching settlement, although SVB enjoys material reinsuranceprotection in this area. The combined effect of these factors has increased theloss forecasts by 5% points for both run-off syndicates. Current Trading and Prospects The severity of windstorm losses during 2005 is leading to expectations of amodest loss in Syndicate 2147, where property insurance and reinsurance businesstransacted by the Group is written. For Syndicate 1007, where any hurricaneimpact is likely to be insignificant, a satisfactory level of profit isanticipated. The scale of 2005 windstorm losses is expected to exert amaterially beneficial impact upon the trading environment in 2006 and someevidence of improvement in rates is already emerging across liability as well asproperty classes. For further information: 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