2nd Feb 2006 07:00
Advent Capital (Holdings) PLC02 February 2006 Advent Capital (Holdings) PLC ("Advent" or the "Company") For publication in the United Kingdom only. Not for release, publication or distribution in or into any other jurisdiction including, but not limited to,the United States, Canada, Australia, South Africa, Republic of Ireland or Japan Trading update Advent, the specialist Lloyd's Insurer, is pleased to provide an update on itskey sectors of reinsurance and insurance business following the 1st Januaryrenewal season. Advent Syndicate 780 had budgeted to underwrite approximately45% of its premium income at the commencement of the 2006 underwriting year andhas met this objective during the renewal season. Key Points • Rate increases across all key accounts • USA property catastrophe treaty reinsurance business experiencing rate increases up to 100% • Syndicate gross exposures on catastrophe exposed accounts reduced • Improvements in policy terms and deductibles further reducing gross exposure to catastrophe losses • Retrocessional business conditions better than experienced in 2002 after the WTC catastrophe Renewal Overview The Company is pleased with the market conditions experienced thus far. All keyaccounts are experiencing material rate increases and Advent anticipates thatthis trend will continue. Coverage terms and policy deductibles have beenamended on renewal on a great majority of catastrophe exposed and loss makingaccounts, which will in turn reduce the syndicate's exposure to natural perilsevents. A more detailed commentary on market conditions follows in the second part ofthis statement. Dividend Due to the impact of the 2005 hurricane losses, Advent is not in a position todeclare a dividend at this time. Capacity for 2006 Advent Syndicate 780 capacity for 2006 remains materially unchanged from 2005 at£152.8m. Of this the Company will be providing 80% (£122.8m) of the total, anincrease from 53% (£82m) in 2005, and is therefore well placed to benefit fromthe improved market conditions being experienced. Results Announcement Date The Company expects to announce its results for the twelve months period to 31stDecember 2005 on the 31st March 2006. Further comment on key accounts renewal season Property Treaty Reinsurance This sector deals with reinsurance of direct underwriters. The property treatyaccount is expected to represent 42% of Advent's business for 2006, based oncurrent business plans. The largest area of exposure is from US catastrophebusiness where pricing on loss making contracts has increased by up to 100%,depending on loss frequency to the contract during 2005. Deductibles have alsoseen significant increases where exposures or losses warrant it. General terms and conditions have also improved with more restrictive coveragefor catastrophe exposures from both the treaty risk excess loss and pro rataaccounts. Retrocessional business This sector deals with reinsurance of other reinsurance underwriters. Theretrocessional account is expected to represent 15% of Advent's business for2006, based on current business plans. Syndicate 780 has led approximately 60%of it's business written for 2006. Advent's overall view of this class is that underwriting conditions are betterthan those experienced in 2002 after the World Trade Centre catastrophe. Pricing for catastrophe treaty retrocessional reinsurance has increased bybetween 50% and 100%. Deductibles have been increased by between 25% and 50%. For risk excess retrocession, natural perils events are now excluded and thisclass is now principally exposed to fire / explosion perils, not industry widecatastrophes of earthquake, windstorm or flood. Insurance Business This sector deals with direct property insurance. The account is expected torepresent 23% of Advent's business for 2006, based on current business plans.Approximately 65% of the business is written for USA insured's. Pricing for catastrophe exposed property insurance open market business hasincreased by up to 50% and Advent expects this trend to continue. Deductibleshave been increased significantly, in some cases by several times the previousyear's figure. Business written under binding authorities in the USA has experienced priceincreases of 25% or more on catastrophe exposed accounts. Aggregate exposurewritten under these arrangements has been reduced. Keith Thompson, Chief Operating Officer of Advent Capital Holdings PLC andManaging Director of Advent Underwriting Limited commented: "The January renewal season has provided clear evidence that our markets havereacted positively to the events of 2005 with pricing and coverage terms movingin the right direction. We are very pleased with current trading conditions butacknowledge that these are early days. It will be important that conditionsremain firm and improve still further in some areas through the remainder of2006." 2nd February 2006 Enquiries Advent Capital Holdings Keith Thompson Tel: 020 7743 8200 Chief Operating Officer Neil Ewing Tel: 020 7743 8250 Investor Relations and Analysis Pelham Public Relations Charles Vivian Tel: 020 7743 6672 Gavin Davis Tel: 020 7743 6677 Advent Capital (Holdings) PLC, which listed on AIM in June 2005, is a leadingLloyd's insurer which manages and participates on Syndicate 780. The Syndicateis predominantly a short tail property reinsurance and insurance syndicatespecialising in catastrophe business. Notes: Advent Details • Advent listed on AIM in June 2005 and raised a total of £70 million of equity and £40m of debt during 2005. • Advent manages and participates on Syndicate 780 through Advent Underwriting Limited (a Lloyd's managing agency) and Advent Capital (No.3) Limited (a corporate member of Lloyd's). • Advent Underwriting Limited, which was formed in 1975, has operated in the Lloyd's market for thirty years. • Syndicate 780 has outperformed the Lloyd's market in 27 of the last 29 closed years of account returning an average profit of 18.5% compared with the Lloyd's average of 1.3%. However, Syndicate 780 is expected to under perform the Lloyd's market for the 2004 and 2005 years of account. • Syndicate 780's latest forecast results as at 30 September 2005 were: • 2003 account - profit 25% - 30% of underwriting capacity (total capacity £228 million) • 2004 account - loss 17.5% -22.5 % of underwriting capacity (total capacity £216 million) • Advent's management is led by Brian Caudle (Executive Chairman and Director of Underwriting) and Keith Thompson (Chief Operating Officer). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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