1st Nov 2005 10:53
Beazley Group PLC01 November 2005 1 November 2005 Beazley Group plc Updated loss estimates for hurricane Katrina and initial loss estimates from hurricanes Rita and Wilma Beazley Group plc announces today an updated estimate of losses sustained fromhurricane Katrina and initial loss estimates from hurricanes Rita and Wilma. In our interim statement dated 7 September we made reference to the impact ofhurricane Katrina. As stated, the estimate was made based on the littleinformation available at the time, being just one week after the hurricanedevastated large areas of the Gulf Coast and New Orleans was still evacuated. Weindicated that we would update the market when the information became morereliable. Although information can now be deemed more reliable in respect of the loss fromhurricane Katrina, there is still a considerable amount of uncertainty regardingthe overall magnitude of the insured loss for the industry and the informationin relation to our exposure remains sparse and incomplete. The losses sustainedfrom hurricane Katrina are primarily from the property reinsurance, marineenergy and direct property lines of business. The current estimate of the net loss from hurricane Katrina to the managedsyndicates is $150m (previous estimate of $75m). The estimates for the netlosses from the direct property and energy accounts have not materially changedsince the initial announcement at the time of the interim results on 7 September2005. However, our estimate of the property reinsurance account has increased due tothe uplift in industry estimates and our current view of potential exposure fromthis area of our portfolio. It should be noted that many cedants have yet toconfirm our estimates and therefore a degree of uncertainty remains. The Group's share of the revised estimated loss net of reinsurance and includingreinstatement premiums from hurricane Katrina is approximately $100m before tax(previous estimate of $50m). The initial net loss estimate to the Group from hurricane Rita is approximately$15m before tax and as substantial reinsurance protection is still availablethis net loss is not expected to increase materially. The initial net loss estimate to the Group from hurricane Wilma is alsoapproximately $15m. There is no hard information available on this loss at thisstage. Based on a loss of this size substantial reinsurance protection is stillavailable to all business lines. The effect of these events is to reduce the current expectation of Group profitsfor 2005 by a further £40m (in addition to the £20m announced by the Group on 7September). This update is given before the end of the hurricane season andbefore most of our cedants have notified us of losses from the events andtherefore there remains uncertainty as to the eventual outcome. There is now firm evidence of rates increasing in the energy and propertysectors. We expect the increase to accelerate towards the year end asunderwriters adjust to the new trading conditions. Our revised 2006 plan, whichLloyd's has now approved, increases our premium capacity from £742m to £830mwith the Group's participation increasing from 70% to 78%. Our dividend policy of paying a reasonable level of base dividend across theunderwriting cycle remains in place and we are committed at this stage to payinga minimum of 4p for the year. Contacts Beazley Group plc Tel: 020 7667 0623Andrew BeazleyAndrew Horton Finsbury Tel: 020 7251 3801Simon MoyseAmanda Lee This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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