Chaucer Holdings PLC - Trading Update, Syndicate Results and Forecasts - 6.02.08
Chaucer Holdings PLC has today provided an update on current trading and has announced syndicate results for the 2005 year of account and the latest forecasts for 2006 and 2007.
Current trading
Conditions in catastrophe-exposed property and marine classes remain favourable although there is some pricing pressure following a second consecutive year free from major hurricane activity in the US.
Non-marine and marine classes without catastrophe exposure remain under significant pressure as markets continue to retreat from recent cyclical highs.
After a prolonged difficult period, the UK private car market is now achieving rate increases as pressures for a return to market profitability increase. We believe that our Motor Division will benefit significantly from this upturn.
Against this background, the current underwriting year has started positively with premium income in line with budget. We have experienced an overall decrease of 3.3% to date in non-motor premium rates across the 2008 renewal season. We currently forecast non-motor rates to decrease by 7.9% in 2008, against our previously published forecast of 6.6%.
Overall, the outlook for 2008 is positive but challenging.
2005 syndicate results
Both our syndicates delivered strong results for the 2005 year of account, producing a return of capacity of 13.3% for our total underwriting interests of £372.0m.
Capacity Chaucer share Result Previous forecast |
2005 Syndicate Sector £m £m % % % |
1084 Composite 400.2 362.3 +13.0 +7.5 to +12.5 |
1176 Nuclear 18.5 9.7 +25.6 +25.0 to +35.0 |
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Syndicate 1084 closed outside the top of our previously announced forecast range, benefiting from prior year reserve releases. The result underlines the enduring strength of the business. This was an excellent performance in light of an unprecedented hurricane season contributing to a record year for insured natural catastrophe losses.
Latest syndicate forecasts
Our 2006 and 2007 forecasts are encouraging for this early stage of their development, with significant business remaining on risk.
Capacity Chaucer share Latest forecast Previous forecast |
2006 Syndicate £m £m % % % % |
1084 450.0 416.2 +10.0 to +15.0 +9.0 to +16.5 |
1176 22.5 11.1 +35.0 to +50.0 +35.0 to +50.0 |
The 2006 mid-point forecast return on capacity is 13.4% for our total underwriting interests of £427.3m on Syndicates 1084 and 1176.
Capacity Chaucer share Initial forecast |
2007 Syndicate £m £m % % |
1084 485.0 448.6 +2.5 to +12.5 |
1176 27.5 13.7 +20.0 to +40.0 |
The 2007 mid-point forecast return on capacity is 7.3% for our total underwriting interests of £462.3m.
After writing business at healthy rates in 2006 and 2007, our Marine and Non-marine Divisions have since benefited from a continued absence of extreme catastrophe activity.
Improving conditions within the private car sector of the UK motor market assisted the performance of our Motor Division in 2007.
The initial 2007 forecasts for our combined participation of £18.6m on Syndicates 4000 and 4242 are also satisfactory.
2007 investment update
The Chaucer investment portfolio recorded a return of £42m (4.7%) for 2007 (2006 £38m; 5.7%). The performance reflects difficult conditions during the second half of the year.
Ewen Gilmour, Chief Executive Officer, commented:
"I am pleased to report another excellent performance from our syndicates.
The 2005 year of account has closed to produce a fourth consecutive year of healthy profits, despite record catastrophe losses for the industry, while 2006 and 2007 continue to develop positively, the beneficiaries of an absence of major losses in both years.
I am also pleased to report a promising start to 2008."
As previously announced, Chaucer Holdings PLC will publish its 2007 results on 10 March 2008.
Enquiries
Ewen Gilmour, Chief Executive Officer
Bob Stuchbery, Chief Underwriting Officer
Chaucer Holdings PLC
T 020 7397 9700
Jessica Lindridge, Marketing and Communications Manager
Chaucer Holdings PLC
T 020 7105 8258
Website: www.chaucerplc.com
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