Catlin reports 82% drop in profits
Bermuda-based insurer Catlin, operator of the biggest syndicate at Lloyd’s of London, reported an 82 percent drop in its 2011 profit, still ahead of market expectations, after absorbing nearly $1 billion in catastrophe-related claims.
Pretax profit for the year was $71 million, down from $406 million in 2010.
The better than expected result partly reflected Catlin’s reinsurance protection programme, which reduced the final impact of $961 million in catastrophe claims to $678 million, 40 per cent of which were incurred during the second half of the year.
Catlin said it had raised its prices as customers renewed their policies in January, in a sign that last year’s losses were helping to reverse a four-year decline in rates blamed on stiff competition.
“Our structure is designed to perform in all phases of the market cycle. Market conditions are improving, especially for catastrophe-exposed business classes for which rates increased by nine percent at January 1, 2012 renewals,” said CEO Stephen Catlin. “Whilst it may be too early to declare that the market has turned, nearly all signals are encouraging.I believe that Catlin today is in a strong position. We have a structure that is capable of substantial, profitable growth at a time when excellent opportunities are arising.”
Catlin wrote more business in 2011, increasing its gross premiums written overall and in its non-UK offices.
“Notwithstanding the exceptional series of natural catastrophes in 2011, Catlin continued to build its global business,” said Mr Catlin. “Gross premiums written increased by 11 percent, and premium volume written by our non-London/UK underwriting hubs rose by 24 percent. Our Group-wide attritional loss ratio was 50 percent, the lowest in five years.”
Sir Graham Hearne, chairman of Catlin Group Limited,said: “2011 was a tough year for the insurance industry and for Catlin. A record series of natural catastrophes produced insured losses of more than $100 billion for the industry. Rate competition adversely affected many classes of insurance and reinsurance. The ongoing economic uncertainty kept interest rates low, reducing many insurers’ investment returns.
“Despite these pressures, Catlin performed well. Whilst the Group sustained nearly $1 billion in gross losses from the natural catastrophes and operated in a challenging investment environment, profit before tax amounted to $71 million, with a return on net tangible assets of 1.7 percent.”