Lloyd's insurer Sandy and Costa Concordia claims higher than expected
Lloyd's insurer Catlin made a 2012 profit after tax of $ 305 m (£ 194.5 m), eight times the $ 38 million profit made in 2011.
Ratio improved by 12.6 points to a profitable 90% (2011: 102.6%) of the company combined thanks to less natural disaster claims.
(Re) insurers were hit hard by a series of natural disasters in 2011, including the Thailand floods and earthquake in Japan and New Zealand. 2012, however, Was a more average year, which means better performance for most companies.
Growing losses
Catlin of improved 2012 showing came despite a higher-than-expected claims account by Super storm Sandy, who the US East Coast last October, and the Costa Concordia cruise ship disaster.
The insurer lost $ 200 m from Sandy originally had predicted, but it now expects the cost $ 225 m. Catlin had originally put is Costa Concordia claims bill on $ 35 m, but it ended up paying $ 51 m.
The company was also impacted by falling investment returns. Total investment income fell by 32% 173 m $ (2011: 256 m $) because of low interest rates and global economic uncertainty.
On the plus side Catlin said her 788 million dollars take over net contribution (net earned premiums minus claims) was a five-year record.
Hardening rates
Director Stephen Catlin praised the overall result. He said: "the value of the operational strategy of Catlin was clearly shown by the results of the group in 2012, in which the Group produced a return on net tangible assets by 14.6% and a return on equity of 11.3%".
"We aim to build on this achievement. The market conditions for many types of business are currently good. Prices for catastrophe exposed company at a high level, following voice increases in 2011 and 2012, as well as voice on further improvements for our reinsurance property on 1 January 2013, innovations in the wake of Sandy Super storm. There is also a better environment for certain non-catastrophe business activities such as u.s. casualty classes. "
Increased reinsurance spend
Catlin the gross written premium increased by 10.2% to $ 5bn $ 4.5. However, net premiums written and net premiums earned were flat because of increased reinsurance.
Catlin set with different special purposes syndicates to reinsure themselves in 2012 and therefore are underwriting to increase capacity. It also bought negative development coverage (ADC) in 2012, which protects against the risk of loss reserves for Catlin of 2009 and prior years not sufficiently advanced to take over pay. It extended the cover for 2013.
The company said in a statement: "we believe that these arrangements real advantages to Catlin and its shareholders offer by access to a cost-efficient source of capital without diluting the interests of current shareholders. The ADC is a prudent way to reduce the risk of previous years reserve deterioration, while Catlin still benefit from reserve releases. "
Catlin of 2012 results in $ m (compared with 2011)
GWP: 4,972 (4,722) net premiums earned: 3,604 (3,612) take over net contribution: 788 (324) Total investment return: 173 (256) profit before tax: 339 (71) profit after tax: 305 (38) combined ratio (%): 90 (102.6) return on equity (%): 11.3 (1.3)* Just take over contribution is defined as net earned less losses and costs of loss and acquisition cost premiums
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