Operating Principles
Catlin has established a core set of operating principles that the Group follows as it carries out its strategy:
- Forward-looking approach
Catlin takes a long-term view of business and market conditions. The Group seeks to concentrate on business activities that will produce long-term, sustainable earnings across underwriting cycles. - Attractive return on capital
Property and casualty insurance and reinsurance is a cyclical business, with cycles often varying across different business classes. Returns on capital can vary greatly, depending upon market conditions and the occurrence of catastrophic losses. While it is not possible to guarantee a minimum annual return on capital, Catlin strives to produce attractive returns and, over the longer term, to rank consistently among the top performing companies in its sector. - Realistic and flexible approach to underwriting
cycles
Catlin seeks to increase premium volume during periods of favourable rates and conditions and focus on profit rather than market share during times of declining market conditions. This philosophy extends to the specific underwriting cycles that affect individual classes of business. Because it underwrites a diversified book of business, Catlin aims to profit from the specific favourable underwriting opportunities that can exist even when general market conditions are adverse. - Focus on gross underwriting profits
Underwriters report on a gross of reinsurance basis. The Catlin Group expects each class to produce a gross profit in the aggregate through its cycle. - Diversification by class and
distribution
Catlin actively explores new classes of business and geographic markets to enlarge its core earnings base. Over the years, Catlin has diversified from its origins as a marine syndicate at Lloyd’s to write numerous classes of specialty property and casualty insurance and reinsurance, seeking opportunities for underwriting profit and the spread of uncorrelated risk. Catlin seeks a balance between volatile and non-volatile classes of business. - Conservative reserving philosophy
Catlin sets reserves conservatively within the actuarial range of estimates, reflecting inherent uncertainties in estimating insurance and reinsurance liabilities. - An underwriting and corporate structure which maximises
scope for earnings growth and provides flexibility
Catlin’s four underwriting platforms provide access to diversified business opportunities in the world’s major insurance and reinsurance markets. Catlin’s network of international offices provides the underwriting platforms with flows of business that would otherwise be placed with local carriers and allows Catlin to strengthen relationships with local clients and retail brokers. The Group is domiciled in Bermuda, which allows Catlin to utilise its capital in a flexible and tax-efficient manner. - Emphasis on capital preservation
Catlin seeks to underwrite business that presents the highest returns against the least risk, both to maximise profits and to protect its capital base. The Group actively looks for opportunities to write new classes of business which produce an underwriting profit and, where possible, are uncorrelated to its existing portfolio. Catlin uses outwards third-party reinsurance both to protect its capital base and to increase underwriting capacity. Catlin also utilises a risk-averse approach in the management of its investments, and its portfolio comprises primarily highly rated fixed income securities and cash. - Maximisation of relationships with core clients,
brokers and other counterparties
Catlin aims to support core clients whose business is profitable over the long term, both during periods of constrained market capacity and after a large loss, recognising that lasting, profitable relationships should not be broken because of short term considerations. The Group works closely with core clients to provide innovative solutions to their needs and with brokers to offer consistent support and dependable capacity. Catlin seeks transparent relationships with all counterparties. - Continuous improvement of technical
capabilities
Catlin recognises that ongoing investment in people, systems, processes and controls is essential to compete effectively. As Catlin grows, it continues to attract high-quality professionals in all areas of its operations to provide further depth to an already strong team. Catlin also continues to develop its proprietary underwriting system and data warehouse that have been designed to the specifications of its underwriters and that allow Catlin underwriting platforms and offices to share a single database. - A culture that stresses open communication and
accountability for actions
As it has grown, Catlin has retained a corporate culture that gives underwriters and other key employees significant responsibility for business decisions. The Catlin Culture is based on open communication and transparency, and is supported by a comprehensive control framework which enables the Group to monitor effectively decisions made by employees. This culture includes a Group-oriented mentality, including a profit-related bonus plan that encourages employees to collaborate and share information. As well as contributing to the Catlin Group’s success, this culture has also resulted over time in a low level of staff turnover, particularly at the management and underwriter level.