Press Releases
Preliminary Results for Year Ended 31 December 2006
| 9 March 2007 | Release 2007-4 |
HAMILTON , Bermuda – Catlin Group Limited (‘CGL': London Stock Exchange), the international specialty property/casualty insurer and reinsurer, announces its financial results for the year ended 31 December 2006.
Financial highlights:
Combined basis
- Income before tax of US$521 million
- Net income of US$428 million
- Return on average equity of 24 per cent
- Earnings per share of US$1.73
- Gross premiums written of US$2.72 billion, representing 15 per cent growth compared with 2005
- Combined ratio of 87 per cent
As reported
- Income before tax rose nine-fold to US$275 million (2005: US$28million)
- Stockholders' equity increased by 117 per cent to US$2.0 billion (2005: US$931 million)
- Investments and cash increased by 111 per cent to US$5.0 billion (2005: US$2.4 billion)
- Book value per share increased 19 per cent in sterling terms to £4.12 (2005: £3.47); book value per share in dollar terms rose 35 per cent to US$8.07 (2005: US$5.97)
- Proposed final dividend of 17 pence (32.8 US cents) (2005: 10.1 pence; 17.6 US cents); proposed total dividend of 23 pence (44.1 US cents), an increase of 48 per cent in sterling terms over prior year (2005: 15.5 pence; 27.5 US cents)
| US$000 |
Catlin |
Wellington |
Combined |
| Gross premiums written |
1,605,019 |
1,116,781 |
2,721,800 |
| Net premiums written |
1,410,123 |
913,138 |
2,323,261 |
| Net premiums earned |
1,325,861 |
902,301 |
2,228,162 |
| Income before income taxes |
275,417 |
245,097 |
520,514 |
| Net income |
258,789 |
169,692 |
428,481 |
| Tax rate |
6.0% |
30.8% |
17.7% |
| Loss ratio |
51.4% |
47.9% |
50.0% |
| Expense ratio |
36.8% |
38.1% |
37.3% |
| Combined ratio |
88.2% |
86.0% |
87.3% |
| Return on average equity |
24.2% |
22.4% |
23.8% |
|
|
|
| |
| Investments and cash |
5,013,709 |
|
5,013,709 |
| Stockholders' equity |
2,018,280 |
|
2,018,280 |
| Earnings per share (US$) |
1.59 |
|
1.73 |
| Book value per share (sterling) |
4.12 |
|
4.12 |
| Book value per share (US dollar) |
8.07 |
|
8.07 |
| Total dividend per share (pence) |
23.0 |
|
23.0 |
| Total dividend per share (US cents) |
44.1 |
|
44.1 |
Notes:
- Catlin's results for the year ended 31 December 2006 include the acquisition of Wellington on 18 December 2006. Because of its timing, the acquisition had no impact on the income statement, including net income, for the year, but the acquisition is reflected in the balance sheet at 31 December 2006.
- Income statement figures presented on a combined basis represent the aggregation of audited Catlin results and Wellington results, both presented under US GAAP. The Wellington US GAAP income statement has not been audited.
- A summary of Catlin's financial results for the year ended 31 December 2006, including comparisons to the previous year, are contained in the Financial Review attached to this announcement. Catlin's full financial statements are also attached.
- Earnings per share are based on weighted average shares in issue of 162.6 million (as reported) and 248.7 million (combined). Book value per share is based on shares in issue and to be issued of 250.0 million at 31 December 2006.
Operational highlights:
Underwriting
- Strong underwriting performance in 2006 for Catlin and Wellington
- Catlin and Wellington reduced catastrophe exposures; nevertheless, both portfolios grew strongly
- Broadly constant split of premium volume between catastrophe exposed and non-catastrophe business
Wellington acquisition
- Relocated: All London-based employees in one location
- Refinanced: Acquisition bridge finance facility retired with proceeds of US$600 million non-cumulative perpetual preferred share issue
- Integrated: Catlin and Wellington operations fully integrated
- Minimal unplanned staff departures
- Acquisition now expected to be earnings accretive for 2007 after restructuring and retention costs
- Greater than US$70 million in post-tax synergies projected for 2008, ahead of original expectations
Growth
- Embedded growth will result from uplift in share of Lloyd's business retained by Group arising from departure of third-party capacity
- Organic growth potential across business, from investment in Catlin US and from expansion of international office network
Outlook:
- Estimated written premium for January 2007 renewal season slightly above combined 2006 volumes for same period
- Rates for catastrophe exposed business expected to remain firm
- Rates for non-catastrophe exposed business expected to decrease, but margins should remain good
- Catlin will continue to expand non-catastrophe exposed portfolio
- Catlin looks ahead with confidence
Commenting on the Group's preliminary results, Sir Graham Hearne, Chairman of Catlin Group Limited, said:
“Catlin produced a strong operating performance during 2006, with a return on average equity of 24 per cent. We are confident about our prospects following the acquisition of Wellington , and this confidence is reflected in the proposed total dividend of 23 pence per share, an increase of 48 per cent.”
Chief Executive Stephen Catlin said:
“Catlin has made excellent progress, both in terms of our operating results for 2006 and the rapid integration with Wellington . Since our offer for Wellington was declared unconditional on 18 December 2006, we have relocated all London employees to a single office, refinanced the debt we assumed to acquire Wellington and integrated all operational functions. We now expect the acquisition to be earnings accretive in 2007 and to produce post-tax savings of at least $70 million in 2008.
“The Wellington acquisition provides Catlin with a springboard for future growth. We have made an excellent start to 2007, with written premiums in the January renewal season slightly above the combined volumes for the same period in 2006. We are set to benefit from embedded growth in the amount of business retained by the Group from its Lloyd's operations, and expect to see continued organic growth from our investment in Catlin US and our international office network. Catlin is in the strongest position in its history, and we look ahead with confidence.”
- ends -
For more information contact:
| Media Relations: | ||
| James Burcke, Head of Communications, London |
Tel: Mobile : E-mail: |
+44 (0)20 7458 5710 +44 (0)7958 767 738 james.burcke@catlin.com |
| Liz Morley, Maitland |
Tel: |
+44 (0)20 7379 5151 emorley@maitland.co.uk |
| Investor Relations: | ||
| William Spurgin, Head of Investor Relations, London |
Tel: |
+44 (0)20 7458 5726 +44 (0)7710 314 365 william.spurgin@catlin.com |
Notes to editors:
- Catlin Group Limited, headquartered in Bermuda , is an international specialist property/casualty insurer and reinsurer writing more than 30 classes of business worldwide. Catlin shares are traded on the London Stock Exchange (ticker symbol: CGL). More information about Catlin can be found at www.catlin.com.
- Catlin management will make a presentation to investment analysts at 10.30am GMT today at its London office. The presentation will be broadcast live on the Group's website (www.catlin.com). The webcast will be available on the website following the presentation.
- Catlin's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (‘US GAAP'). The Group reports in US dollars.
- Rate of exchange at 31 December 2006: £1 = US$1.96 (balance sheet); £1 = US$1.85 (income statement); at 7 March 2007: £1 = US$1.93.
- Detailed information regarding Catlin's operations and financial results for the year ended 31 December 2006 follow, including statements from the Chairman and Chief Executive, an underwriting and financial review, and information about the Wellington acquisition.
- Statements that the Wellington acquisition is expected to be earnings accretive do not constitute a profit forecast and should not be interpreted to mean that the earnings per share in 2007, or in any subsequent period, would necessarily match or be greater than those for the relevant preceding financial year.
See the full Preliminary Results in PDF format (250 Kb).