Profits at Lloyd’s insurer Catlin (CGL) recovered strongly in 2012 as premium rates hardened following 2011’s long list of costly catastrophes. Accordingly, the group’s combined ratio (of claims to premiums) improved to an impressively profitable 90 per cent from last year’s loss-making 102.6 per cent ratio.
Profits would have been better still had it not been for a $225m (£143m) hit from Hurricane Sandy - up from an estimated $200m in December - and a $51m loss from the Costa Concordia disaster. Broker Numis Securities, for example, had been expecting a $383m pre-tax profit. But, with the exception of those events, 2012 was significantly free of major loss events and, as 2011’s catastrophe losses work through the sector, premium rates are continuing to firm. Overall, Catlin’s premium rate rose 4 per cent during 2012, with a hefty 8 per cent rate hike on catastrophe-exposed business and a 2 per cent rate rise on the group’s non-catastrophe classes.
Still, the return on the group’s investment portfolio did fall to 2 per cent from 3.1 per cent in 2011 - partly reflecting a negative return on the group’s small book of "other" less conventional assets. Overall, however, the book remains overwhelmingly focused on high quality bonds and cash.
Numis expects EPS of 53.1p for 2013 and net tangible assets (NTA) of 446p.
| CATLIN (CGL) | ||||
| ORD PRICE: | 525p | MARKET VALUE: | £1.9bn | |
| TOUCH: | 524-525p | 12-MONTH HIGH: | 549p | LOW: 397p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 808¢* | COMBINED RATIO: | 90% | |
| Year to 31 Dec | Gross premiums ($bn) | Pre-tax profit ($m) | Investment return ($m) | Dividend per share (p) |
| 2008 | 3.44 | -13.0 | -91.0 | 23.2 |
| 2009 | 3.72 | 603 | 414 | 25.0 |
| 2010 | 4.07 | 406 | 205 | 26.5 |
| 2011 | 4.51 | 71.0 | 248 | 28.0 |
| 2012 | 4.97 | 339 | 158 | 29.5 |
| % change | +10 | +377 | -36 | +5 |
Ex-div: 20 Feb Payment: 22 Mar *Includes intangible assets of $720m, or 199¢ a share £1=$1.57 Capacity owned: 100% | ||||
