Catlin was hit with claims arising from such events as February's Australian bush fires and June's Air France disaster. That explains the five percentage point year-on-year deterioration in the group's combined ratio - although, at 96 per cent, it remains acceptably profitable at the underwriting level.
More importantly, premium rates improved across the portfolio and Catlin's average weighted premium rate rose 6 per cent in the six-month period, compared to a 5 per cent slide last year - although catastrophe-related classes are performing more strongly than non-catastrophe business lines. Premium rates in the energy & marine and reinsurance accounts, for instance, rose 10 per cent, while the speciality lines book saw rates rise just 1 per cent, and the aerospace and casualty accounts each saw rates rise 3 per cent.
Still, helped by a recovery in the value of Catlin's diversified asset holdings (equity and hedge funds), the investment return recovered from last year's 0.9 per cent to 2.9 per cent. These alternative assets represented 11.2 per cent of the book in the first half, with the remainder invested in safer-looking fixed income securities and cash. Anticipating further market volatility, Catlin has been reducing its holdings of alternative assets, including the disposal of its equity fund holdings.
Numis Securities expects full-year pre-tax profits of $503m, giving EPS of 112¢.
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CATLIN (CGL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 316p | MARKET VALUE: | £1,133m | |
| TOUCH: | 315-316p | 12-MONTH HIGH: | 403p | LOW: 217p |
| DIVIDEND YIELD: | 4.7% | PE RATIO: | 73 | |
| NET ASSET VALUE: | 839c | COMBINED RATIO: | 96% | |
| Half-year to 30 Jun | Net premiums ($bn) | Pre-tax profit ($m) | Investment return ($m) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 1.46 | 150 | 54 | 7.5 |
| 2009 | 1.77 | 240 | 195 | 8.2 |
| % change | +21 | +60 | +261 | +9 |
Ex-div: 26 Aug Payment: 25 Sep Capacity owned: 100% £1=$1.65 | ||||
