With no repeat of 2011's painful catastrophe losses, Lloyd's insurer Catlin stormed back to underwriting profitability with an impressive half-year combined ratio (of claims to premiums) of 86.3 per cent - a huge improvement on last year's heavily loss-making 116.5 per cent ratio. Yet the shares remain too modestly rated for such a quality performance.
That performance was helped by impressive premium rate growth. Overall, premium rates rose 5 per cent in the period, with catastrophe-related classes having delivered a hefty 9 per cent rate hike while non-catastrophe business lines saw rates rise 2 per cent. "Underwriting conditions are favourable, with rates continuing to rise for most catastrophe-exposed classes of business and the long-awaited recovery in the US casualty portfolio starting to appear," said chief executive Stephen Caltin. Meanwhile, the investment book, around 95 per cent of which is focused on cash and low-risk bonds, delivered a decent enough 2 per cent annualised investment return.
Broker Numis Securities expects full-year pre-tax profit of $436m, EPS of 57.9p (from $71m and 6.9p in 2011) and net tangible assets (NTA) of 416p.
CATLIN (CGL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 447.1p | MARKET VALUE: | £1.6bn | |
| TOUCH: | 446.7-447.3p | 12-MONTH HIGH: | 452p | LOW: 331p |
| DIVIDEND YIELD: | 6.4% | PE RATIO: | 5 | |
| NET ASSET VALUE: | 940¢* | COMBINED RATIO: | 86.3% | |
| Half-year to 30 Jun | Net premiums ($bn) | Pre-tax profit ($m) | Investment return ($m) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 2.27 | -210 | 115 | 9.00 |
| 2012 | 2.26 | 231 | 83 | 9.50 |
| % change | - | - | -28 | +6 |
Ex-div: 22 Aug Payment: 21 Sep *Includes intangible assets of $718m, or 199¢ a share Capacity owned: 100% £1=$1.56 | ||||
