Catlin stock downgraded

Catlin’s stock has been downgraded by analyst Jeffries because of uncertainty about the reserves.

The analyst pointed out that while many insurers’ reserves appear adequate at this stage in the cycle, trends are less positive in Catlin where risk was “in adverse development”.

Catlin was downgraded due to reserving uncertainty, greater cycle exposure and less scope for capital management.

Catlin has less reserving buffer than peers, and a slow-down in releases in early years raises some question marks over front-end adequacy, according to Jeffries.

The analyst predicted that capital returns were likely in 2011, pointing out that premium growth estimates are down on the whole and capital positions are solid. Jeffries estimates around 10% distributable surplus at Amlin and Hiscox at the end of 2010.

US acquisition

Meanwhile, Catlin has acquired US subsidiary Blue Ridge Insurance Company from QBE Insurance Group.

BRIC is a Wisconsin-domiciled admitted insurer and a wholly owned subsidiary of General Casualty Company of Wisconsin.

Stephen Catlin, chief executive of Catlin Group, said: “This purchase further demonstrates our commitment to the US marketplace and will strengthen our position in this important region.”