Flagstone Re targets Brazil

Flagstone Re, which owns the Lloyd’s Marlborough Underwriting Agency, has reported rising premiums and profits in second quarter with a cut in its combined ratio from 76% to 68.7%.

Financial highlights (2008 in brackets)

• Gross premiums written $328.7m ($271.2m) half year: $690.2m ($513.4m)
• Net premiums earned $187.0m ($141.8m) half year: $359.8 ($277.0m
• Operating income $57.9m ($41.8m) half year: $89.2m ($92.6m)
• Combined ratio 68.7% (76.0%) half year: 74.3% (71.5%)

David Brown, Flagstone CEO said: “Flagstone’s solid performance this quarter is the result of the continued strength of our underwriting, expansion in several lines of business and geographical diversification.

Diversification cut loss ratio

“In particular, this diversification accounted for a loss ratio in the quarter of 30.8% and a combined ratio of 68.7%, which produced an underwriting profit of $61.9m for the quarter.

“Our ability to generate quality business on a global basis allows us to continue adding significant premium leverage to our business and achieve outstanding operating performance. Note that our Lloyds platform, Marlborough Underwriting Agency Limited, is only beginning to impact the top line, as our fresh corporate name ramps up. Premiums written at Marlborough for the half year were a quite satisfactory $85.6m, in line with plan.”

Mid-year renewals

Brown continued: “Our mid-year renewals were attractive on a risk-adjusted basis and we were able to strategically allocate our capital to the best priced pieces of business.

“Flagstone’s North American gross aggregate exposure was flat and our premiums were up approximately 5% despite renewing less proportional business in the quarter and writing more excess of loss.

“Florida pricing in particular was up approximately 15% on average, an attractive level given the appearance of capacity in the market at the last moment.”

Lloyd’s in Brazil

Mark Byrne, Flagstone chairman said: "We are also excited by the prospects of our recently opened representative office in Brazil. Operating within the Lloyd’s offices in Rio, this office will be able to access Brazil’s growing and attractive market.

“We anticipate that this will begin to impact our portfolio of business in the second half of 2009.”