Equitas has reported a £21m fall in its accumulated surplus for the year to 31 March 2002 but has described its results as "generally neutral" due to an improvement in its solvency margin.
The group, which was set up to reinsure and run off the1992 and prior years' non-life liabilities of Lloyd's syndicates, reported that its accumulated surplus after tax had fallen by 3% to £679m from £700m at the same point in March 2001.
This represents less than a quarter of 1% of the £8.8bn in assets on its balance sheet
However, its solvency margin, the company's accumulated surplus stated as a percentage of net claims outstanding, rose almost one percentage point to 10.3% from 9.5%.
Equitas chairman Hugh Stevenson said: "The decrease in surplus is primarily due to technical additions to reserves for a number of categories of business, including a re-estimation of future reinsurance recoveries.
"Notwithstanding the decrease in surplus, however, the solvency margin has risen as a result of the significant fall in net claims outstanding during the year."
Gross claims paid for all types of coverage, which includes claims resolved through commutation agreements as well as the Group' s operating costs, amounted to £1.4bn, down from £2.1bn in the previous year.
A commutation agreement fully extinguishes all liabilities under reinsurance contracts between two reinsurers.
The decrease in claims paid reflected not only the gradual reduction in Equitas' claims activity over time but also the fact that many of the largest claims managed by Equitas had been closed, an Equitas statement said.
