Lloyd’s insurer maintains focus on underwriting amid lower interest rates
Advent announced pre-tax profits of £1.9m for the first quarter (ending 31 March 2009) after posting a loss of £5.5m in the first quarter of 2008, because of losses attributed to Hurricane Ike.
The specialist Lloyd’s insurer also achieved an underwriting profit of £2.2m and a combined ratio of 93%, excluding RITC (reinsurance to close premiums). Gross written premiums, excluding RITC, increased by 40.8% to £87.3m, compared to the £62m the insurer posted in the first quarter of 2008.
“It’s been a fairly benign first quarter for the market and [the figures are] effectively reflecting business to date. The additional premium partly reflects the strength of the US dollar, which has got stronger since last year, and partly reflects the development of business,” said Neil Ewing, investor relations officer of Advent Capital.
“First quarter last year for the industry featured a lot of risk losses particularly in the mining industry and they haven’t occurred this year.”
But Advent’s investment return dropped to £1.2m for this quarter compared to the £3.2m it announced in the first quarter of last year. Advent attributed the decrease to lower interest rates in the US and the UK. “For everyone the investment return for 2009 is fairly low so it’s now a case of producing profits in underwriting than relying on investment return. Investment return is a secondary line of income and our focus has always been on underwriting,” said Ewing.
Ewing said Advent would not need to raise further capital, despite the strengthening of the dollar against sterling. “We haven’t raised any further capital. All we’ve done is revise our business plan, which now includes quota share reinsurance.
“This takes out some of the peak exposures and seeds some of the reinsurance income to a third party. We are comfortable with that.”