Success of Syndicate 1007 fires up hunt for capital
SVB is hunting for new capital after pulling off a dramatic £120m turnaround in its fortunes.
Chief executive Matthew Fosh said he was looking at options including equity funding of up to £75m. "It's at the top of our agenda," he said.
SVB needs capital to boost its underwriting after gross written premiums fell to £506.6m last year from £656.9m in 2001.
The group made £10.1m profit before tax in 2002 against a £110.1m loss the year before when it was hit hard by difficulties in US liability business.
The legacy of poor underwriting in 2001 was a drag on its core specialty lines business, on which it achieved a combined ratio of 103.2%, described by Fosh as "unsatisfactory".
The segment accounts for 42% of gross written premiums.
But new business, reflected in the results of its Syndicate 1007, performed far better and achieved a combined ratio of 83.1% despite the need for extra reserving.
Syndicate 1007 is the focus of SVB's specialty lines underwriting, in which it leads 70% and saw a 44% increase in rates during the first quarter of 2003 for business covering financial instruments and professional indemnities.
Overall, the group's combined ratio improved to 107.9% from 138.8%.
The company is withdrawing from US liability reinsurance as part of a general move awayfrom US and reinsurance towards UK direct business.
Fosh said: "It's a different business from the one that people had in mind two years ago. But we've kept our core expertise and tightened the whole thing up."
He said it was a mark of confidence in its reserving that he could talk about raising new capital.
He said: "There comes a time when opportunities are being foregone which we would like to seize. That's what's driving us."