Wellington expects half-year pre-tax profit of £66m

Wellington has released a trading update indicating that its interim results for the six months ended 30 June 2005 will exceed market expectations.

It is anticipated that consolidated pre-tax profit for the 2005 interim results will be not less than £66m, of which pre-tax profit from Group Underwriting Operations will be not less than £55m.

Review of the performance for the first half of 2005 indicates that the outcome for the results of Group Underwriting Operations will be better than market expectations due to continued good underwriting results, principally in the area of good claims experience to date for current and prior accident years, improved investment performance, the impact of the strengthening US dollar and the effect of the treatment when reporting under IFRS.

However, the company warned that full year results may be significantly impacted by hurricane and other loss events occurring in the second half of the year as well as by conditions in the foreign exchange and investment markets.

The forecast range for the 2003 year of account for Syndicate 2020, which is expressed as a percentage of capacity after standard personal expenses, has been increased to 15% -19% (previously 13% -18%). The forecast for the 2004 year of account remains unchanged at 8%-15%.

The company said that the relatively benign loss experience in the first six months of 2005 will result in a higher than expected interim profit for the current accident year. This, combined with reserve releases from prior accident years, will result in a better than expected combined ratio for the 2005 interim period.

Preben Prebensen, chief executive of Wellington, said: "The group's performance has been very strong in the first half of 2005 and while most of the windstorm season is still ahead, we believe we have laid the foundations for strong full-year results."