Insurer posts £5.5m property loss due to mining and steelmaking claims.
Lloyd’s insurer Advent blamed the worst quarter for single risk property losses since the 2001 attacks on the World Trade Centre, as it posted a loss for the first three months of the year.
The insurer said major property losses, such as claims connected to mining giant BHP Billiton and Russian steelmaking group Severstal, had seen its profits for the quarter plunge. In the first quarter of 2008 it posted a loss of £5.5m, compared to a profit £0.5m in the same period last year.
Advent estimated that the insurance industry saw aggregate net losses of $3.65bn (£1.8bn) for the quarter. Only the third quarter of 2001 recorded higher losses, with the World Trade Centre attacks.
Advent said first quarter losses net of reinsurance recoveries and reinstatement premiums were £7m in excess of it business plan. The company said that in the absence of additional significant property losses in the remainder of the year, it expected total losses for 2008 to be in line with its business plan.
For the three months ended 31 March 2008, Advent’s property insurance account had an underwriting loss of £4.8m and a combined ratio of 196.9%. This compared with the underwriting profit of £0.2m, and a combined ratio of 96.7% in 2007.
In the first quarter the underwriting loss across its whole portfolio was £6.4m, compared to a loss of £0.9m in 2007. Its combined ratio deteriorated to 111.5% from 104.1%.
Gross premiums written, excluding the reinsurance-to-close premium, increased by over 21% to £62m from £51.1m in 2007.
Advent Capital chairman Brian Caudle said market conditions were increasingly competitive in its principal business lines. UK property insurance rates had started to see modest increases by up to 5% as a result of the catastrophes such as last summer’s flood.
He said: “Our business plans for Syndicate 780 and Advent Re reflected our expectation of softer market conditions, albeit we believe that underwriting profitability remains at attractive levels. Terms and conditions are holding, particularly in the reinsurance account, despite pricing reductions of between 7.5% and 15%.”