Sunday, March 06, 2005
Insurers keeping it up
The last fortnight saw a steady flow of reports from the insurance sector, providing vital information on profitability and industry climate. It's vital to keep tabs on the newsflow in a sector an investor has a stake in and I've got around 25% in Chaucer Holdings, which announces full-year results on Friday March 18th.
Last Friday, Wellington Underwriting announced final results for 2004 with a hugely encouraging RNS, here's the relevant bits:
we remain confident .. given normal market conditions. 2005 has started well .. we have an excellent platform on which to build further value for our shareholders..Underwriting profits from Syndicate 2020 increased by 8% to £39.4m (2003: £36.5m), including hurricane activity in 2004, reflecting strong underwriting conditions in 2003 and 2004
Now a quick scan down to the Chairman's statement:
Underwriting conditions were generally favourable during 2004; overall rates decreased by 5% as we had anticipated and some lines, particularly US property, continued to be under pressure. In the energy and non-marine property lines of business, however, pressure on rates eased as the result of the losses sustained from the hurricanes, Charley, Frances, Ivan and Jeanne...I believe that market conditions will continue to be favourable in 2005... the exceptionally severe hurricane season in the Caribbean in 2004, are a reminder that rates need to be maintained to ..maintain profitability
BRIT Insurance impressed on Tuesday, announcing record results:
The insurance market continues to experience low investment returns which together with pressure on back year reserves among a number of our competitors give us real confidence that the necessary market conditions will remain in force for good returns to be generated on our account.
It's not steak sandwiches all round in the sector however, on Friday Hardy Underwriting was forced to warn trading had landed butter-side down with the sort of statement that should remind an investor just how exposed each company in the sector is to force majeure events:
The 2004 year of account has been impacted by significant losses from the US
hurricanes and Japanese typhoons, particularly Songda... we are disappointed that the group results will not be in line with the expectations we had at the half year stage.
Hardy has clearly copped it from typhoon Songda and this disappointing news saw the company's shares falling 9% on the day. This sort of loss goes with the territory, investors will have to decide if they trust management to continue running their business profitably or if funds would be better invested elsewhere.
All in all, this week's news from the sector has been very encouraging for my shareholding in Chaucer. If the sector continues to report in the positive tones of BRIT and Wellington, I expect the price to advance further between now and final results day.
The Artful Dodger
Last Friday, Wellington Underwriting announced final results for 2004 with a hugely encouraging RNS, here's the relevant bits:
we remain confident .. given normal market conditions. 2005 has started well .. we have an excellent platform on which to build further value for our shareholders..Underwriting profits from Syndicate 2020 increased by 8% to £39.4m (2003: £36.5m), including hurricane activity in 2004, reflecting strong underwriting conditions in 2003 and 2004
Now a quick scan down to the Chairman's statement:
Underwriting conditions were generally favourable during 2004; overall rates decreased by 5% as we had anticipated and some lines, particularly US property, continued to be under pressure. In the energy and non-marine property lines of business, however, pressure on rates eased as the result of the losses sustained from the hurricanes, Charley, Frances, Ivan and Jeanne...I believe that market conditions will continue to be favourable in 2005... the exceptionally severe hurricane season in the Caribbean in 2004, are a reminder that rates need to be maintained to ..maintain profitability
BRIT Insurance impressed on Tuesday, announcing record results:
The insurance market continues to experience low investment returns which together with pressure on back year reserves among a number of our competitors give us real confidence that the necessary market conditions will remain in force for good returns to be generated on our account.
It's not steak sandwiches all round in the sector however, on Friday Hardy Underwriting was forced to warn trading had landed butter-side down with the sort of statement that should remind an investor just how exposed each company in the sector is to force majeure events:
The 2004 year of account has been impacted by significant losses from the US
hurricanes and Japanese typhoons, particularly Songda... we are disappointed that the group results will not be in line with the expectations we had at the half year stage.
Hardy has clearly copped it from typhoon Songda and this disappointing news saw the company's shares falling 9% on the day. This sort of loss goes with the territory, investors will have to decide if they trust management to continue running their business profitably or if funds would be better invested elsewhere.
All in all, this week's news from the sector has been very encouraging for my shareholding in Chaucer. If the sector continues to report in the positive tones of BRIT and Wellington, I expect the price to advance further between now and final results day.
The Artful Dodger
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