Monday, August 22, 2005
Wellington still not letting in water
Today brought another announcement from an insurer that profits at the half-year stage would comfortably beat market expectations. This followed Thursday's announcements from Chaucer and Amlin that we should expect strong results. Sandwiched between these was a positive trading statement from BRIT arriving on Friday. As I mused in yesterday's blog this may well be a feast-to-famine industry but the main players are still feeding well.
Wellington has had a great first six months of the year but warns that with half of the hurricane season still to come, the full year won't necessarily outstrip consensus forecasts:
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 International Financial Reporting Standards (IFRS).
However, the 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.
BRIT issued a similar statement of cautious optimism:
It is anticipated that the Group's pre-tax profit for the first half of 2005 will be in the region of £110 million. This is due to a combination of favourable trading conditions, low levels of claims incurred, excellent investment performance and profit on exchange rate adjustments when reporting under International Financial Reporting Standards ('IFRS').
Dane Douetil, Group Chief Executive Officer of Brit, said: 'Brit's performance has been extremely strong, however, it is unlikely that all the positive factors experienced in the first half of the year will be repeated in the second half. In addition IFRS could introduce further volatility. Although we believe that it would be imprudent to infer that our excellent first half performance will be repeated in the second half of 2005 we look forward to the year end with some confidence.
The hurricane season has had no material adverse effects on these businesses yet and if the sector can enter October with little storm damage, we can expect to full-year profit upgrades arriving. I just wish my two holdings, Chaucer and SVB would join the party with a fully qualified profit upgrade for the interims. There's time yet, with results starting to arrive around the third week of September.
The Artful Dodger
Wellington has had a great first six months of the year but warns that with half of the hurricane season still to come, the full year won't necessarily outstrip consensus forecasts:
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 International Financial Reporting Standards (IFRS).
However, the 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.
BRIT issued a similar statement of cautious optimism:
It is anticipated that the Group's pre-tax profit for the first half of 2005 will be in the region of £110 million. This is due to a combination of favourable trading conditions, low levels of claims incurred, excellent investment performance and profit on exchange rate adjustments when reporting under International Financial Reporting Standards ('IFRS').
Dane Douetil, Group Chief Executive Officer of Brit, said: 'Brit's performance has been extremely strong, however, it is unlikely that all the positive factors experienced in the first half of the year will be repeated in the second half. In addition IFRS could introduce further volatility. Although we believe that it would be imprudent to infer that our excellent first half performance will be repeated in the second half of 2005 we look forward to the year end with some confidence.
The hurricane season has had no material adverse effects on these businesses yet and if the sector can enter October with little storm damage, we can expect to full-year profit upgrades arriving. I just wish my two holdings, Chaucer and SVB would join the party with a fully qualified profit upgrade for the interims. There's time yet, with results starting to arrive around the third week of September.
The Artful Dodger
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