Catlin Announces Forecast Writedowns

by Stewart Douglas

Story link: Catlin Announces Forecast Writedowns

Insurer Catlin has today announced its expectations of a writedown totalling $75 million in recognition of losses it sustained against sub-prime linked securities, most of which value was eradicated during the sector collapse of the early summer months.

The group said that it had managed to offload a proportion of its sub-prime debt, although it did still have exposure of around $85 million which will leave $12 million beyond the writedown charge it anticipates taking over the remainder of this year.

However the group has managed to offset some of its charges after enjoying a low exposure to catastrophic losses over the course of the year, whilst managing to increase its gross written premiums by 6% over the course of the first three quarters of its financial year across both its Catlin and Wellington brands.

Additionally the company added today that it had managed to increase its reserves overall in line with previous forecasts, to provide financial support for further catastrophic exposure in exceptional years, providing further security for policy holders.

Speaking today on the results, Stephen Catlin suggested that the company would manage to meet its objectives despite its exposure to sub-prime losses. “The Group is on track to meet its targets in 2007. Whilst we have taken the decision to write down the value of the small portion of the investment portfolio exposed to the subprime sector, we expect the profit impact of the writedown to be offset broadly by the low incidence of catastrophe losses in the second half of 2007.”

Catlin’s investment portfolio had previously comprised of substantial sub-prime exposure, much of which is now worthless in the wake of the sector collapse in the US. However, after having successfully sold off some of its exposure in order to minimise risk, it is hoped that it will be able to reduce the scope for further writedowns over the coming years.