Benfield Group has forecast a more encouraging outlook for 2006 than previously estimated, with revenue growth of over 20% expected for the group in 2006.
In a trading update, the company said revenue growth in the reinsurance intermediary business is expected to be above 10% and combined with the growth anticipated from Benfield Corporate Risk, Benfield expects revenue growth for the Group to exceed 20%.
Benfield said its 2006 trading result is expected to amount to at least the £87.3m achieved in 2004. In addition 2005 revenues are still expected to be in line with 2004.
However, the Group added that while the trading margin is also expected to improve significantly, it is not expected to regain the level reported for 2004 until the benefits of the current investment programme have been realised in full.
Benfield said that in 2005, significant new capital entered the reinsurance market but its impact on year end renewals was muted. Underlying demand for reinsurance was strong, the group added.
It said that, despite the new capital entering the reinsurance market during 2005, a number of factors were already imposing constraints on capacity. These included the recalibration of catastrophe models, a shrinking risk appetite for peak exposures, the restructuring of coverage on a more restrictive basis and the increased cost of underwriting capital.
These influences were likely to maintain upward pressure on reinsurance pricing during 2006 and 2007, Benfield said.
Benfield said it was therefore well placed to benefit from current market trends, and added it remained confident that its carefully targeted expansion would significantly enhance the medium term outlook for the group.
