Talbot is increasing the capacity of its Syndicate 1183 at Lloyd's to £307m for the 2006 year, an increase of 9% over 2005 capacity of £282m.
Talbot said that for 2006, capital of $268m (£151m) has been provided to Lloyd's to support the syndicate, a small increase over the current year's figure of $261m (£144m).
The group said that approximately 52% of syndicate capital for 2006 is being provided from the group's resources and banking facilities and that it has extended its $30m letter of credit facility from Lloyds TSB for a further year.
Talbot's 2006 business plan, which has been approved by Lloyd's, shows gross premium income on a Lloyd's basis (net of acquisition costs) of £293m. This is a 8.5% increase over the latest forecast gross premium income for 2005 of £270.1m.
Talbot said it has increased its forecasts, on a Lloyd's accounting basis, for the 2003 and 2004 years of account to profits of £47.1m in 2003 and £31.4m in 2004, representing 24.4% and 10.9% of syndicate capacity for the two years respectively.
The group added that these profits represent returns on syndicate capital of 60% in 2003 and 27% in 2004.
Talbot also said that its latest estimate for the net loss to Syndicate 1183 from hurricanes Katrina, Rita and Wilma, after reinsurance recoveries and inwards and outwards reinstatement premiums, is approximately £63m.
This loss principally arises on the direct property, energy and property treaty accounts. Talbot's current forecast is that the loss is likely to cause Syndicate 1183 to report an overall loss for 2005, on a GAAP reporting basis.
Michael Carpenter, chief executive of Talbot, said: "As a prominent underwriter at Lloyd's in the property and energy classes, Talbot has suffered a major loss from the three hurricanes which struck in 2005. Like others, we are fortunate that these events, which include the largest insured loss in history, come at a time when we have very satisfactory profits from other areas of our business to offset their impact."
