Two Kiln syndicates could make 2010 losses

Lloyd’s insurer Kiln has indicated that two of its syndicates could make a loss for the 2010 year of account.

The current 2010 forecast for Syndicate 557, the group’s second-largest syndicate by capacity, ranges from a loss of 9.1% of capacity to a profit of 10.9% of capacity. The forecast range for Syndicate 807, the third-largest, ranges from a loss of 8.9% of capacity to a profit of 6.1%.

However, Syndicate 510, the largest, is expected to make a profit of between 1.4% and 11.4% of capacity, while the fourth-largest syndicate, 308, has a forecast profit of between 2.1% and 12.1% of capacity.

Kiln chief executive Charles Franks said the insurer is “set to deliver a reasonable set of results for 2010, despite a high level of catastrophe activity adding to already challenging market conditions.”

He added that 2011 had got off to a difficult start, with losses from the Brisbane floods in Australia and the Christchurch earthquake in New Zealand. .”While it is far too early to predict accurately the financial impact this will have across the industry, these losses look as though they will fall well within the expectations that we have for these types of events and we will continue to support our customers when these claims materialise.”

Kiln reports according to the three-year Lloyd’s accounting system, where underwriting years remain open for three years and results are not finalised until closure.

For the now-closed 2008 year, Kiln beat its expectations. Syndicate 510 was 8.1% above the mid point of the forecast range presented at the end of the previous calendar year, achieving a combined ratio of 87%.

Syndicate 557 closed with results inside the previous forecast and Syndicate 807 closed at 2.8% above the mid point of the previous forecast range. For Syndicate 308 the result was 4.0% above the mid point of the previous forecast range; due in part to the release of reserves from prior years.

“Today’s results for the 2008 year of account show that we have weathered the economic and meteorological storms extremely well in a year which saw hurricanes Ike and Gustav, as well as the global economic crisis,” said Franks. “Despite these events, we have delivered very good profits for the year demonstrating our resilience in challenging trading conditions.”

According to Kiln, the 2009 year of account is in line with expectations, and the insurer has said it expects to see excellent returns on capital because the year benefited from favourable market conditions, particularly in catastrophe-exposed classes.