US dollar raises Advent targets

Following the major fluctuation in US Dollar exchange rate, Advent has completed its review of the 2009 Plans of Syndicate 780 and has received approval from Lloyd’s for the revised arrangements.

The plan will be based upon a projected gross premium income net of brokerage of £145.0m (at US$1.50) compared to the original Business Plan target of £124.8m (at US$1.99 – Lloyd’s PIM rate).

As part of the review, Advent Syndicate 780 has entered into a quota share arrangement with an AM Best A rated reinsurance subsidiary of Fairfax Financial Holdings in respect of 40% of the property reinsurance lines of business for the 2009 underwriting year of account.

The property reinsurance lines represent 60% of the planned gross premium of Syndicate 780. The quota share is subject to an overrider fee charged as a percentage of the premium ceded and a profit commission, both of which are at normal commercial terms. As the reinsurance programme for Advent Syndicate 780 also acts for the benefit of the quota share, it will also bear its share of reinsurance programme cost.

The approved plan and quota share arrangements will maintain Advent’s continued market presence in its core property reinsurance and insurance classes, it said. The quota share will offer significant economic benefit through the fee revenue on premium income, the reduction in net reinsurance expense and the opportunity to earn profit commission on the result of the ceded business.