Catlin Issues Ike/Gustav and Investment Loss Estimates

October 17, 2008

The Bermuda-based Catlin Group Limited has announced its initial estimate of the financial impact of Hurricanes Ike and Gustav and an update on its investment performance and trading conditions.

The Group said its “losses arising from Hurricanes Ike and Gustav are estimated at approximately US$200 million, net of reinsurance protections and reinstatement premiums. The Group’s estimate is based on the assumption that market-wide insured losses from Hurricane Ike will amount to approximately US$15 billion.

“The Group’s total net investment return for the nine-month period ended 30 September 2008 was -0.9 per cent. This return was calculated after valuing all investments on a mark-to-market basis. This includes an unrealised loss of US$118 million on fixed income investments as at 30 September. The Group held US$11 million of Lehman Brothers debt, which has been written down to US$1 million. “The Group’s investment, insurance and reinsurance exposures relating to American International Group Inc. are not material.”

Catlin said its cash and investments as of Sept. 30 “amounted to approximately US$6.2 billion (30 June 2008: US$6.2 billion). Asset allocation has not materially changed since 30 June, and the Group remains defensively positioned. At 30 September, cash and investments comprised approximately 40 percent cash, 20 percent government and government agency securities, 27 percent other fixed income securities, 11 percent hedge funds/funds of funds, and 2 percent equities.

“Current capital levels are sufficient to support the embedded growth arising from the acquisition of Wellington Underwriting plc, including the expiration at the end of 2008 of the quota share reinsurance provided to the Catlin Syndicate by former Wellington third-party capital providers. Current capital levels are also sufficient to support expected increases in premiums arising from improved insurance and reinsurance market conditions in 2009.”

Chief Executive Stephen Catlin commented: “The unprecedented events of this year, including the instability in international financial markets, have presented the Group with both challenges and opportunities. We believe that these are market turning events. We expect an improved rating environment created by the removal of significant capital from the marketplace.

“Catlin’s balance sheet remains strong. Our investment in the business over the past few years leaves us well positioned to take advantage of the new opportunities.”

Catlin will issue its third-quarter interim management statement on Thursday November 13;

Source: Catlin Group –

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