?Difficult Financial Climate? Sends Chaucer Into 2008 Pretax Loss

Tue. March 10, 2009; Posted: 02:05 PM

LONDON, Mar 10, 2009 (A. M. Best via COMTEX) -- ZALOF | Quote | Chart | News | PowerRating -- Pointing to a ?difficult financial climate,? specialist Lloyd?s insurer Chaucer Holdings plc reported a 2008 pretax loss of 26.2 million pounds (28.4 million euros), down from a pretax profit of 89.4 million pounds in 2007.

Investments produced a loss of 71 million pounds, down from a 2007 profit of 41.7 million pounds.

?Our good underwriting performance in 2008 was undermined by the impact on our investments of the considerable economic upheaval,? Ewen Gilmour, chief executive officer, said in a statement. ?With a strengthened balance sheet, improving underwriting conditions and the talent and capital to take advantage, we look forward to 2009 and beyond with confidence and optimism.?

Gross written premiums rose 26.9% to 741 million pounds from 584.1 million pounds. Underwriting profit before investment fell 56.2% to 33 million pounds from 75.5 million pounds in 2007. The combined ratio was 93.9, against 82.6 in 2007.

Despite the problems in the investment market, Chaucer said it turned in a ?good underwriting performance.? Chaucer (LSE: CHU) said it has moved to ?significantly de-risk [its] investment portfolio.? Among other steps, this has involved a withdrawal from both equities and absolute return bond funds.

Chaucer, which described prospects for the underwriting market as ?very encouraging,? said it is hoping for an average 2009 premium increase of 5.4%.

?The hardening market should gather pace through 2009 and 2010,? Chaucer said in a statement.

Rates, Chaucer said, are likely to go up in such lines as energy, marine, U.K. automobiles and catastrophe-exposed property.

Chaucer said its decision to raise 75 million pounds in capital will ?strengthen [its] balance sheet and support additional underwriting opportunities.? The group also noted plans to raise the 2009 capacity of its Syndicate 1084 to 545 million pounds, from the 2008 level of 445 million pounds and the previously planned 2009 capacity of 480 million pounds.

Lloyd?s and Syndicate 1084 each has a current Best?s Financial Strength Rating of A (Excellent).

Chaucer was trading at 39 pence on the afternoon of March 9, up 2.63% from the previous close.

(By Robert O'Connor, London editor: Robert.OConnor@ambest.com)

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