Annual Report 2008

Underwriting performance

£152.8 million of gross premium was written in the year (2007: £149.2 million).

Faced with difficult rating conditions, our underwriters have continued to demonstrate excellent discipline, focusing on risk selection and underwriting profitability. The acquisition of the renewal rights to the commercial motor account of HCC generated £4.5 million of renewed income in the year with further renewals due in 2009.

Property insurance grew by 89% in the year. This follows a number of new business initiatives and the full year impact of the 2007 acquisition of Allied Cedar. This growth whilst retaining profitability is pleasing given the build up of a competitive market. It results partly from increased marketing activity, with additional resources recruited in 2007.

With market conditions once again proving challenging, the combined ratio of 80% (after removing the exchange differences on translation of non-monetary assets and liabilities) is a strong result (2007: 86%). The claims ratio was 48% compared to 61% in the prior year. The higher expense ratio of 32% (2007: 24%) reflects a modestly higher expense base against reduced net earned premium. Reserve releases of £34.4 million (2007: £22.1 million) represent the release of case reserves as claims settle below expectations.

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