Hampden Underwriting Interim Results - 25.9.08

Hampden Underwriting PLC which provides investors with a limited liability direct investment into the Lloyd's insurance market released its interim results for the six months ended 30 June 2008 this morning.  These are available here.

Highlights

    * Commenced underwriting with an allocated capacity of £5.1m.

    * Premium written during the period totalled £2.8m.

    *Group's first acquisition of a Lloyd's corporate member during the period.

    *Net assets increased to £7.2m.

Commenting upon these results the Chairman, Sir Michael Oliver, said:

"While it's too early to comment on the likely result for the 2008 year of account, the Group has had a satisfactory result for the six month period. The insurance industry has generally fared well through the global crisis and Lloyd's continues to outperform its peer groups. We expect Lloyd's to continue to remain an attractive investment for 2009 and beyond.

The Group's first period of underwriting has resulted in a profit before tax of £148,000. This has been achieved despite the fact that the first six months underwriting has been hit by costs which are unlikely to recur in the second half of the year. This is typical of any new start up in the Lloyd's market.

The above together with the investment income generated from the funds held by the group has contributed to a satisfactory result for the period.

It is too early to comment on the likely result for the 2008 year of account which will be dependent on major loss activity, in particular the insured loss from Hurricane Ike, which may be the third largest insured hurricane loss in history.

The recent turmoil in the credit markets has precipitated the difficulties encountered by the world's largest property/casualty insurance group, which has obtained a loan from the Federal Reserve Bank of New York of $85bn. Together with losses from Hurricane Ike estimated at up to $18bn, there are grounds for improved profit potential for 2009 and 2010 on the syndicates backed by the Company at Lloyd's.  This is supported by the fact that Managing Agency Partners, which manages the second best performing syndicate in the Company's portfolio, Syndicate 2791, has recently announced that it proposes to renew its "sidecar" reinsurance Syndicate 6103 for a third year.  The business case is based on reinsurance rates remaining steady for 2009, which we view as a conservative assumption.

So far, the insurance industry, with some notable exceptions, has fared well through the global credit crisis. The operating performance of Lloyd's continues to outperform its peer groups with an 84% combined ratio on an annual accounted basis for the 2007 financial year.  The syndicates on which we participate have historically outperformed the Lloyd's average by a considerable margin.  Lloyd's has emerged since 2002 and particularly since the establishment of the Franchise Performance Board in 2003 with its reputation enhanced and we expect this to continue with Lloyd's remaining an attractive investment for 2009 and beyond”.