Insurer and reinsurer Catlin has set up Catlin U.S., a new company that will write speciality property/casualty business on an admitted basis in the U.S. It has appointed Richard Banas, formerly v.p. and chief underwriting officer of XL Professional Lines, as CEO of the new unit.
Catlin U.S. will be domiciled in Texas. Last year, Catlin agreed to acquire a shell property/casualty company, which will be renamed Catlin Insurance Company, subject to regulatory approval and completion of the acquisition.
Once it gets regulatory approval Catlin U.S. will become the group’s fourth underwriting platform. Its other underwriting platforms are Syndicate 2003 at Lloyd’s, Catlin Bermuda and Catlin U.K. The group already writes U.S. business on a non-admitted basis.
“The creation of Catlin U.S. offers Catlin tremendous underwriting opportunities in the world’s largest insurance market,” said Stephen Catlin, chief executive of Catlin, in a statement. “Rich’s background and experience in speciality insurance underwriting make him the ideal person to lead the establishment of Catlin U.S. as a leading admitted speciality insurer.”
The new unit was announced along with Catlin’s 2005 results. The group made net income of $19.7 million, down from $154.1 million in 2004. The results were hit by losses from hurricanes Katrina, Rita and Wilma of $333.5 million. By comparison, its losses from the four Florida hurricanes in 2004 were $114.6 million.
The group also announced capital raising plans. It will issue 7.7 million new shares – about 5% of its overall share capital – and raise $150 million by issuing subordinated debt. The company says it will use the proceeds to strengthen its financial position and take advantage of the underwriting opportunities it expects this year.
Observers believe the new U.S. unit will do well. Investment bank UBS predicts that Catlin U.S. will write $45 million of gross written premiums this year. And Gerald Farr, research analyst at investment bank Seymour Pierce, says the capital raising will help Catlin U.S.'s growth.
“The company’s capital position remains robust, and the new raise is in order to take advantage of the demand and rating environment in the U.S.,” said Farr in a research note. “Coming, as it does, several months after the likes of Amlin and Hiscox raised capital to expand in the Bermuda market, the company looks as though it may have been a little slow off the mark. However, Catlin’s U.S. operations are still at an early phase, and we believe that there are significant opportunities in the U.S. speciality market to grow the operation with rates at profitable levels.”
