Benfield 2006 forecast better than expected

Despite unprecedented industry losses in 2004 and 2005, Benfield Group Limited is forecasting a more encouraging financial outlook for 2006 than previously expected.”The full impact of the unprecedented losses of 2004 and 2005, like that of previous major losses, will emerge over the next 12 to 18 months,” Benfield announced in a release. “Despite the new capital entering the reinsurance market during 2005, a number of factors are already imposing constraints on capacity.”These include the recalibration of catastrophe models, a shrinking risk appetite for peak exposures, the restructuring of coverage on a more restrictive basis and the increased cost of underwriting capital. These influences are likely to maintain upward pressure on reinsurance pricing during 2006 and 2007.”At the same time, changes in the competitive landscape for insurance and reinsurance have provided unprecedented opportunities for Benfield to invest in its existing reinsurance intermediary business and in the development of an insurance intermediary business focused on the marine, energy and power sectors, the company announced. In September 2005 this new venture was formally launched as Benfield Corporate Risk and now also incorporates Benfield’s other insurance broking interests.”At current rates of exchange, revenue growth in the reinsurance intermediary business is expected to be above 10% and, combined with the growth anticipated from Benfield Corporate Risk, Benfield expects revenue growth for the Group to exceed 20%,” the company announced. “Expense growth will reflect continued investment opportunities, including Benfield Corporate Risk, and is expected to be more than 10%. Consequently, Benfield’s 2006 Trading Result is expected to amount to at least the 87.3 million achieved in 2004.”