Benfield Group Limited boosts profit, revenues in 2006

Benfield Group Limiteds profits in 2006 increased to 38.4 million [Cdn$87 million], compared with a 34.9 million [Cdn$79.1 million] profit in 2005.Overall, the Groups reinsurance broking revenue increased by 12.9% (to 299.4 million, or Cdn$678.5 million), up from 265.1 million [Cdn$600.9 million] in 2005.We are pleased to announce results which demonstrate the strength of our reinsurance broking franchise, Benfield CEO Grahame Chilton said. The pace of change in our industry shows no sign of lessening; during 2006, Benfield continued to be at the forefront of innovation in approaches to risk transfer and capital management for our customers.In a press release announcing its results, Benfield noted some of the challenges it faced in 2006. During the course of 2006, we saw further market impact, both positive and negative, from the exceptional hurricane activity of 2005, the press release says. We continued to invest in marine, energy and power insurance, although revenues were slower to emerge than originally anticipated. At a critical point in the year, we experienced the defection of one of our production teams, which we have since restructured and continued to strengthen.Finally, in early 2007, legislative changes took place in the Florida insurance market that will materially impact reinsurance purchases. Floridas legislative changes included increasing the amount of hurricane losses covered by the public Florida Hurricane Catastrophe Fund (FHCF). The reform, A.M. Best notes, could result in billions of dollars of reinsurance premiums being eliminated from the private reinsurance market, which might result in capacity being redeployed.Against this backdrop, Benfield Advisory and its U.S. broking operation created Starbound Re, a reinsurance vehicle which generated approximately US$400 million of new capacity solely for Benfield customers at the height of the acute capacity crunch in Florida, Benfield noted in a press release. As a result, Benfield was able to meet demand for catastrophe cover from customers with south eastern U.S. exposures at mid-year renewals.