ALEA Alea

RNS Number:0481B
Alea Group Holdings(Bermuda) Ltd
21 July 2004


                        Alea Group Holdings (Bermuda) Ltd.
                              Pre Close Statement

                Alea's Major Business Units Continue to Benefit
                         from Strong Market Conditions

21 July 2004

Alea Group Holdings (Bermuda) Ltd. ("Alea", or "the Group") today provides an
update on the current mid year trading conditions prior to entering the close
period for the interim results for the half year ended 30 June 2004 that will be
published on 21 September 2004.

Positive Outlook for 2004

The strength of the renewals and trading conditions to date, particularly in our
key target areas, re-affirms our positive outlook for 2004.

Mid Year Trading Conditions

Conditions have remained strong in all Alea's business units during the first
half of 2004.

Alea's renewal portfolio is evenly spread throughout the year with 47% of 2003's
expiring premium available for renewal in the first half of the year.
Specifically, the vast majority of Alea's European business and a significant
proportion of Alea's London business renews in the first half of the year. Alea
remains on course to achieve its premium plan for 2004 and, with conditions
remaining firm in its chosen markets and with reported claims development in
line with expectations, Alea remains confident of achieving pre-tax operating
profit targets.

Alea's targeted growth areas (alternative risk, excess and surplus lines, US
casualty reinsurance and Europe) have all experienced strong trading conditions.
In accordance with its strategy of proactively managing the underwriting cycle,
Alea remains overweight in its chosen market segments of the casualty sector
where rate improvement continues to be seen, albeit at a slower pace of growth
than last year. Just as importantly as rates, terms and conditions remain tight
across the board as underwriting discipline holds firm. The more capacity driven
property market has seen rate deterioration of between 5-20%, depending on
territory and the appetite of the larger property reinsurers. However the
property business currently written by Alea remains well above internal hurdle
rates of return and terms and conditions have not been relaxed.

Overall Group Gross Premiums Written increased by approximately 30% in the first
half of the year in comparison to the same period in 2003.

Premiums written generally take three years to earn through the profit and loss
account. These patterns differ by business class and operational unit. However,
overall they currently approximate to 40% in year one, 50% in year two and 10%
in year three. The strong underwriting year conditions in the first half of 2004
will mostly be recognized in Alea's profit and loss accounts for the years ended
31 December 2004 and 31 December 2005.

Alea London

Gross Premium Written in London grew by 10% excluding Bristol West in the first
half of the year.

Alea London's excess and surplus lines portfolio (facilities) continues to
progress in line with expectations with rates remaining firm or improving over
2003 in the property and casualty areas, with the latter increasing 5-10%
depending on the specific line of business.

Rates on international property treaty business have weakened with an average
10-15% reduction over comparable 2003 figures. The rates do, however, remain
well within planned expectations and above hurdle rates of return. In most areas
North American property business rates have shown fewer signs of weakening and
have remained slightly above planned expectations. In both these areas terms and
conditions remain firm demonstrating a reassuring underwriting discipline in the
market as a whole.

Within Alea's strategic target markets, US and International casualty,
reinsurance lines continue to show rate improvement of an average 10% over 2003
conditions. Gross premium written is marginally ahead of plan.

Alea Alternative Risk - Insurance

Alea's target insurance business in the US is growing rapidly and year-to-date
gross premium written was up by 169% over the comparable period in 2003. Rates
in the liability lines of business are up 5-10% on 2003 levels and property are
up 0-5%.

There is considerable activity in the market with recent acquisitions driving
strategic reviews amongst the larger players. As a result, we are seeing
increased opportunity flow and, with market conditions remaining attractive, we
are confident of meeting our growth plans in this key strategic area.

Alea North America - Reinsurance

For the first half of 2004, ANA recorded a 38% increase in GWP over the similar
period in 2003. Growth drivers are high level of renewal retentions and
significant volumes of new business. Alea North America remains on plan for the
year.

Underwriting conditions in US Casualty remain strong. At the primary level, rate
change momentum on the small-to-medium accounts that remain Alea's target
market, has remained positive. Primary rate increases vary by class but have
averaged a 12% increase over 2003 levels on the business written to date. At the
reinsurance level, treaty conditions remain tight in most areas and terms and
conditions are mostly as expiring, reflecting the continued underwriting
discipline of the market to date this year.

Alea Europe

The majority of Alea Europe's business is written in January and the European
team remain on target to exceed their expectations from this region. Gross
premium written to date in dollar terms is up by 30% over the full year 2003.
Alea Europe's excellent client relationships produced strong results with
business written on a direct basis increasing from 45% to 60% of the gross
premium written to date.

Underlying primary property rates have generally been flat with reinsurance
rates remaining stable to 10% lower in the more capacity driven markets where
Alea does not generally compete. There are some signs of further pressure on the
most capacity driven catastrophe rates but there is still a high degree of
underwriting discipline being shown.

Casualty lines saw improvements over 2003, although these have varied by country
with some Eastern European lines, for example, showing marked improvement.

Tax and Investment Strategy

The Group's tax, regulatory structure and investment strategy are aimed to
maximise the long-term return to investors by accumulating invested assets in
Bermuda and by utilising Bermudan capacity through inter-company quota shares.
This is designed to provide a number of benefits including: tax-free investment
returns, greater capital flexibility and leverage potential, and long-term
reduced average corporate tax rates

There are significant tax benefits from the Group's strategy in this area,
although decreases in bond portfolio valuations caused by rising yields have
exerted downward pressure on net asset value and have impacted effective tax
rates. This is not a real value driver, as the Group follows a conservative
investment strategy and a hedged balance sheet approach by matching currency and
duration exposure of assets to liabilities. In the longer term, we expect
increases in interest rates will enhance investment income as existing maturing
bonds and strong new cash flows are invested at higher rates of return.


Comment from Mark Ricciardelli, Group Chief Executive

"The year to date performance has been reassuring and we remain confident that
our strategic focus on small to mid market clients in alternative risk, excess
and surplus lines, US casualty and Europe is the correct one. In all these
areas, rates, terms and conditions remain strong and with reported claims
development in line with expectations we are confident of achieving our pre-tax
operating profit targets.

In casualty lines we are still seeing rate improvement over 2003 albeit at a
slightly slower pace than last year. In the property areas there is continuing
evidence of rate decline in the capacity driven accounts, where, generally, we
do not compete, but rates remain well above our internal hurdles. We will
continue proactively to monitor rate movements and will not hesitate to respond
appropriately to maximise returns."

Comment from John Reeve, Group Chairman

"We continue to believe that the Group is exceptionally well positioned to take
advantage of current and projected market conditions."

Certain statements in this announcement are or may constitute forward-looking
statements. Because such statements are inherently subject to risks and
uncertainties, actual results may differ significantly from those expressed or
implied by such forward-looking statements. We caution you not to place undue
reliance on such forward-looking statements. We do not undertake any obligation
(except reporting obligations imposed on us in relation to our listing on the
London Stock Exchange) to update such forward-looking statements to reflect
events or circumstances occurring after the date hereof.

For further information please contact:

Alea                                      
Mark L Ricciardelli                       +44 207 621 3233                     
Amanda Atkins                             +41 41 767 0402
Financial Dynamics                        
Robert Bailhache                          +44 207 269 7200


NOTES FOR EDITORS

Company Overview

Alea is a global reinsurance and specialty insurance company focused on
underwriting for profit and return on equity. It has expertise in a wide range
of property and casualty reinsurance, insurance, alternative risk and finite
risk products and maintains a significant presence in major insurance and
reinsurance markets worldwide.

Alea is headquartered in Hamilton, Bermuda and has ongoing operations in the
United Kingdom, the United States, Bermuda, Switzerland, Sweden, Australia and
Jersey. At 31 March 2004, it had 380 employees.

Alea has its origins in an investment thesis developed in 1997 by KKR 1996 Fund
(Overseas) Limited Partnership, its major shareholder: to create a new global
reinsurer focused on generating sustainable profitability and growth over the
longer term.

The core of this thesis was that underwriting discipline, strong controls, broad
capabilities in both reinsurance and select insurance markets, a focus on less
volatile lines of business and long-term relationships with small to
medium-sized clients would result in sustainable profitability in any market
environment.

Alea has acquired or built the talent, local infrastructure, licenses and client
relationships to be able to react quickly to attractive return opportunities in
the major markets worldwide. It has leveraged this platform to develop a
sizeable book of business diversified by class and geography.

Alea had total assets of $3,477 million and equity shareholders' funds of $725
million at 31 December 2003. Gross premiums written were $1,300.2million in the
twelve-month period to 31 December 2003.

Alea is publicly traded on the London Stock Exchange under the ticker "ALEA".
For more information on Alea, see www.aleagroup.com.


                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
TSTPUUQWMUPCGQU

Alea (LSE:ALEA)
Historical Stock Chart
From Jun 2024 to Jul 2024

Alea (LSE:ALEA)
Historical Stock Chart
From Jul 2023 to Jul 2024