CBL Corporation expects to miss its 1H17 internal operating profit
expectations by $17.5m largely due to a $16.5m strengthening of CBL Insurance
reserves.
CEO Peter Harris, said "The decision by the Board to strengthen reserves in
certain lines is seen as a prudential and appropriate approach and takes into
account advice from CBL''s external actuarial consultants". In providing their
advice, they looked back at policies issued up to 10 years ago, and forecast
forward for the next 10 years, however the full amount of that strengthening
adjustment will be taken through current period earnings."
1H17 expected operating profit is now expected to be $22.5m. This compares to
$35.1m in 1H16.
Peter Harris emphasised that this is not a restatement of existing reported
and open claims, - it is an adjustment that our independent actuaries
consider is prudent to make to our future claim forecasts. To put this into
perspective, the $16.5m adjustment to CBL Insurance reserves represents a
strengthening of 7.2% of CBL''s total net claims reserves of $229m.
The announcement in July 2017 by Elite Insurance Company that it has decided
to stop writing new business and go into orderly runoff is not expected by
CBL to adversely affect it, because in February 2016, CBL announced it would
be writing its European business directly through CBL Insurance Europe and
not Elite. This has resulted in a very strong half year for CBL Insurance
Europe.
2017 is shaping to be a year of strong volume and operational growth across
the Group. When it announces its results next week, CBL expects to record a
1H17 Gross Revenue of $205m, - an increase of 29% over 1H 2016 revenue of
$159m. "Much of the benefit of that substantial lift in revenue will flow
through into earnings numbers over the next 12 - 18 months," said Mr Harris.
As previously notified, CBL will be announcing its half year results on
August 24th.
End CA:00305769 For:CBL Type:MKTUPDTE Time:2017-08-18 09:22:25