Early results are indicating that the 2005 year of account will close with a profit. This is an exceptional result following the much-documented losses of Hurricanes Katrina, Rita and Wilma in the US resulting in 2005 witnessing the highest ever incidence of insurance losses. Swiss Re has calculated the total cost of 2005 insured losses to be $83 billion compared to $49 billion in 2004.
The first market forecast, back in June 2006, was for a loss of 6.3% of stamp. Since then, we have seen a weakening in the US dollar and the prior underwriting years have, in general, run-off slightly better than expected. In many cases, this has led to a release from reserves on both 2005 and prior years, which has improved the 2005 closing result. These results are a testament not only to the improved underwriting management within the managing agencies but also to the continuing effect of Rolf Tolle and his team at the Franchise Board, who following the four hurricanes in 2004, made syndicates plan and model for both more frequent and larger losses.
As expected, the non-dollar syndicates have produced top quartile results. The UK liability Abacus syndicate 2525 has produced the best result in the market with a profit of 42.8% and QBE syndicate 386 is the second best result with a profit of 41.5%. Abacus Syndicate 2526, in its second year of underwriting, has closed with a profit of 25.4%. On UK motor, the two non-aligned syndicates being Equity 218 and KGM 260 available to third party capital have produced an average profit of 14.2%.
The composite syndicates have been more affected by US losses in 2005, and as a class are currently forecasting a small profit overall. Two of these syndicates with large reinsurance accounts have performed particularly well, producing results above the top end of their previously forecast ranges. Cathedral syndicate 2010 has produced a profit of 8% and MAP syndicate 2791 has closed with a profit of 5.8%.
The catastrophe syndicates were inevitably hardest hit by the US hurricanes. Syndicate 780 had forecast a loss in the range -70% to -80% and had closed the account at -74.4%. It is a disappointing result but also a relief that the loss has not deteriorated since this forecast was first issued after 12 months. Syndicate 557, the only other pure catastrophe syndicate, has closed with a loss of 13.9% which is in line with its last forecast.
The following table gives you an update on the confirmed results we have received to date. Where no result has been given, the previous midpoint is shown. These results are before the deduction of members' agents fees.