| |
Audited
12/31/06
(in U.S. $000's) |
Audited
12/31/05
(in U.S. $000's) |
Audited
12/31/04
(in U.S. $000's) |
Audited
12/31/03
(in U.S. $000's) |
Audited
12/31/02
(in U.S. $000's) |
Audited
12/31/01
(in U.S. $000's) |
| Gross Written Premiums |
717,740 |
594,451 |
519,169 |
489,045 |
135,171 |
459,149 |
| Net Written Premiums |
655,833 |
521,550 |
519,891 |
474,160 |
133,192 |
459,149 |
| Net Earned Premiums |
601,079 |
488,662 |
567,071 |
354,538 |
118,990 |
459,149 |
Net Income for the Year
|
58,687 |
2,570 |
49,861 |
34,993 |
28,254 |
13,716 |
| Total Cash & Investments |
2,058,087 |
1,694,007 |
1,518,210 |
787,065 |
665,617 |
491,590 |
| Total Assets |
2,607,014 |
2,317,825 |
1,890,607 |
1,009,287 |
724,144 |
496,928 |
| Total Liabilities |
2,033,679 |
1,790,216 |
1,363,730 |
621,529 |
373,249 |
286,050 |
| Total Shareholders' Equity |
573,335 |
527,609 |
526,877 |
387,757 |
350,895 |
210,888 |
Total Capitalization
|
725,270 |
614,828 |
579,323 |
397,936 |
360,895 |
220,878 |
Return on Average Equity
|
10.7% |
0.5% |
10.9% |
9.5% |
10.1% |
6.7% |
| P & C Loss Ratio |
76.7% |
94.2% |
|
|
|
|
| P & C Expense Ratio |
26.1% |
25.9% |
|
|
|
|
| P & C Combined Ratio |
102.8% |
120.1% |
|
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Our business has grown significantly since its inception. From our initial equity funding of $200 million in September 2000, we have built a solid company that has seen a thirteen-fold increase in total assets to just over $2.6 billion at the end of 2006. Total capitalization, including subordinated and senior debt, now stands in excess of $725 million. Gross written premiums have increased to $717 million during 2006; representing an increase of 21% over 2005. Our net income for 2006 of $58.7 million represents the highest operating result in the history of the Imagine Group reflecting the strategic commitment we made two years ago to expand our business lines to include more traditional insurance and reinsurance products, especially at Lloyd's of London, while continuing to provide the non-traditional products desired by our clients to meet their risk management objectives.
Our return on average equity for 2006 of 10.7% reflects the favorable underwriting results in our Property, Casualty and Life & Health business segments tempered by a one-time loss from the discontinuance of certain Scandinavian casualty business and the sale of one of our Danish subsidiaries. Excluding this one-time loss arising from our sale of the Danish subsidiary, our return on average equity would have been 15.4%, exceeding our long-term risk adjusted return objective of 12 to 15%.
Our P&C combined ratio has improved over the year, declining from the 120.1% reported in 2005 to 102.8% for 2006. Our Property combined ratio, was impacted during 2005 by the above average storm season and particularly the hurricanes Katrina, Rita and Wilma. The industry has been fortunate that 2006 was a benign catastrophe year and this has been reflected within our improved combined ratio for this segment. The improvement in our Property combined ratio was partially offset by an increase in our Casualty combined ratio. Two non-traditional reinsurance contracts, one covering non-standard auto and the other professional liability, produced combined net losses of $12 million for our account. This translated into a 5 point drop in our casualty combined ratio result. While one of these contracts was not renewed, the other was written for a long-standing, profitable client who we continue to support.
During 2006 we completed the process of integrating our acquisitions of Danish Re and Abacus managing agencies into one efficient Lloyd's operation, and we have begun to recognize the economies of scale and synergies that can result from combining companies. Our three managing agencies were merged into one agency that was renamed "Imagine Syndicates Management Limited". At the same time, we moved all of our London staff into a single office in the Lloyd's business district saving significant expense from running three separate office locations. In addition, to gain the capital, expense and operational efficiencies associated with fewer, larger syndicates, we merged Syndicate 994 into Syndicate 1400, which are both syndicates where we provide all of the Funds at Lloyd's on current underwriting years. Our Lloyd's operations are critical to our future success and we will continue to develop them as an increasingly important part of our business.
Towards the end of the year we renewed both of our letter of credit facilities with expanded capacity and under improved terms. In the case of the four year Lloyd's unsecured facility, our unsecured capacity doubled from £80 million to £160 million and approximately 84% of this facility was utilized at the end of the year. In the case of the 364 day unsecured facility, our unsecured capacity increased from $290 million to $370 million and approximately 60% of this facility was utilized at the end of the year.
The outlook for 2007 looks promising. We benefit from having more diversified sources of earnings which will allow us to generate stable earnings under different market conditions. Premium rates remain good in the worldwide property catastrophe market. Although casualty rates are declining, profitability remains acceptable. Imagine benefits from participating in the life & health reinsurance market where new business profitability is generally good.
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