Exhibit 99.1
The Company is furnishing the following information regarding the finance expenses of its Talbot segment in order to facilitate more detailed analysis of the cost of the Talbot third party FAL facility. Talbot is the Bermuda parent of the specialty insurance group operating primarily within the Lloyd’s insurance market through Syndicate 1183 (the “Syndicate”).
| 1. | Gross premiums written by underwriting year of account for the 2003 to 2007 calendar years in order to demonstrate the relationship between calendar year gross premiums written and ultimate gross premiums written (Table 2-A). | |
| 2. | Ultimate gross premiums written and ultimate gross premiums earned for the 2003 to 2005 underwriting years of account in order to demonstrate the relationship between ultimate gross premiums written and ultimate gross premiums earned (Table 2-B). | |
| 3. | Gross premiums written and gross premiums earned for the calendar quarters of the 2005 to 2007 calendar years and the interim period ended March 31, 2008 by underwriting year of account in order to show the percentage of ultimate gross premiums earned by underwriting year of account which emerge by calendar quarter (Tables 3-A, 3-B, 3-C, 3-D and 3-E). | |
| 4. | Ceded premiums written for the calendar quarters of the 2005 to 2007 calendar years and the interim period ended March 31, 2008 by underwriting year of account in order to show the percentage allocation of ceded premiums written to each underwriting year of account by calendar quarter (Tables 4-A and 4-B). | |
| 5. | Ceded premiums earned for the calendar quarters of the 2005 to 2007 calendar years and the interim period ended March 31, 2008 by underwriting year of account in order to show the percentage of ceded premiums earned by underwriting year of account for each calendar quarter of a calendar year (Tables 4-C and 4-D). | |
| 6. | Net premiums written and net premiums earned for the calendar quarters of the 2005 to 2007 calendar years and the interim period ended March 31, 2008 by underwriting year of account (Tables 5-A, 5-B and 5-C). | |
| 7. | Combined ratio and underwriting profit for the calendar quarters of the 2005 to 2007 calendar years and the interim period ended March 31, 2008 by underwriting year of account in order to show the contribution to calendar quarter underwriting profit by each underwriting year of account (Tables 6-A, 6-B and 6-C). | |
| 8. | Investment return for the calendar quarters of the 2005 to 2007 calendar years and the interim period ended March 31, 2008 by underwriting year of account in order to show the percentage contribution in each calendar quarter of each underwriting year of account to total investment return (Tables 7-A and 7-B). | |
| 9. | Exchange adjustment for the calendar quarters of the 2005 to 2007 calendar years and the interim period ended March 31, 2008 by underwriting year of account as a reconciling item as Syndicate Profit is the sum of Underwriting Profit, Investment Return and Exchange Adjustment (Table 7-C). | |
| 10. | Syndicate profit and FAL cost for the calendar quarters of the 2005 to 2007 calendar years and the interim period ended March 31, 2008 by underwriting year of account in order to demonstrate the relationship between Syndicate profit and FAL cost for each calendar quarter period by year of account (Tables 8-A, 8-B and 8-C). |
Page 1
Gross Premiums Written and Gross Premiums Earned by Calendar Year
The following table analyzes historical ultimate basis gross premiums written and gross premiums earned for the Syndicate by underwriting year of account, as well as calculating the ratios of premiums earned and premiums written for each year of account relative to each calendar year. Ultimate premiums written and ultimate premiums earned are recognized over the three calendar years a given underwriting year of account remains open. Ultimate premiums written may differ from ultimate premiums earned due to the translation of underlying currency balances at different average rates of exchange.
Table 2-A
| % of Year of Account Ultimate Gross | ||||||||||||||||||||||||||||||||||||||||||||
| Year of | Gross Premiums Written by Calendar Year | Premiums Written in Calendar Year | ||||||||||||||||||||||||||||||||||||||||||
| Account | 2003 | 2004 | 2005 | 2006 | 2007 | Total | Ultimate | First | Second | Third | Total | |||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
| 2003 | $ | 415,648 | $ | 23,441 | $ | 15,446 | $ | — | $ | — | $ | 454,535 | $ | 454,535 | 91.4 | % | 5.2 | % | 3.4 | % | 100.0 | % | ||||||||||||||||||||||
| 2004 | — | 502,436 | 49,583 | 18,106 | — | 570,125 | 570,125 | 88.1 | % | 8.7 | % | 3.2 | % | 100.0 | % | |||||||||||||||||||||||||||||
| 2005 | — | — | 527,125 | 39,708 | 16,907 | 583,740 | 583,740 | 90.3 | % | 6.8 | % | 2.9 | % | 100.0 | % | |||||||||||||||||||||||||||||
| 2006 | — | — | — | 590,838 | 30,028 | 620,866 | (a) | |||||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | 640,789 | 640,789 | (a) | |||||||||||||||||||||||||||||||||||||
Table 2-B
| Ultimate Gross | Earned, | |||||||||||
| Year of | Premiums | % of | ||||||||||
| Account | Written | Earned | Written | |||||||||
| (Dollars in thousands) | ||||||||||||
| 2003 | $ | 454,535 | $ | 460,990 | 101.4 | % | ||||||
| 2004 | 570,125 | 570,377 | 100.0 | % | ||||||||
| 2005 | 583,740 | 585,285 | 100.3 | % | ||||||||
| (a) | Ultimate gross premiums written emerges over three calendar years, and consequently ultimate gross premiums written for the 2006 underwriting year of account will not be finally determined until the end of the 2008 calendar year and ultimate gross premiums written for the 2007 underwriting year of account will not be finally determined until the end of the 2009 calendar year. |
Page 2
Gross Premiums Written and Gross Premiums Earned by Calendar Quarter
The following tables analyze historical gross premiums written and gross premiums earned for the Syndicate for each of the quarterly periods comprising the 2005 to 2007 calendar years and the first quarter of 2008, by underwriting year of account. Gross premiums earned by quarter, expressed as a percentage of ultimate gross premiums earned is presented to provide information on the pattern of earning ultimate gross premiums earned.
Table 3-A
| Gross Premiums Written | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | Total | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2003 | $ | 3,437 | $ | 3,629 | $ | 4,470 | $ | 3,910 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 15,446 | ||||||||||||||||||||||||||||
| 2004 | 23,485 | 11,799 | 14,405 | (106 | ) | 3,628 | 5,592 | 4,715 | 4,171 | — | — | — | — | — | 67,689 | |||||||||||||||||||||||||||||||||||||||||
| 2005 | 142,881 | 136,213 | 119,185 | 128,846 | 17,368 | 8,589 | 5,245 | 8,506 | 3,587 | 7,960 | 2,946 | 2,414 | — | 583,740 | ||||||||||||||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | 151,118 | 149,369 | 131,204 | 159,147 | 16,911 | 13,240 | 1,805 | (1,928 | ) | 8,280 | 629,146 | |||||||||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | 178,307 | 181,180 | 138,291 | 143,011 | 28,728 | 669,517 | ||||||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | 164,786 | 164,786 | ||||||||||||||||||||||||||||||||||||||||||
| $ | 169,803 | $ | 151,641 | $ | 138,060 | $ | 132,650 | $ | 172,114 | $ | 163,550 | $ | 141,164 | $ | 171,824 | $ | 198,805 | $ | 202,380 | $ | 143,042 | $ | 143,497 | $ | 201,794 | $ | 2,130,324 | |||||||||||||||||||||||||||||
Table 3-B
| Gross Premiums Earned | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | Total | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2003 | $ | 10,479 | $ | 7,121 | $ | 5,976 | $ | 5,246 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 28,822 | ||||||||||||||||||||||||||||
| 2004 | 94,338 | 73,668 | 57,844 | 25,700 | 10,422 | 8,427 | 5,685 | 5,014 | — | — | — | — | — | 281,098 | ||||||||||||||||||||||||||||||||||||||||||
| 2005 | 26,998 | 59,196 | 95,899 | 117,451 | 93,896 | 76,237 | 50,489 | 34,071 | 11,674 | 11,555 | 4,370 | 3,449 | — | 585,285 | ||||||||||||||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | 28,288 | 63,373 | 101,258 | 134,782 | 114,096 | 85,861 | 51,280 | 30,993 | 17,643 | 627,574 | ||||||||||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | 33,534 | 74,584 | 110,494 | 143,064 | 123,982 | 485,658 | ||||||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | 29,885 | 29,885 | ||||||||||||||||||||||||||||||||||||||||||
| $ | 131,815 | $ | 139,985 | $ | 159,719 | $ | 148,397 | $ | 132,606 | $ | 148,037 | $ | 157,432 | $ | 173,867 | $ | 159,304 | $ | 172,000 | $ | 166,144 | $ | 177,506 | $ | 171,510 | $ | 2,038,322 | |||||||||||||||||||||||||||||
Table 3-C
| Gross Premiums Earned, % of Ultimate Gross Premiums Earned | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | Ultimate | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2003 | 2.3 | % | 1.5 | % | 1.3 | % | 1.1 | % | — | — | — | — | — | — | — | — | — | $ | 460,990 | |||||||||||||||||||||||||||||||||||||
| 2004 | 16.5 | % | 12.9 | % | 10.1 | % | 4.5 | % | 1.8 | % | 1.5 | % | 1.0 | % | 0.9 | % | — | — | — | — | — | 570,377 | ||||||||||||||||||||||||||||||||||
| 2005 | 4.6 | % | 10.1 | % | 16.4 | % | 20.1 | % | 16.0 | % | 13.0 | % | 8.6 | % | 5.8 | % | 2.0 | % | 2.0 | % | 0.7 | % | 0.6 | % | — | 585,285 | ||||||||||||||||||||||||||||||
Table 3-D
| Gross Premiums Earned, % of Ultimate Gross Premiums Earned by Quarter | ||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter After Beginning of the Applicable Year of Account | |||||||||||||||||||||||||||||||||||||||||||||||
| Account | First | Second | Third | Fourth | Fifth | Sixth | Seventh | Eighth | Ninth | Tenth | Eleventh | Twelfth | ||||||||||||||||||||||||||||||||||||
| 2003 | — | — | — | — | — | — | — | — | 2.3 | % | 1.5 | % | 1.3 | % | 1.1 | % | ||||||||||||||||||||||||||||||||
| 2004 | — | — | — | — | 16.5 | % | 12.9 | % | 10.1 | % | 4.5 | % | 1.8 | % | 1.5 | % | 1.0 | % | 0.9 | % | ||||||||||||||||||||||||||||
| 2005 | 4.6 | % | 10.1 | % | 16.4 | % | 20.1 | % | 16.0 | % | 13.0 | % | 8.6 | % | 5.8 | % | 2.0 | % | 2.0 | % | 0.7 | % | 0.6 | % | ||||||||||||||||||||||||
| 2006 | 4.4 | % | 9.8 | % | 15.6 | % | 20.8 | % | 17.6 | % | 13.2 | % | 7.9 | % | 4.8 | % | 2.7 | % | — | — | — | |||||||||||||||||||||||||||
| 2007 | 4.6 | % | 10.3 | % | 15.3 | % | 19.8 | % | 17.2 | % | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Table 3-E
| Gross Premiums Earned, % of Calendar Quarter by Year of Account | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | |||||||||||||||||||||||||||||||||||||||||||
| 2003 | 7.9 | % | 5.1 | % | 3.8 | % | 3.6 | % | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| 2004 | 71.6 | % | 52.6 | % | 36.2 | % | 17.3 | % | 7.9 | % | 5.7 | % | 3.6 | % | 2.9 | % | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| 2005 | 20.5 | % | 42.3 | % | 60.0 | % | 79.1 | % | 70.8 | % | 51.5 | % | 32.1 | % | 19.6 | % | 7.3 | % | 6.7 | % | 2.6 | % | 1.9 | % | — | |||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | 21.3 | % | 42.8 | % | 64.3 | % | 77.5 | % | 71.6 | % | 49.9 | % | 30.9 | % | 17.5 | % | 10.3 | % | ||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | 21.1 | % | 43.4 | % | 66.5 | % | 80.6 | % | 72.3 | % | ||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | 17.4 | % | ||||||||||||||||||||||||||||||||||||||||||
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||||||||||||||
Page 3
Ceded Premiums Written and Ceded Premiums Earned by Calendar Quarter
The following tables analyze historical ceded premiums written and ceded premiums earned for the Syndicate for each of the quarterly periods comprising the 2005 to 2007 calendar years and the first quarter of 2008, by underwriting year of account. In analyzing ceded premium written, it should be noted that the Syndicate’s excess of loss reinsurance program is placed substantially in the first quarter of a given calendar year, with reinsurance ceded in subsequent quarters generally attributable to reinstatement premiums, quota share coverage or facultative placements. In contrast to gross premiums written, the Syndicate’s ceded reinsurance is generally earned over a four quarter period.
Table 4-A
| Ceded Premiums Written | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | Total | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2003 | $ | (613 | ) | $ | 355 | $ | 4,475 | $ | 2,207 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 6,424 | |||||||||||||||||||||||||||
| 2004 | (26,770 | ) | (4,082 | ) | (4,031 | ) | (5,650 | ) | 430 | (101 | ) | 1,805 | 464 | — | — | — | — | — | (37,935 | ) | ||||||||||||||||||||||||||||||||||||
| 2005 | (41,497 | ) | (9,284 | ) | (28,556 | ) | (10,304 | ) | (37,755 | ) | (4,963 | ) | (2,320 | ) | (809 | ) | 1,250 | 735 | 2,437 | 924 | — | (130,142 | ) | |||||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | (64,466 | ) | (5,998 | ) | (2,129 | ) | (3,098 | ) | (33,316 | ) | (548 | ) | (1,385 | ) | 1,038 | 954 | (108,948 | ) | ||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | (54,371 | ) | (2,248 | ) | (1,667 | ) | (2,715 | ) | (27,866 | ) | (88,867 | ) | ||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | (45,493 | ) | (45,493 | ) | ||||||||||||||||||||||||||||||||||||||||
| $ | (68,880 | ) | $ | (13,011 | ) | $ | (28,112 | ) | $ | (13,747 | ) | $ | (101,791 | ) | $ | (11,062 | ) | $ | (2,644 | ) | $ | (3,443 | ) | $ | (86,437 | ) | $ | (2,061 | ) | $ | (615 | ) | $ | (753 | ) | $ | (72,405 | ) | $ | (404,961 | ) | |||||||||||||||
Table 4-B
| Ceded Premiums Written Allocated by Year of Account | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | |||||||||||||||||||||||||||||||||||||||||||
| 2003 | 0.9 | % | (2.8 | )% | (15.9 | )% | (16.1 | )% | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| 2004 | 38.9 | % | 31.4 | % | 14.3 | % | 41.1 | % | (0.4 | )% | 0.9 | % | (68.2 | )% | (13.5 | )% | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| 2005 | 60.2 | % | 71.4 | % | 101.6 | % | 75.0 | % | 37.1 | % | 44.9 | % | 87.7 | % | 23.5 | % | (1.4 | )% | (35.7 | )% | (396.3 | )% | (122.5 | )% | — | |||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | 63.3 | % | 54.2 | % | 80.5 | % | 90.0 | % | 38.5 | % | 26.6 | % | 225.2 | % | (137.7 | )% | (1.3 | )% | ||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | 62.9 | % | 109.1 | % | 271.1 | % | 360.2 | % | 38.5 | % | ||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | 62.8 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||||||||
Table 4-C
| Ceded Premiums Earned | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | Total | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2003 | $ | (1,901 | ) | $ | 566 | $ | 4,352 | $ | 1,635 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 4,652 | |||||||||||||||||||||||||||
| 2004 | (11,991 | ) | (11,755 | ) | (19,189 | ) | (10,227 | ) | 379 | (582 | ) | 1,781 | 455 | — | — | — | — | — | (51,129 | ) | ||||||||||||||||||||||||||||||||||||
| 2005 | (10,285 | ) | (11,960 | ) | (34,302 | ) | (23,845 | ) | (13,515 | ) | (15,942 | ) | (13,857 | ) | (11,168 | ) | 816 | 542 | 2,406 | 919 | — | (130,191 | ) | |||||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | (11,935 | ) | (19,000 | ) | (18,277 | ) | (18,158 | ) | (12,221 | ) | (11,023 | ) | (11,097 | ) | (8,257 | ) | 918 | (109,050 | ) | |||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | (12,493 | ) | (12,089 | ) | (13,920 | ) | (14,651 | ) | (14,050 | ) | (67,203 | ) | ||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | (10,061 | ) | (10,061 | ) | ||||||||||||||||||||||||||||||||||||||||
| $ | (24,177 | ) | $ | (23,149 | ) | $ | (49,139 | ) | $ | (32,437 | ) | $ | (25,071 | ) | $ | (35,524 | ) | $ | (30,353 | ) | $ | (28,871 | ) | $ | (23,898 | ) | $ | (22,570 | ) | $ | (22,611 | ) | $ | (21,989 | ) | $ | (23,193 | ) | $ | (362,982 | ) | |||||||||||||||
Table 4-D
| Ceded Premiums Earned, % of Calendar Year Ceded Premium Written | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | ||||||||||||||||||||||||||||||||||||||||||||
| 2003 | (40.9 | )% | 12.2 | % | 93.6 | % | 35.1 | % | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| 2004 | 22.6 | % | 22.1 | % | 36.1 | % | 19.2 | % | 18.6 | % | (28.6 | )% | 87.6 | % | 22.4 | % | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| 2005 | 12.8 | % | 14.9 | % | 42.7 | % | 29.7 | % | 24.8 | % | 29.3 | % | 25.4 | % | 20.5 | % | 17.4 | % | 11.6 | % | 51.4 | % | 19.6 | % | ||||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | 17.7 | % | 28.2 | % | 27.1 | % | 27.0 | % | 28.7 | % | 25.9 | % | 26.0 | % | 19.4 | % | ||||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | 23.5 | % | 22.7 | % | 26.2 | % | 27.6 | % | ||||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Page 4
Net Premiums Written and Net Premiums Earned
The following tables analyze historical net premiums written and net premiums earned for the Syndicate for each of the quarterly periods comprising the 2005 to 2007 calendar years and the first quarter of 2008, by underwriting year of account. Net premiums written and earned constitute the difference between (i) gross premiums written and earned and (ii) ceded premiums written and earned, respectively.
Table 5-A
| Net Premiums Written | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | Total | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2003 | $ | 2,824 | $ | 3,984 | $ | 8,945 | $ | 6,117 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 21,870 | ||||||||||||||||||||||||||||
| 2004 | (3,285 | ) | 7,717 | 10,374 | (5,756 | ) | 4,058 | 5,491 | 6,520 | 4,634 | — | — | — | — | — | 29,753 | ||||||||||||||||||||||||||||||||||||||||
| 2005 | 101,384 | 126,929 | 90,629 | 118,542 | (20,387 | ) | 3,626 | 2,925 | 7,697 | 4,837 | 8,695 | 5,383 | 3,338 | — | 453,598 | |||||||||||||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | 86,652 | 143,371 | 129,075 | 156,049 | (16,405 | ) | 12,692 | 420 | (890 | ) | 9,234 | 520,198 | ||||||||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | 123,936 | 178,932 | 136,624 | 140,296 | 862 | 580,650 | ||||||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | 119,293 | 119,293 | ||||||||||||||||||||||||||||||||||||||||||
| $ | 100,923 | $ | 138,630 | $ | 109,948 | $ | 118,903 | $ | 70,323 | $ | 152,488 | $ | 138,520 | $ | 168,380 | $ | 112,368 | $ | 200,319 | $ | 142,427 | $ | 142,744 | $ | 129,389 | $ | 1,725,362 | |||||||||||||||||||||||||||||
Table 5-B
| Net Premiums Earned | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 (a) | Total | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2003 | $ | 8,578 | $ | 7,687 | $ | 10,328 | $ | 6,881 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 33,474 | ||||||||||||||||||||||||||||
| 2004 | 82,347 | 61,913 | 38,655 | 15,473 | 10,801 | 7,845 | 7,466 | 5,469 | — | — | — | — | — | 229,969 | ||||||||||||||||||||||||||||||||||||||||||
| 2005 | 16,713 | 47,236 | 61,597 | 93,606 | 80,381 | 60,295 | 36,632 | 22,903 | 12,490 | 12,097 | 6,776 | 4,368 | — | 455,094 | ||||||||||||||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | 16,353 | 44,373 | 82,981 | 116,624 | 101,875 | 74,838 | 40,183 | 22,736 | 18,561 | 518,524 | ||||||||||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | 21,041 | 62,495 | 96,574 | 128,413 | 109,932 | 418,455 | ||||||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | 19,824 | 19,824 | ||||||||||||||||||||||||||||||||||||||||||
| $ | 107,638 | $ | 116,836 | $ | 110,580 | $ | 115,960 | $ | 107,535 | $ | 112,513 | $ | 127,079 | $ | 144,996 | $ | 135,406 | $ | 149,430 | $ | 143,533 | $ | 155,517 | $ | 148,317 | $ | 1,675,340 | |||||||||||||||||||||||||||||
| (a) | The net premiums earned for the three month period ended March 31, 2008 presented in this table do not agree to the figures presented in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2008, as filed with the Securities and Exchange Commission. The difference is a result of Talbot accounting for foreign exchange up to and including December 31, 2007 within its syndicate by treating each of the ledgers within the syndicate as separate branches under FAS 52, each with a separate functional currencies so that each ledger profit and loss account is consolidated at the average rate for the year and the balance sheet (including non-monetary items such as unearned premiums and deferred acquisition costs) is consolidated at the rate of exchange on the balance sheet date (the “closing rate”). Exchange differences on the retranslation of the balance sheet at the closing rate were recognized through other comprehensive income. | |
| For the three months ended March 31, 2008, and future periods, the syndicate has been deemed to have one functional currency United States Dollars (“USD”). Foreign exchange transactions within the syndicate are translated to USD at the exchange rate on the date of the transaction, or at the average rate for the year as an approximation. Monetary assets and liabilities should be retranslated at each period end at the closing rate. Exchange differences on the retranslation of monetary assets are recognized through the profit and loss account. However, for accounting purposes the original policy is retained but a consolidation adjustment is recognized to give effect to the correct accounting policy at the segment level. Thus, syndicate earned premiums will differ from segment earned premiums. The degree of difference will depend primarily on the exchange rate variation between the USD and the United Kingdom Pound. |
Table 5-C
| Net Premiums Earned, % of Calendar Quarter by Year of Account | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | |||||||||||||||||||||||||||||||||||||||||||
| 2003 | 8.0 | % | 6.6 | % | 9.3 | % | 5.9 | % | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| 2004 | 76.5 | % | 53.0 | % | 35.0 | % | 13.3 | % | 10.1 | % | 7.0 | % | 5.9 | % | 3.8 | % | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| 2005 | 15.5 | % | 40.4 | % | 55.7 | % | 80.7 | % | 74.7 | % | 53.6 | % | 28.8 | % | 15.8 | % | 9.3 | % | 8.1 | % | 4.7 | % | 2.8 | % | — | |||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | 15.2 | % | 39.4 | % | 65.3 | % | 80.4 | % | 75.2 | % | 50.1 | % | 28.0 | % | 14.6 | % | 12.5 | % | ||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | 15.5 | % | 41.8 | % | 67.3 | % | 82.6 | % | 74.1 | % | ||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | 13.4 | % | ||||||||||||||||||||||||||||||||||||||||||
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||||||||||||||
Page 5
Combined Ratio and Underwriting Profit
The following tables show the Syndicate’s combined ratio by calendar quarter by underwriting year of account and the Syndicate’s underwriting profit by calendar quarter by underwriting year of account. The combined ratio is a common measure of underwriting results, and is calculated in the numerator as the sum of loss and loss expenses, acquisition expenses and other underwriting expenses and in the denominator as net premiums earned. A combined ratio of less than 100% generally indicates profitable underwriting results for the period indicated. The combined ratio does not give effect to investment return.
Table 6-A
| Syndicate Combined Ratio (a) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | |||||||||||||||||||||||||||||||||||||||||||
| 2003 | 88.1 | % | 76.2 | % | (17.8 | )% | (60.6 | )% | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| 2004 | 82.1 | % | 88.0 | % | 72.1 | % | 84.3 | % | 84.8 | % | (129.6 | )% | (90.2 | )% | (256.1 | )% | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| 2005 | 164.3 | % | 101.8 | % | 221.9 | % | 97.9 | % | 77.5 | % | 77.5 | % | 68.8 | % | 78.3 | % | 64.5 | % | 84.1 | % | (275.4 | )% | (508.9 | )% | — | |||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | 155.3 | % | 116.1 | % | 78.4 | % | 74.1 | % | 77.1 | % | 76.9 | % | 86.9 | % | 118.0 | % | 29.1 | % | ||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | 142.4 | % | 93.8 | % | 96.5 | % | 87.4 | % | 92.0 | % | ||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | 176.0 | % | ||||||||||||||||||||||||||||||||||||||||||
| 95.3 | % | 92.8 | % | 147.2 | % | 86.6 | % | 90.1 | % | 78.3 | % | 65.7 | % | 62.3 | % | 86.1 | % | 84.5 | % | 76.3 | % | 75.2 | % | 95.4 | % | |||||||||||||||||||||||||||||||
| (a) | The Syndicate’s combined ratio will not agree to the Talbot segment’s combined ratio due to operating items not recognized at the syndicate level including: managing agent’s fees and profit commission, share compensation, intangible amortization and other segment operating expenses. |
Table 6-B
| Underwriting Profit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | Total | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2003 | $ | 526 | $ | 785 | $ | 9,362 | $ | 8,489 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 19,162 | ||||||||||||||||||||||||||||
| 2004 | 14,765 | 7,416 | 10,778 | 2,435 | 1,644 | 18,014 | 14,199 | 19,473 | — | — | — | — | — | 88,724 | ||||||||||||||||||||||||||||||||||||||||||
| 2005 | (10,739 | ) | (846 | ) | (75,098 | ) | 2,001 | 18,052 | 13,552 | 11,426 | 4,972 | 4,436 | 1,928 | 25,438 | 26,595 | — | 21,717 | |||||||||||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | (9,042 | ) | (7,150 | ) | 17,956 | 30,148 | 23,365 | 17,289 | 5,264 | (4,086 | ) | 13,154 | 86,898 | |||||||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | (8,921 | ) | 3,874 | 3,380 | 16,136 | 8,784 | 23,253 | |||||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | (15,071 | ) | (15,071 | ) | ||||||||||||||||||||||||||||||||||||||||
| $ | 4,552 | $ | 7,355 | $ | (54,958 | ) | $ | 12,925 | $ | 10,654 | $ | 24,416 | $ | 43,581 | $ | 54,593 | $ | 18,880 | $ | 23,091 | $ | 34,082 | $ | 38,645 | $ | 6,867 | $ | 224,683 | ||||||||||||||||||||||||||||
Table 6-C
| % of Calendar Quarter Underwriting Profit by Year of Account | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | |||||||||||||||||||||||||||||||||||||||||||
| 2003 | 11.5 | % | 10.7 | % | (17.0 | )% | 65.7 | % | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| 2004 | 324.4 | % | 100.8 | % | (19.6 | )% | 18.8 | % | 15.5 | % | 73.8 | % | 32.6 | % | 35.7 | % | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| 2005 | (235.9 | )% | (11.5 | )% | 136.6 | % | 15.5 | % | 169.4 | % | 55.5 | % | 26.2 | % | 9.1 | % | 23.5 | % | 8.3 | % | 74.7 | % | 68.8 | % | 0.0 | % | ||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | (84.9 | )% | (29.3 | )% | 41.2 | % | 55.2 | % | 123.8 | % | 74.9 | % | 15.4 | % | (10.6 | )% | 191.6 | % | ||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | (47.3 | )% | 16.8 | % | 9.9 | % | 41.8 | % | 127.9 | % | ||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | (219.5 | )% | ||||||||||||||||||||||||||||||||||||||||||
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||||||||||||||
Page 6
Investment Return and Exchange Adjustment
The following tables analyze historical investment return for the Syndicate for each of the quarterly periods comprising the 2005 to 2007 calendar years and the first quarter of 2008, by underwriting year of account. Investment return by quarter, expressed as a percentage of total Syndicate investment return is presented to provide information on the percentage of each calendar quarter’s investment return that is attributable to the applicable year of account.
Table 7-A
| Investment Return | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | Total | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2003 | $ | 1,013 | $ | 2,910 | $ | 1,255 | $ | 1,818 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 6,996 | ||||||||||||||||||||||||||||
| 2004 | 836 | 2,647 | 1,248 | 1,740 | 1,368 | 1,570 | 5,040 | 2,136 | — | — | — | — | — | 16,585 | ||||||||||||||||||||||||||||||||||||||||||
| 2005 | 35 | 378 | 737 | 1,102 | 838 | 988 | 2,477 | 1,518 | 3,948 | 3,559 | 4,829 | 4,996 | — | 25,405 | ||||||||||||||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | 20 | 211 | 1,072 | 1,566 | 2,643 | 2,702 | 3,770 | 4,000 | 10,830 | 26,814 | ||||||||||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | 57 | 718 | 1,952 | 3,046 | 6,548 | 12,321 | ||||||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | 207 | 207 | ||||||||||||||||||||||||||||||||||||||||||
| $ | 1,884 | $ | 5,935 | $ | 3,240 | $ | 4,660 | $ | 2,226 | $ | 2,769 | $ | 8,589 | $ | 5,220 | $ | 6,648 | $ | 6,979 | $ | 10,551 | $ | 12,042 | $ | 17,585 | $ | 88,328 | |||||||||||||||||||||||||||||
Table 7-B
| % of Calendar Quarter Investment Return by Year of Account | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | |||||||||||||||||||||||||||||||||||||||||||
| 2003 | 53.8 | % | 49.0 | % | 38.7 | % | 39.0 | % | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| 2004 | 44.4 | % | 44.6 | % | 38.5 | % | 37.3 | % | 61.5 | % | 56.7 | % | 58.7 | % | 40.9 | % | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| 2005 | 1.9 | % | 6.4 | % | 22.7 | % | 23.6 | % | 37.6 | % | 35.7 | % | 28.8 | % | 29.1 | % | 59.4 | % | 51.0 | % | 45.8 | % | 41.5 | % | — | |||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | 0.9 | % | 7.6 | % | 12.5 | % | 30.0 | % | 39.8 | % | 38.7 | % | 35.7 | % | 33.2 | % | 61.6 | % | ||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | 0.9 | % | 10.3 | % | 18.5 | % | 25.3 | % | 37.2 | % | ||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | 1.2 | % | ||||||||||||||||||||||||||||||||||||||||||
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||||||||||||||
Table 7-C
| Exchange Adjustment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | Total | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2003 | $ | 339 | $ | 744 | $ | 825 | $ | 226 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 2,134 | ||||||||||||||||||||||||||||
| 2004 | (20 | ) | 111 | 898 | (420 | ) | (109 | ) | (155 | ) | (23 | ) | (1,342 | ) | — | — | — | — | — | (1,060 | ) | |||||||||||||||||||||||||||||||||||
| 2005 | 44 | (929 | ) | (288 | ) | (629 | ) | 104 | 666 | 160 | 1,812 | (62 | ) | 1,220 | 1,028 | (1,241 | ) | — | 1,885 | |||||||||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | (34 | ) | (1,284 | ) | (121 | ) | (166 | ) | 51 | 443 | 300 | (1,255 | ) | 96 | (1,970 | ) | ||||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | 97 | (6 | ) | (98 | ) | 630 | 579 | 1,202 | ||||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | (177 | ) | (177 | ) | ||||||||||||||||||||||||||||||||||||||||
| $ | 363 | $ | (74 | ) | $ | 1,435 | $ | (823 | ) | $ | (39 | ) | $ | (773 | ) | $ | 16 | $ | 304 | $ | 86 | $ | 1,657 | $ | 1,230 | $ | (1,866 | ) | $ | 498 | $ | 2,014 | ||||||||||||||||||||||||
Page 7
Syndicate Profit and FAL Cost
Syndicate profit presented in the table below is the sum of (i) underwriting profit, (ii) investment return and(iii) exchange adjustment.
Table 8-A
| Syndicate Profit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | Total | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2003 | $ | 1,878 | $ | 4,439 | $ | 11,442 | $ | 10,533 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 28,292 | ||||||||||||||||||||||||||||
| 2004 | 15,581 | 10,174 | 12,924 | 3,755 | 2,903 | 19,429 | 19,216 | 20,267 | — | — | — | — | — | 104,249 | ||||||||||||||||||||||||||||||||||||||||||
| 2005 | (10,660 | ) | (1,397 | ) | (74,649 | ) | 2,474 | 18,994 | 15,206 | 14,063 | 8,302 | 8,322 | 6,707 | 31,295 | 30,350 | — | 49,007 | |||||||||||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | (9,056 | ) | (8,223 | ) | 18,907 | 31,548 | 26,059 | 20,434 | 9,334 | (1,341 | ) | 24,080 | 111,742 | |||||||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | (8,767 | ) | 4,586 | 5,234 | 19,812 | 15,911 | 36,776 | |||||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | (15,041 | ) | (15,041 | ) | ||||||||||||||||||||||||||||||||||||||||
| $ | 6,799 | $ | 13,216 | $ | (50,283 | ) | $ | 16,762 | $ | 12,841 | $ | 26,412 | $ | 52,186 | $ | 60,117 | $ | 25,614 | $ | 31,727 | $ | 45,863 | $ | 48,821 | $ | 24,950 | $ | 315,025 | ||||||||||||||||||||||||||||
The below tables show Talbot’s historical FAL cost and the FAL cost as a percentage of Syndicate profit. Between 30% and 65% of syndicate profit is payable to Talbot third party FAL providers up to and including the 2007 underwriting year of account. Some of these costs are fixed; others are profit-related. The fixed payments are generally amortized in proportion to gross premiums earned. The profit-related payments will be $nil in a given calendar quarter for a specific underwriting year of account until that individual year of account becomes profitable on a cumulative basis.
Table 8-B
| FAL Cost | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | Total | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2003 | $ | 1,287 | $ | 3,283 | $ | 7,374 | $ | 7,150 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 19,094 | ||||||||||||||||||||||||||||
| 2004 | 5,868 | 3,791 | 4,570 | 1,607 | 1,101 | 7,120 | 7,173 | 7,931 | — | — | — | — | — | 39,161 | ||||||||||||||||||||||||||||||||||||||||||
| 2005 | 125 | 404 | 591 | 741 | 927 | 65 | 317 | 202 | 124 | 77 | 4,744 | 11,390 | — | 19,707 | ||||||||||||||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | 161 | 380 | 1,083 | 10,801 | 9,204 | 7,077 | 3,223 | (302 | ) | 8,358 | 39,985 | |||||||||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | 159 | 387 | 815 | 4,938 | 4,668 | 10,967 | ||||||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| $ | 7,280 | $ | 7,478 | $ | 12,535 | $ | 9,498 | $ | 2,189 | $ | 7,565 | $ | 8,573 | $ | 18,934 | $ | 9,487 | $ | 7,541 | $ | 8,782 | $ | 16,026 | $ | 13,026 | $ | 128,914 | |||||||||||||||||||||||||||||
Table 8-C
| FAL Cost, % of Syndicate Profit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year of | Calendar Quarter for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Account | 3/31/05 | 6/30/05 | 9/30/05 | 12/31/05 | 3/31/06 | 6/30/06 | 9/30/06 | 12/31/06 | 3/31/07 | 6/30/07 | 9/30/07 | 12/31/07 | 3/31/08 | |||||||||||||||||||||||||||||||||||||||||||
| 2003 | 68.5 | % | 74.0 | % | 64.4 | % | 67.9 | % | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| 2004 | 37.7 | % | 37.3 | % | 35.4 | % | 42.8 | % | 37.9 | % | 36.6 | % | 37.3 | % | 39.1 | % | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| 2005 | (1.2 | )% | (28.9 | )% | (0.8 | )% | 30.0 | % | 4.9 | % | 0.4 | % | 2.3 | % | 2.4 | % | 1.5 | % | 1.1 | % | 15.2 | % | 37.5 | % | — | |||||||||||||||||||||||||||||||
| 2006 | — | — | — | — | (1.8 | )% | (4.6 | )% | 5.7 | % | 34.2 | % | 35.3 | % | 34.6 | % | 34.5 | % | 22.5 | % | 34.7 | % | ||||||||||||||||||||||||||||||||||
| 2007 | — | — | — | — | — | — | — | — | (1.8 | )% | 8.4 | % | 15.6 | % | 24.9 | % | 29.3 | % | ||||||||||||||||||||||||||||||||||||||
| 2008 | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Page 8