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LONDON Benfield Group Ltd.'s nascent corporate risk department has generated a loss of £17.2 million ($33.2 million) in its first full year of trading.
Benfield announced its 2006 results today, which Graham Chilton, chief executive officer, described as, "good, though not as good as expected."
In a statement, Benfield said of its corporate risk unit that, "revenue generation was slower than expected, and as a result, it became evident during the year that it would not attain the original break-even objective for 2006."
But Mr. Chilton insisted that the prognosis for 2007 was more promising and that he expected the unit to break even. He said that there was already, "very significant business already established in a new area."
A further blow to Benfield's balance sheet was the November 2006 defection of 20 senior members of the facultative solutions team to rival Aon Corp. In a statement, Benfield said that the timing was particularly bad for the company as it is generally the last quarter of the year when 30% to 40% of facultative revenues are normally generated.
Mr. Chilton estimated that the poor performance of the corporate risk unit and the departure of a significant number of its facultative solutions team had cost the company £20 million ($38 million).
But there were highlights for the group as well. Profit before tax was down marginally, from £53.8 million ($103.9 million) in 2005 to £53.0 million ($102.3 million), though profit for the financial year was up from £34.9 million ($67.4 million) to £38.4 million ($74.1 million).
The company said that the highlights included the "strong growth" of 12.9% in reinsurance revenues "despite challenging market conditions." Trading results were up by 18.3% to £74.9 million ($144.6 million), and trading margins were increased by 21.1%. And the company returned £78.3 million ($151.2 million) to common shareholders.