Stable profit and higher turnover at Nationale Borg in 2015
May 4, 2018 10:54 am
April 13, 2016 2:51 pm
Nationale Borg-Maatschappij has closed the 2015 books with a profit of € 16.3 million, similar to the 2014 profit. Premium income rose from € 89.9 million to € 92.7 million (+ 3.1%). The total guarantee exposure at year-end 2015 stood at € 3.0 billion (2014: € 2.8 billion), because the company saw more commercial opportunities in the various sectors of the economy. Market conditions in the construction sector improved slightly and this is even more the case in other core markets, like transport and logistics, and capital goods production. Subsidiary Nationale Waarborg had an excellent year because it benefited from the strong recovery in the Dutch housing market.
SLIGHT INCREASE GUARANTEE PORTFOLIO
With its activities, Nationale Borg is the largest independent supplier of guarantees in the Netherlands and Belgium. The total number of guarantees issued increased to 18,500 from 17,600 in 2014. The loss ratio improved slightly to 36.7% and was well within the long term target range (2014: 36.9%).
GUARANTEES: POSITIVE MARKET DEVELOPMENTS
Nationale Borg’s largest exposure is in the construction sector. The difficult climate for this sector changed in a positive sense during 2015 and this resulted in fewer claims and a slight increase in exposure from bonds for new projects. The other segments where Nationale Borg traditionally has a big stake (transport & logistics, capital goods manufacturing, and food & agriculture) offer plenty of growth potential. There is concern about companies in the offshore and energy sectors. Their long investment horizon, volatile markets and the low oil prices have a severe impact on these companies.
INCREASED PREMIUM VOLUME FROM REINSURANCE
Nationale Borg spreads the risks emanating from its guarantee portfolio among a large number of highly reputable reinsurers. Reversely, through its subsidiary Nationale Borg Reinsurance, the company takes a share of the risk in the portfolios of over 100 bond providers and credit insurers. A slightly growing share of its premium income is from this activity: in 2015 it was almost 75% (2014: 73%). The reinsurance market saw adverse market conditions, mainly caused by an over-supply of capacity. Nonetheless, the results of Nationale Borg in this area were well above market average.
Subsidiary Nationale Waarborg had an excellent year in which it realized a strong increase in turnover caused by the strong recovery in the Dutch housing market. In the field of workers compensation self insurance, Nationale Borg is one of the few parties in the private sector offering guarantees in this category, that shows good growth potential in the Dutch market.
STRONG INCREASE IN NET EQUITY
Over the past year, net equity increased to € 111.7 million (2014: € 95.3 million) and solvency remained strong. The sound financial position is confirmed in the January 2016 report of Standard & Poor’s, who once again assigned Nationale Borg their A- rating.
INTENDED TAKE-OVER BY AMTRUST FINANCIAL SERVICES INC
Last August, the shareholders of Nationale Borg came to an agreement with the American insurance group AmTrust Financial Services Inc about the transfer of ownership of Nationale Borg. This transaction will be completed as soon as the two regulators involved have given their approval. The Central Bank of Curaçao and Sint Maarten has already given its approval, while Dutch regulator De Nederlandsche Bank is expected to give its approval soon. AmTrust Financial Services Inc owns an international portfolio of specialized insurance companies and as part of this group, Nationale Borg will be able to serve its clients even better than it can today. This offers opportunities to further expand the company’s market share in its two home markets for guarantees and in the international reinsurance market.
Nationale Borg expects slight premium and exposure growth in 2016 and a stable result. The increased geopoitical and financial unrest are a source of concern, even though the company has a very broad geographic risk spread. Although rates are under pressure throughout its markets, the company sees interesting opportunities. Nationlae Borg has a very stable position in the reinsurance market and expects to expand it further. The same it true for its guarantee activities in the Netherlands and Belgium, helped by a continuing economic recovery. The home purchase bond market is likely to see another successful year while Dutch home sales continue to increase. Nationale Waarborg expects to benefit from the increased market share of non-traditional mortgage providers. All in all, the diversification across various sectors and geographies remains important to Nationale Borg in order to secure its strong market position.
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