will enable us to take advantage
of current market conditions.
Chaucer has confronted a set of extraordinary circumstances over the past 16 months. Despite this, I am pleased to report that stability has returned to Chaucer, with an encouraging financial performance and the establishment of a new Executive Management Team to lead the development of the business.
Business results
Our pre-tax profit before the impact of foreign exchange on non-monetary items was £75.3m (2008 loss £59.5m). The reported profit before tax was £42m (2008 loss £26.2m). The return on post-tax equity was 9.7% (2008 loss 7%). Both underwriting and investments made positive contributions to profits. In February 2009, the Group raised funds of £74.9m, net of expenses, to enable it to take advantage of good rating conditions in 2009, following the financial and insurance losses of 2008.
Dividends
As previously announced, we intend to pay a total dividend of 4.0p per share for 2009, with the final dividend of 2.7p being payable on 28 May 2010 to shareholders on the register on 7 May 2010. In the absence of unforeseen circumstances, we also intend to pay a minimum total dividend of 4.0p per share for 2010.
Board changes
On 16 December 2009, we announced a new Executive Management Team that saw Robert Stuchbery assume the role of Chief Executive Officer, Bruce Bartell the role of Chief Underwriting Officer and confirmed the appointment of Ken Curtis as Chief Finance Officer. I am convinced that Bob is the right person to lead the business, having been responsible for much of Chaucer’s success over the past 20 years. In appointing these roles, the search considered both external and internal candidates to ensure that we found the best individuals.
We have appointed John Fowle as Active Underwriter for Syndicate 1084 and, with effect from 1 April 2010, we have appointed Mauricio Carrillo as Finance Director of Chaucer Syndicates Limited, our Lloyd’s managing agent.
All of these appointments reflect the strength of Chaucer’s executive team and of its succession planning. This is a hugely experienced and proven leadership team that I believe has the capabilities required to continue Chaucer’s development as a diversified Lloyd’s insurance group.
We are seeking two additional non-executive directors for Chaucer Holdings PLC and three additional non-executive directors for Chaucer Syndicates Limited.
Domicile
The Board will review a strategic options paper in the third quarter of 2010 before announcing any further actions.
Amongst other matters, the paper will consider the future impact of the recently introduced claims equalisation reserves in the UK, other actions that our government proposes to reduce the effective tax rate for insurance activities and changes to Controlled Foreign Company rules worldwide. At present, the Group has significant unutilised tax losses, which means that re-domicile of the Group is primarily a strategic consideration from 2011 onwards.
Business outlook
We are optimistic for 2010, believing that the strength in depth of our underwriting team and the broad diversity of our portfolio will enable us to take advantage of the current market conditions.
Martin Gilbert
Chairman
7 April 2010
