29 May 2015News

XL Catlin forecasts increase in synergy savings

XL Catlin has forecast an increase in synergy savings of $50 million, compared with its original forecast.

On an investor call, Mike McGavick, chief executive officer (CEO) of the newly formed operation, said the company expected to achieve at least $250 million in savings, compared with the original forecast of $200 million.

“That’s a number that I can say with confidence that we will deliver. But we aren’t done looking and that number could go higher. It will not go lower,” said McGavick.

He added that there are other “buckets of financial benefit” XL Catlin expected the transaction to deliver. These are reinsurance purchasing, claims management (particularly legal fees) and investment management.

However, as expense savings grow, the ratio of the cost to achieve them will stay the same. Previously, $200 million in savings were forecast, with $250 million in costs. Now, a one time charge of $1.25 for every $1 saved is expected.

On top line growth, McGavick said the company was thrilled. He explained that there had been some concern at the 1:1 renewals because of the leaked information about the merger and the company’s inability to comment, but that combined premium had grown modestly.

In April, the positive trend continued, with premium in growth in insurance 4 percent above last year. McGavick added that pricing would be a wildcard, with a number of pockets experiencing downward pressure.