CBL says first-half earnings dropped 36% due to increased reserves
Revenue growth was still strong.
Auckland-based credit surety and financial risk insurer CBL Corp says first half operating earnings fell 36%, largely due to a $16.5 million increase in CBL Insurance's reserves to cover future claims, although revenue growth was still strong.
Internal operating profit was $22.5 million in the six months to June 30, down from $35.1 million in the same period a year earlier, and $17.5 million below expectations, CBL said in a release to the stock exchange ahead of its first half result announcement on August 24. CBL has previously projected annual earnings of between $89.9-93 million for calendar 2017.
"The decision by the board to strengthen reserves in certain lines is seen as a prudential and appropriate approach and takes into account advice from CBL's external actuarial consultants," said chief executive Peter Harris. He emphasised that the move wasn't a restatement of existing reported and open claims but rather "is an adjustment that CBL's independent actuaries consider is prudent to make to our future claim forecasts."
Mr Harris said the $16.5 million adjustment to CBL Insurance reserves represents a strengthening of 7.2% of its total net claims reserves of $229 million.
CBL said gross revenue was $205 million in the first half, an increase of 29% against the same period a year earlier when revenue was $159 million. "Much of the benefit of that substantial lift in revenue will flow through into earnings numbers over the next 12 to 18 months," Mr Harris said.
The shares last traded at $3.77 and are up 36% over the past 12 months.
(BusinessDesk)
Rebecca Howard
Fri, 18 Aug 2017
Fri, 18 Aug 2017
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CBL says first-half earnings dropped 36% due to increased reserves
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