London-based insurance broker Benfield reported net income dropped 4 percent in 2007 due to the weak U.S. dollar and declining insurance prices.
The firm reported net income dropped ?1.6 million ($3.2 million U.S. at the current exchange rate) to ?37 million ($75 million) for the year. Earnings per share remained relatively unchanged at 16 pence a share (33 cents). Revenues also dipped 4.5 percent, or ?16 million ($33 million), to ?339 million ($691 million).
Benfield said that revenues if compared on a 2006 currency basis would have increased less than 1 percent.
The firm did not release quarterly results.
Grahame Chilton, chief executive of Benfield, said in a statement, "The business faced considerable headwinds in 2007, including adverse currency trends and the softening reinsurance market.
"Nevertheless, we continued to deliver growth in revenue and trading profit on a constant currency basis. We further strengthened the unique mix of reinsurance knowledge, capital markets expertise and market leading analytics which is at the heart of Benfield's franchise.
"We remain committed to delivering value to shareholders through our long-term goal of growth across cycles, and I am confident of the group's prospects for future progress."
Revenues from the firm's U.S. division dropped 7 percent, or ?10 million ($20 million) to ?131 million ($267 million), but when compared to 2006 currency rates revenues would have grown by 0.4 percent.
Benfield said the division continues to invest in research and development, strengthening its position in Benfield's ReMetrics team and improving its performance margin.
Benfield noted that U.S. property-catastrophe reinsurance rates have fallen 25 percent since June 2006 renewals, primarily because of Florida's creation of the Florida Hurricane Catastrophe Fund, adversely affecting Benfield's U.S. brokerage revenues.
However, the company said, demand for peak wind catastrophe coverage outside of the limits provided by the Florida program "remained buoyant and catastrophe reinsurance purchases for Florida exposures were stronger than previously anticipated."
The division launched new products in workers' compensation and directors and officers liability lines that contributed to new business development.
For the future, Benfield said market conditions for insurers and the financial markets are "as challenging and volatile as we have seen in recent times." The firm said it anticipates that the combination of currency devaluation and the soft market will not ease substantially through 2008, "and this will make short-term progress difficult."
"Absent significant improvement in market conditions, we anticipate the 2008 trading result will be marginally below that for 2007," Benfield added.
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