CBL says 1H earnings dropped 36% due to increased reserves
By Rebecca Howard
Aug. 18 (BusinessDesk) - Auckland-based credit surety and financial risk insurer CBL Corp says first half operating
earnings fell 36 percent, 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 Aug. 24. CBL has previously projected annual earnings of between $89.9 million and $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."
Harris said the $16.5 million adjustment to CBL Insurance reserves represents a strengthening of 7.2 percent of its
total net claims reserves of $229 million.
CBL said gross revenue was $205 million in the first half, an increase of 29 percent versus 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,” said Harris.
The shares last traded at $3.77 and are up 36 percent over the past 12 months.
(BusinessDesk)
ends