Glacierre Press Release

PRESS RELEASE
2008-02-26
Glacier Reinsurance AG

Full year results and trading update

Pfäffikon, Switzerland: Glacier Group (‘Glacier’ or ‘The Group’), the European insurer and reinsurer operating as Glacier Reinsurance AG and Glacier Insurance AG, today announces its consolidated US GAAP financial results for the year ended 31 December 2007.

Financial highlights for the year ended 31 December 2007:

• Total gross written premiums of $465.7 million, a 55.5% increase on the previous year (2006: $299.5 million).

• Pre-tax net income of $76.6 million, a 20.8% increase of $13.2 million over the prior year (2006: $63.4 million).

• Gross combined ratio improved to 65.7% (2006: 71.9%) with the net combined ratio declining to 83.4% (2006: 78.0%) as a result of deferred earnings.

• Return on equity increased to 18.8% (2006: 17.5%), including net unrealized gains on investments.

• The Group’s net underwriting capital is now $573.3 million (Shareholder funds and trust preferred equity), a 15.5% increase on the previous year (2006: $496.4 million) and a 91.1% increase since the Group began underwriting operations in January 2005.

• Total investment results increased by 99.8% to $36.4 million (2006: $18.2 million), including interest, realized and net unrealized gains on investments and foreign exchange.

• Overall total investment returns improved to 5.7% (2006: 3.3%) reflecting the strength of the investment portfolio and conservative investment strategy of the Group.

• There is no exposure to US sub prime mortgage products either through the Group’s underwriting operations or its investment portfolio.

Operational highlights 2007:

Excellent first year of trading for Glacier Insurance

Glacier Insurance’s first full year of operations has been an exceptional success. The company achieved $40.4 million of premium and now underwrites out of Vaduz and Cologne, where a team of 9 underwriters and support staff are in place. Further expansion is planned for 2008.

Geographic expansion

The Group has established underwriting and marketing locations in Switzerland, Liechtenstein, Germany, Argentina and the UK.

Launch of Nelson Re

In June 2007 Glacier Re announced the launch of Nelson Re Ltd, a newly formed Cayman Islands exempted insurance company, set up by Glacier Re as the issuer of catastrophe bonds under a $1.5bn catastrophe bonds shelf programme. During 2007 $75 million was raised from a group of institutional investors through the issuance of the first Series of Notes to support reinsurance coverage against US wind and earthquake and European wind related catastrophes. The coverage provided by Nelson Re is for a three year period.

Continued employee and infrastructure growth

Professional staff levels continue to increase. The Glacier Group now has over 50 employees, an increase of 75% from January 2007.

Trading update and outlook for 2008:

During 2008 the Glacier Group continues to grow its businesses with further expansion into new, as well as existing, markets. Through the important 2008 renewal season the Group’s retention rate was excellent, with more than 87% of all programmes being renewed. Gross written premiums increased by 11%, achieved by growth in the overall customer base and increased shares with existing customers. Despite a softening market the Group considers the pricing environment to be still adequate, albeit not as attractive as 2006 and 2007. Glacier continues to expand, driven by selective growth initiatives including the anticipated opening of a branch office in London and the establishment of a Latin American representative and marketing office in Buenos Aires.

Robbie Klaus, Chief Executive Officer and Chief Underwriting Officer of the Glacier Group, commented:

“2007 has been a great year of profitable growth for Glacier. Our underwriting result is exceptional, and our investment in new talent and infrastructure leaves us well-placed to capitalise on the year’s success. While overall market losses increased during 2007 versus 2006 our focus on technical underwriting and risk management has resulted in a significantly improved gross loss ratio.

"We will continue to write high quality, profitable business in 2008 and we expect to maintain an ROE in excess of 15% over the insurance cycle."

Further information

Media

Haggie Financial
David Haggie / Juliet Tilley
Tel: +44 20 7417 8989