BFD Benfield Group

RNS Number:8149W
Benfield Group Limited
12 January 2006





                    Benfield Group Limited - Trading Update



Benfield Group Limited ("Benfield" or the "Group"), the world's leading
independent reinsurance and risk intermediary, today issues an update on current
market conditions and provisional comments on the trading period just ended.



As previously stated, changes in the competitive landscape for insurance and
reinsurance have provided unprecedented opportunities for Benfield to invest in
its existing reinsurance intermediary business and in the development of an
insurance intermediary business focused on the marine, energy and power sectors.
 In September 2005 this new venture was formally launched as Benfield Corporate
Risk and now also incorporates Benfield's other insurance broking interests.



These investments will inevitably have a short-term impact on profit and margin
and the Group had previously anticipated that they would add a further #20
million to expenses in 2005.   As a result of increased spend on infrastructure
the cost base was projected to rise by approximately 6% over 2004.  In addition
2005 revenues were expected to be in line with 2004.  The full year 2005
projected Trading Result remains in line with that anticipated earlier in the
year.



2005 was the second successive year of record catastrophe losses with market
estimates for the combined insurance loss generated by hurricanes Katrina, Wilma
and Rita between US$60 billion and US$80 billion and Hurricane Katrina in
particular generating the largest ever insured loss.  At 2005/6 renewals, the
previously downward trend in reinsurance rates generally stabilised although
competition was still evident for certain non loss affected business,
particularly in Europe.  There were substantial rate increases for loss affected
areas.  Significant new capital entered the reinsurance market but its impact on
year end renewals was muted.  Underlying demand for reinsurance was strong,
partly due to higher levels of modelled exposure driving increased regulatory
and rating agency capital requirements.  However, buyers sought to manage costs
as well as to secure the most appropriate reinsurance protection.



The full impact of the unprecedented losses of 2004 and 2005, like that of
previous major losses, will emerge over the next 12 to 18 months.  Despite the
new capital entering the reinsurance market during 2005, a number of factors are
already imposing constraints on capacity.  These include the recalibration of
catastrophe models, a shrinking risk appetite for peak exposures, the
restructuring of coverage on a more restrictive basis and the increased cost of
underwriting capital.  These influences are likely to maintain upward pressure
on reinsurance pricing during 2006 and 2007.





These market conditions, together with the anticipated realisation of some of
the benefits of the investments made in 2005, lead the Group to forecast a more
encouraging outlook for 2006 than previously expected.  At current rates of
exchange, revenue growth in the reinsurance intermediary business is expected to
be above 10% and combined with the growth anticipated from Benfield Corporate
Risk, Benfield expects revenue growth for the Group to exceed 20%.  Expense
growth will reflect continued investment opportunities, including Benfield
Corporate Risk, and is expected to be more than 10%.  Consequently, Benfield's
2006 Trading Result is expected to amount to at least the #87.3 million achieved
in 2004.  While the Group's Trading Margin is also expected to improve
significantly, it is not expected to regain the level reported for 2004 until
the benefits of the current investment programme have been realised in full.



With its expertise in property catastrophe reinsurance and specialist modelling
and analytical capabilities, Benfield is well placed to benefit from current
market trends, and the Group remains confident that its carefully targeted
expansion will significantly enhance the medium term outlook for the Group.



                                     -ENDS-

For further information, please contact:


Investors & Analysts
Julianne Jessup                Benfield                  +44 (0)20 7578 7425
Robert Bailhache               Financial Dynamics        +44 (0)20 7269 7200

Media
David Bogg                     Benfield                  +44 (0)20 7522 4016
Peter Rigby/David Haggie       Haggie Financial          +44 (0)20 7417 8989





Benfield is the world's leading independent reinsurance and risk intermediary.
Its customers include many of the world's major insurance and reinsurance
companies as well as government entities and global corporations.   Benfield
operates from more than 40 locations worldwide. The company is listed on the
London Stock Exchange under the ticker symbol BFD.  www.benfieldgroup.com






                      This information is provided by RNS
            The company news service from the London Stock Exchange
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