Up to $165m Chile quake costs and $15m for oil rig blast

Amlin announced gross written premium was up 32.1% for the four months ended 30 April 2010 at £964.0m (30 April 2009: £729.7m) with £246.3m from its corporate insurance acquisition in July.

At constant exchange rates written premium increased by 37.6% (30 April 2009: £700.8m). The underlying increase for the pre-existing Amlin business was £16.9m. But rates fell on average by 1.4%

Q1 GWP £m (2009 in brackets)

  • Amlin London 488.4 (519.8)
  • Amlin UK 64.3 (57.4)
  • Amlin France 19.8 (18.2)
  • Amlin Bermuda (Direct) 145.2 (134.3)
  • Amlin Corporate Insurance 246
  • Total / average 964.0 (729.7)

Reinsurance rates

Reinsurance rates within the international catastrophe book have been broadly flat, helped by rate increases in territories that were loss affected in 2009, Amlin said.

“Similarly we believe that the Chilean Earthquake is likely to lead to rate rises on South American programmes but it does not appear to have removed the downward pressure in the United States.

Amlin Bermuda has been able to increase its direct reinsurance account during 2010 by 13.1% to $217.6m.

London market

Average rates within the London Marine business were flat. The energy account experienced downward pressure following the low level of hurricane activity in 2009, with an average decrease of 4.3% in the period.

“However, we expect that the Deepwater Horizon oil rig disaster will arrest this decline and trigger upward pressure on rates. Modest increases were achieved in most other Marine classes,” Amlin said

UK motoring

Amlin UK reported increases to fleet motor rates of 1.9%, with fleet motor income up 17.0%, with new business amounting to £9.0m net of brokerage. Rates for liability classes have also begun to show modest increases.

Outwards reinsurance

Apart from the retrocessional reinsurance programme the core reinsurance programmes were renewed with structures largely unchanged from 2009. The retrocessional programme in London was restructured in the period following a review of the value offered by the previous programme.

Greater retention of the first major catastrophe event is now borne by the Group but cover has now been purchased which responds in the event of a series of medium sized catastrophes.

Catastrophe costs

Estimates of overall catastrophe losses in the period to 31 March 2010 reached $16bn, the worst first quarter on record.

Based on an insured market loss of between $3.9bn and $7.7bn, Amlin estimated the Chile earthquake will cost it between $142m and $165m. If the Chilean earthquake insured loss increases to around $10 billion, the catastrophe reinsurance claims would increase by $11m and all of Amlin's inwards catastrophe excess of loss reinsurance exposures will have been exhausted.

It will also have exposure within other direct and reinsurance accounts but said how much was difficult to estimate “but should largely be absorbed in our expected loss ratios”.

Amlin does not expect material claims from Windstorm Xynthia, Australian hailstorms in March and the Baja earthquake in April.

But Deepwater Horizon will produce a net loss of $15m.

At 31 March 2010, following the normal quarterly review of claims reserves, £25.4m was released from reserves (31 March 2009: £20.0m).