Low claims and good investment performance combine

Amlin said the first ten months of the year had seen a 52.% increase in premium to £1,374.6m low claims incidence, further run off profits from reserves and a strong investment performance.

Financial highlights (2008 in brackets)

  • Gross written premium up 52.0% at £1,374.6m (£904.1m).
  • At constant exchange rates up 31.4% from £1,045.7m.
  • Syndicate 2001 £988.6m up 31.6% (£751.4m). Reinsurance was almost half of this increase.
  • Anglo French Underwriters, acquired in November 2008, contributed €28.6m.
  • Amlin Bermuda contributed $342.7m up 6.9% ($293.2m).
  • ACI has added €169.8m.

The acquisition of Fortis Corporate Insurance was completed on 22 July 2009, with FCI renamed Amlin Corporate Insurance ('ACI') on that date. Financial performance since acquisition has been better than expected, largely as a result of excellent investment returns.

Underwriting environment

In US catastrophe reinsurance good rate increases have been achieved and there continues to be strong margin potential.

Better rating conditions are anticipated in UK motor.

The average renewal rate of increase for the Group during the first ten months of 2009 was 4.4%, with renewal retention stable at 85.8%.

Catastrophe reinsurance, which represents approximately 28.1% of 2009 gross written premium, saw solid rate increases in the year and continues to offer good margin potential for Amlin’s London and Bermuda businesses.

The Property and Casualty business achieved an overall rate improvement of 3.4% on the renewal portfolio. Competition in this area has been stronger than expected and the necessary improvements in premium rates to return the market to a position that we would find supportive of growth have not materialised to date.

For US property insurance Amlin saw an average rate increase of 6.6%, whilst the US casualty business experienced an average rate decrease of 1.7%.

“We continue to believe that pricing in the US commercial insurance market is unsustainably low, but while the prospect of lower investment returns should encourage an upward trend, we are cautious in our expectations for 2010,” Amlin said.

London calling

“Within our London Marine business, the energy account experienced a further significant uplift in rates, with an average increase of 25.2% in the period. However, in response to higher rates and stricter terms, coupled with challenging economic conditions, clients have retained more risk, which has restricted growth in premium volumes.

“Hull and liability classes have sustained favourable rate improvements of 7.5% and 6.6% respectively, with modest increases in most other Marine classes.

“Our appetite for airline business has been limited while rates have remained competitive. With a number of notable losses in the year to date pushing the airline insurance market into loss, recent rate increases have been between 15% and 25%.

“A large proportion of our airline business is still to renew and we are optimistic of further improvement in the rating environment into 2010. Pricing for other non-airline classes has also begun to stabilise.

Trading environment

“The trading environment for Amlin UK has continued to improve since 1 July. Increases to fleet motor rates now average 5.3% with an improving trend beginning to emerge. Average increases of 3.6%, 7.1% and 10.5% were achieved in August, September and October respectively.

“The level of quotes provided year on year, and more importantly the overall conversion ratio, has continued to improve through the third quarter. Overall, fleet motor income is up 30.8%, with new business amounting to £30.7 million net of brokerage.

“Rates for liability classes have also begun to stabilise. Other classes, as expected, are slowly but surely showing more positive signs.

Looking forward

“Looking forward we expect further increases in UK commercial motor rates in 2010. Typically other UK commercial classes are slower to improve at this stage in the cycle, but we anticipate greater upward momentum over the next few months.

“Recent investments in our underwriting personnel, marketing and operational infrastructure have positioned the UK business to expand substantially as market conditions offer more attractive returns.

Charles Philipps, Amlin's chief executive said, "We have had an outstanding quarter's performance and expect the full year result to be an excellent one. Moreover, the Group is well positioned for 2010, in particular with improving conditions for our UK business becoming more visible."