Price hikes across the board but retrocessional cover scarce

Amlin’s Q1 results showed an average 4% premium rate increase, with reinsurance rates up by an average of 6.3% and US catastrophe rates up by as much as 10%. Marine leapt 19%.

GWP highlights

  • Amlin London £519.8m up 4.4% with 87.9% renewals
  • Reinsurance £237.3m up 6.3%, with 93.7% renewals
  • Property and Casualty £119.1m up 2.3%, with 80.3% renewals
  • Marine £136.1m, up 4.2%, with 85.2% renewals
  • Aviation £27.2m down 0.9%, with 85.2% renewals
  • Amlin UK £57.4m up 1.0%, with 85.9% renewals
  • Amlin Bermuda £134.3m up 3.9%, with 95.6% renewals
  • Anglo French Underwriters £18.2m
  • Total £729.7 up 4.0%, with 89.2% renewals

Amlin said: “As predicted there has been a steady improvement in the trading environment since the year end across a number of our key classes. It is expected that rating levels will continue to improve for many of our lines of business through 2009, although the speed and extent of change will continue to vary.

Catastrophe prices

“Catastrophe reinsurance business, written within Amlin London and Amlin Bermuda, has experienced good rate increases and this area of our business continues to offer excellent margin potential.

“Within the reinsurance portfolio, the US catastrophe account has had average rate increases of between 7% and 10%, with the largest increases in zones affected by 2008 hurricane activity. The rate of increase in the international catastrophe book is slower, but improvements to rates have been achieved. Notably, the recent Japanese catastrophe reinsurance renewals had an average 8% increase.

Other price rises

“Elsewhere, Property and Casualty business, having recently traded towards the bottom of the cycle, is beginning to show early signs of improvement. Increased upward pressure is anticipated as the year progresses.

“In our Marine business, the energy account has seen a sharp uplift in rates in response to the 2008 hurricanes, with an average increase of 19% in the period. Hull and liability rates also improved by 9% and 7% respectively, with modest increases in most other Marine classes.

“The trading environment for Amlin UK is also improving. Increases to fleet motor rates, often the first sign of upward pressure in the wider UK commercial market, averaged 3.5% in the period. While rate increases so far are still relatively small, it is notable that there has been a significant increase in the level of quotes provided year on year and, more importantly, in the overall conversion ratio. Having recently made a number of strategic investments, including the strengthening of our UK property team in April, we are well positioned to take advantage of the expected upturn in the UK market through 2009 and beyond.

Syndicate 2001 contributed £595.4m (£439.7m) with reinsurance accounting for 48.6% of this increase.

Retrocessional cover scarce

Amlin said retrocessional reinsurance had become scarcer and more expensive, as the risk appetite of reinsurers has become constrained and capital markets activity in this area has fallen.

Charles Philipps, Amlin's chief executive said: “We have seen a flight to quality and recognition of our capital strength and superior ratings, which are reflected in our increased renewal ratios and the expansion of our London, UK and Bermudian businesses.”