Bad weather boosted Lloyd’s insurer’s UK COR to 102%
Lloyd’s insurer Amlin’s UK divisions reported a combined operating ratio (COR) of 102% in the first half of 2014, five percentage points worse than the profitable 97% it reported n the first half of 2013.
But group chief executive Charles Philipps said there are strong prospects for improving profitability in the UK division.
Amlin’s UK COR was pushed into unprofitable territory by claims from the winter floods, which cost the company £9.9m. Prior-year reserve releases were also lower in the half at £4.9m (H1 2013: £9.1m).
The UK unit’s gross written premium fell 11% to £187.3m (H1 2013: £210.3m), but this was because of the transfer of the professional indemnity and financial institutions book of business to Amlin London.
Despite the underwriting loss for the first half, Philipps was upbeat about the UK division’s profitability prospects.
Speaking to journalists this morning he said: “If you strip out [the flood claims] and look at the underlying combined ratio, there is some good improvement on the first half of 2013.
“The prospects are for improving profitability this year and most likely next.”
Amlin UK enjoyed a 6.5% increase in average fleet motor rates in the first half of 2014. The company said most other UK commercial classes have had modest rate increases, which Philipps explained was between 1% and 2%.
As a group Amlin made a profit before tax of £148.5m in the first half of 2014, down 8% on the £1614m it made in last year’s first half.
Like many of its peers, Amlin’s results were hit by the strong pound. Foreign exchange movements reduced the profit by £24.6m.
The group combined ratio increased by two percentage points to 87% (H1 2013: 85%) because of higher catastrophe claims, most notably from European hailstorms and a tornado in Nebraska.
The company said it had “only modest exposure” to the Malaysian Airlines flight MH370 and the Sewol Korean passenger vessel disasters.