Lloyd’s giant Amlin this week said it would continue to reduce its participation in the UK commercial market, owing to intense competition within the sector.
The warning came as the insurer reported record profits for the first half of the year, beating analysts’ forecasts.
Amlin saw pre-tax profit increase by 54% to £185m. The combined ratio improved eight points to 71%. Profits from underwriting were up 17.2% to £146.6m, with £97.7m produced by its London operations.
Gross written premiums fell by 5% to £805m.
But the insurer saw its aviation and UK commercial business shrink at a greater rate, on the back of intensifying competition.
Premiums in the aviation business declined by 13%, while UK commercial business volume fell by 10%. Amlin said it had reduced its exposure in the sectors where rating levels had fallen below its return requirements.
A spokesman for Amlin said: “Our UK commercial division saw continued rating pressure in all classes. In this environment our teams have retained their focus on risk selection and underwriting profitability, as well as the delivery of high levels of service to a core client base which has a record of continuity with the business.”
Amlin said it would not attempt to achieve growth by competing on price in a softening market.
The company said it would instead take on increased volumes of risk when conditions were right .
It added that its purchase of Allied Cedar Insurance would provide the company with greater access to the UK property business – an area it was keen to grow within when conditions improve.
Losses from the July floods were estimated to be £24.6m.
Amlin attributed its profit increase to areas where risks remained well priced, such as marine, non-marine and Amlin Bermuda – which together represented 84.4% of gross written premium.
Chief executive Charles Philipps said: “This is a record result driven by an exceptional underwriting performance and strong investment returns. Our outlook for the remainder of 2007 and for 2008 is positive.”
Numis said the results were “comfortably ahead” of its forecasts.
As Insurance Times went to press shares were trading at 303p, up from 280p earlier in the week.