3rd Mar 2014 08:45
LONDON (Alliance News) - Amlin PLC Monday reported a 23% rise in 2013 pretax profit as a solid underwriting performance was supported by a quiet year for major catastrophes.
Amlin reported a GBP325.7 million pretax profit for 2013, compared with GBP264.2 million in 2012, as its combined ratio, a measure of underwriting profitability, moved in its favour, down 3 percentage points to 86%.
According to consensus estimates provided by Amlin, analysts had been forecasting a GBP297.5 million pretax profit.
Gross written premium rose to GBP2.47 billion, from GBP2.41 billion.
Return on equity was 19.8%, exceeding Amlin's 15% minimum cross-cycle target.
"Our 2013 result is a testament to the strength of our talent and reinforces our capability and potential. With a number of businesses improving their performance, and our actions to drive profitability forward, we are well placed to continue to deliver good returns for shareholders," Charles Philipps, chief executive, said in a statement.
But Philipps said the inflow of alternate capital to the reinsurance and insurance industries brought "fresh challenges", as institutional investors, looking for higher returns, direct capital into the industry to cover risks. That puts pressure on reinsurance rates.
"A number of our businesses are experiencing improving trends. We have also made some material changes to our outwards reinsurance programmes, reducing spend whilst increasing mean expected profitability. This is expected to compensate for the lower margins in catastrophe reinsurance," Philipps said.
"Therefore, even though reinsurance rates have come under downward pressure, we continue to believe that the group can continue to deliver attractive returns on capital," the chief executive added.
Amlin, which writes insurance and reinsurance in a number of markets, said its profit attributable to underwriting came to GBP283.1 million, from GBP207.1 million, while its investment return was down 3.0% to GBP160.4 million.
The strong underwriting performance was driven by operations in London and Bermuda, as well as an improvement from Amlin Europe.
"Amlin Europe's contribution to overall profit increased again, as work to improve the marine portfolio, implement Amlin business practices and integrate the business with the wider group bore fruit," Richard Davey, chairman, said in a statement.
However, European flooding in May and June, together with numerous small catastrophe events, including hail in France and windstorms in October and December across the UK and Northern Europe, led to a small loss in Amlin Re Europe and hurt performance in the UK.
Amlin increased its full-year dividend to 26.0 pence a share, from 24.0 pence.
Amlin shares were Monday quoted at 459.90 pence, up 10.00 pence, or 2.2%.
By Samuel Agini; [email protected]; @samuelagini
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