24th May 2007 07:01
Amlin PLC24 May 2007 AMLIN PLC PRESS RELEASE For immediate release 24 May 2007 AGM STATEMENT AND UPDATE ON TRADING At its Annual General Meeting held today, the Chairman of Amlin plc ("Amlin" or"the Group"), the leading insurer, will provide the following update on trading. Trading environment The Group writes a diverse portfolio of insurance and reinsurance business.Whilst we continue to experience varying trading conditions across our classes,much of our non-marine, marine and Bermudian operations are trading in a wellpriced environment and offer good prospective margins. These areas representapproximately 80% of our expected premiums for 2007. In particular US catastrophe reinsurance pricing is still strong, although it isoff the peaks achieved in the run up to the 2006 US hurricane season. Earlyindications for forthcoming Florida renewals are encouraging and the effect ofthe decision by the State of Florida to increase its hurricane protection fundis anticipated to be less than initially expected. International catastrophereinsurance rates have come under greater pressure as more reinsurers havesought to increase the diversity of their portfolios. For example, prices forthe recent Japanese catastrophe excess of loss renewals were down approximately6% on average relative to last year. For US exposed direct property insurance, pricing is still acceptable althoughincreased competition from some US domestic carriers offering materiallyincreased lines and recent new entrants is placing greater downward pressure onrates. Gulf of Mexico energy rates remain strong and international hull ratesremain firmer following a series of market losses in the first quarter. The trading conditions in our other two divisions, UK commercial and aviation,remain competitive. In this environment our teams have remained focused on goodrisk selection and profitability. Premiums written and exposures The Group's written premium in the first four months ended 30 April 2007 is downmodestly compared to the same period in 2006, however most major modelledcatastrophe losses have also been reduced. The Group's gross written premium (before deduction of brokerage costs) in thefirst four months ended 30 April 2007 was £593.0 million (2006: £604.3 millionat April 2007 rates of exchange rates). Syndicate 2001's gross written premium was £519.5 million, approximately 5%less, at comparable rates of exchange, than in the first four months of 2006. Ofthis income, £21.4 million (2006: £20.1 million) was specifically written to beceded to Amlin Bermuda and up to a further 12.5% will be ceded to Bermuda undera whole account quota share reinsurance contract. Amlin Bermuda has written $144.4 million of direct income in the first fourmonths, together with the reinsurances of Syndicate 2001 noted above. This is anincrease of 26% at comparable rates of exchange over the same period in 2006.The rate of growth over 2006 has been affected by strong competition forinternational reinsurance making it difficult to increase lines. However, we arepleased with the quality, diverse portfolio that has been built to date, andrecent recruitment of two new underwriters should aid our expansion in theremainder of 2007. The average renewal rate reduction for the Group for the first four months was1.3% with renewal retention at a good 82%. This is analysed by division below: 2007 gross premiums to 30 Renewal rate Renewal retention April change ratio £ million % %Amlin Bermuda 73.7 0.4 93Aviation 28.3 (5.0) 81Marine 123.3 (1.5) 84Non-marine 317.4 (1.2) 81UK commercial 50.5 (1.6) 73Total / 593.0 (1.3) 82Average With retrocessional reinsurance becoming more reasonably priced, Syndicate 2001has purchased modestly more cover for its excess of loss account than in 2006.This, together with higher levels of cover for its direct marine and non-marineaccounts, has reduced our modelled losses from potential major catastrophes. TheGroup's largest modelled loss at 1 April was £295 million (2006: £330 million),and the majority of our modelled losses are now less than £200 million. TheGroup expects the cost of outwards reinsurance to be around 10% of gross premiumincome. Claims development The underwriting loss ratios at the end of the first quarter are excellent formost lines of business. There was a low level of natural catastrophe activity inthe first four months of the year and we have exposure to only one of the threemajor marine hull losses incurred in the year to date. Development of claims on prior underwriting years has been better than expectedand since the year end we have been able to make releases from reserves of £19.5million. Investment returns Overall, our investment return for the first four months was 2.3% of averagefunds of £2.3 billion. Equity performance was again good with a return of 6.9%across the London and Bermuda portfolios. US$ bond performance has also beenstrong at 2.1% with values rising on the expectation of future interest ratecuts. Sterling bond performance was more subdued with a return of 0.7% as theBank of England raised rates in response to renewed concerns over inflation.However sterling yields are now at healthy levels and an improved return will begenerated compared to 2006 if market expectations remain unchanged over the restof the year. Summary Overall, the outlook for 2007 financial performance remains very healthy, withincome at similar levels to 2006 and reduced exposures to major catastrophes Enquiries: Charles Philipps, Chief Executive, Amlin plc 0207 746 1000Richard Hextall, Finance Director, Amlin plc 0207 746 1000Hannah Bale, Head of Communications, Amlin plc 0207 746 1000David Haggie, Haggie Financial Limited 0207 417 8989 / 07768 332486 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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