25th May 2006 07:01
Amlin PLC25 May 2006 PRESS RELEASE DATE 25 May2006 AGM Statement and update on current trading At its Annual General Meeting held today, Amlin plc ("Amlin" or "the Group"),the leading insurer, will provide an update on current trading as set out below. Premiums written and pricing The Group's gross written premium (before brokerage costs) in the four monthsended 30 April 2006 was £647 million, up 25% over the same period in 2005. Of this, Syndicate 2001's gross written premium was £591 million (at rates of$1.73:£1), compared to £519 million for the previous year. Syndicate 2001 hasincreased its lines on selected business in a small number of classes with aview to ceding these additional lines to Amlin Bermuda. In the first four monthsit ceded £19 million of such premiums. Amlin Bermuda has written £75 million (at rates of $1.73:£) of new premiumincome to the Group in the first four months of 2006. This includes business ithas written directly and the cessions referred to above. It is below ouroriginal expectations because of the late start and greater competition thananticipated for international catastrophe business for the 1 January renewalseason, and, significantly, a reduction in risk appetite for Amlin Bermudafollowing the decision not to renew a large proportion of Syndicate 2001'sretrocessional reinsurance programme in 2006. Nevertheless, we are pleased withthe level of support shown for our new company and, in particular, with thequality and spread of its portfolio. The Group has increased its premiums most in property reinsurance, propertyinsurance and energy classes, for which conditions have been strengtheningprogressively during 2006 to date. With the commencement of Amlin Bermuda andgrowth in Syndicate 2001, property reinsurance income has increased by £98million compared to the first four months in 2005. The average renewal rate increase for Syndicate 2001 for the first quarter was6% with renewal retention at 84%. This is analysed by division below: Renewal Renewal rate change retention ratio % %Aviation 0.7 88%Marine 9.1 84%Non marine 7.1 86%UK commercial (2.0) 80%Average 6.0 84% With the exception of energy and war, marine classes have seen steady rateimprovements during the quarter. The energy account has averaged renewal rateincreases of 82% for the year to date. Conversely the war account continues tosee rate reductions. However this class has been relatively loss free andoffers diversification benefits. Property and reinsurance rate improvements in the non-marine area have beenstrengthening through the year, particularly for catastrophe exposedterritories. We expect that significant rate increases will be achieved on ourFlorida and Caribbean exposures which renew over the next two months. The UK commercial division continues to operate in a highly competitiveenvironment. Management of exposures As previously reported, less reinsurance has been bought to protect Syndicate2001's own reinsurance exposures. We have continued to explore proposals topurchase more cover but the alternative risk management strategy of reducing andreshaping our peak underwriting exposures has continued to be the main focus. For example, Syndicate 2001's Gulf of Mexico direct property exposures to ourmodelled disaster scenario have been reduced by 30% by 1 April 2006 whencompared to 1 January 2006. Windstorm exposed catastrophe reinsurance aggregateis currently being reduced as programmes come up for renewal. Additionally, as referred to above, Amlin Bermuda has reduced its maximum riskappetite for catastrophes to $200 million from $250 million for a single zone,and to $250 million from $300 million for contiguous zones. Major claims and loss development The underwriting loss ratios for the first quarter are excellent for most linesof business. The first quarter was a benign period for catastrophic loss events, although asmall number of large property claims were incurred. However these are coveredby reinsurance and the property portfolio is performing in line withexpectations. Development of prior year claims has continued to be healthy and ahead of ourexpectations, with overall gross and net movements to 2005 hurricane lossesbeing immaterial. Investment returns Investment returns from different asset classes in the portfolio were mixed inthe first quarter. Our global equity portfolio returned 10%. Short sterlingbonds returned 0.3% and US dollars a loss of 0.1% as bond markets lost ground inthe face of rising interest rate expectations. All of Bermuda's capitalremained invested in cash equivalents during the period and these returned 1.1%.The weighted average return on average cash and investments, of £2.2 billion,was 1.1%. On 7 April 2006 an equity put option was acquired to protect approximately 20%of the equity portfolio from a fall below its then value. Overall cash and investments at 31 March 2006 rose to £2.3 billion from £2.1billion at the end of the year. This was helped by the final closure of the2003 and prior years of the Syndicate into Amlin companies with net investmentsto the Group increasing as a result by £200 million. Roger Taylor, Chairman of Amlin, added: "We have had a strong first quarterunderwriting return. As we enter the critical renewal season for US windstormrisk we are well placed to benefit from an anticipated further hardening of themarket, mindful of the need to manage our exposures." Enquiries: Charles Philipps, Amlin plc 0207 746 1000Richard Hextall, Amlin plc 0207 746 1000David Haggie, Haggie Financial 0207 417 8989 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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