10th Jan 2005 07:00
Amlin PLC10 January 2005 Press Release 10 January 2005 AMLIN PLC Amlin reports continued good trading conditions Amlin plc ('Amlin'), the leading Lloyd's insurer, today released the followingstatement on trading conditions. Current trading Syndicate 2001's gross written premium (net of brokerage) for the year ended 31December 2004 was £780 million (at exchange rates $1.92:£1). This compares to£742 million in the previous year, net of quota share reinsurance and convertedat the same exchange rate. The average renewal rate reduction for the 2004 yearwas 4%, weighted across premium by business class. For 2004 Amlin owned 100% ofSyndicate 2001 compared to 86.2% for 2003. The major class of business renewing in the fourth quarter was the airlineaccount. Premium rate reductions in this class were limited to an average of10%. Taking into account increased passenger volumes for the industry, premiumincome for this class is estimated to be reduced by 6%. 1 January is a major renewal period for a number of key classes of businessunderwritten by Syndicate 2001. Competition in the industry is increasing as,generally, insurance companies rebuild balance sheets depleted in recent yearsby past underwriting and investment losses. Overall, this 2005 renewal period for Amlin has been satisfactory with premiumvolume of £168 million written to date, only 4% down on the previous period.International property catastrophe and other large property risks have comeunder some pressure but US catastrophe reinsurance renewals have seen only smallreductions in rates. This is encouraging given that the principal renewals ofprogrammes impacted by the hurricane and typhoon losses are later in the year.Other classes have remained relatively stable. We have also completed the placement of the syndicate's reinsurance programme inline with our intentions. The cost of the programme is marginally higher than2004. In view of the high level of loss activity in the year for the propertyprogrammes this is a satisfactory outcome. Loss activity 2004 was the costliest year on record for natural catastrophes. Currentindustry estimates place the insurance cost at approximately $40 billion. Amlin's net estimate of the impact of Hurricanes Charley, Frances, Ivan andJeanne together with Typhoon Songda remains materially unchanged from thatannounced previously. At the end of the year the Asian earthquake and tsunami produced further tragicloss of life and destruction. There are no reliable insured loss estimates atthis time because the damage is still being assessed. However, we have receivedfew loss advices and although we have some exposure in the region, this is not amajor part of our portfolio. Accordingly, we do not expect our results for 2004to be materially affected by this loss. Other loss activity has continued to be low with development within expectationsfor the 2002 to 2004 underwriting years. Investment portfolio Strong performance of the global equity portfolio during 2004 led to anestimated total return of between 7% and 8% for the corporate assets, i.e.excluding syndicate funds. The investment performance for the syndicate assets is estimated to be 3% to3.5%. The strategy of progressively switching US dollar surpluses into sterlingcash helped to boost performance, as did actively managing the tactical assetallocation between bonds and cash. In total $282 million were sold during theyear at an average rate of $1.82:£1. During the fourth quarter the composition of the investment portfolio for thecorporate assets of the company was reviewed. After taking account of adjustedrisk appetite and our medium term expectations of asset class performance, itwas decided to change the strategic benchmark allocation to 50% global equitiesand 50% cash, compared with the previous 25% global equities, 70% cash and 5%bonds. As at the end of December 2004, the equity allocation had been increasedto 37%. When fully implemented, the equity allocation would increase to around7% of total cash and investments, including syndicate funds, currently held bythe group. Charles Philipps, Chief Executive, stated: "Following the highly satisfactorypricing conditions in 2004, the 1 January renewal season has been writtenlargely in line with expectations. This gives us confidence that anothersatisfactory underwriting year is in prospect, which, together with a strongpipeline of unearned premium from 2004, should provide a solid platform for2005." Contact Charles Philipps, Amlin plc 020 7746 1000Richard Hextall, Amlin plc 020 7746 1000David Haggie, Haggie Financial 020 7417 8989Peter Rigby, Haggie Financial 020 7417 8989 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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