10th Jan 2006 07:00
Amlin PLC10 January 2006 AMLIN PLC PRESS RELEASE For immediate release 10 January 2006 Amlin reports continued good trading conditions Amlin plc ('Amlin') today released the following statement on current tradingconditions and comments on the trading period just ended. Current trading 2005 Syndicate 2001's gross written premium (net of brokerage) for the 2005underwriting year was £810 million (at an exchange rate of $1.72:£1). Thiscompares to £830 million in the previous year converted at the same exchangerate. However, after removing reinstatement premiums relating to the windstormlosses in each year, the reduction in premium was a modest 2%. The averagerenewal rate reduction for the 2005 year was 4%, weighted across premium bybusiness class. 2005 was the costliest year on record for natural catastrophes. Currentindustry estimates place the insurance cost between $60 billion and $80 billion. Amlin's estimate of the overall impact of Hurricanes Katrina, Rita and Wilmaremains broadly unchanged from that announced previously. Amlin expects that, in the absence of unforeseen circumstances, its pre-taxprofit for 2005 will be ahead of consensus market forecasts. 2006 1 January is a major renewal period for a number of key classes of businessunderwritten by Amlin. Following the significant industry losses in 2005, itwas expected that a number of key classes would see a reversal of the downwardtrend in rate movements. This was particularly true of property reinsurance. Amlin's US catastrophereinsurance renewals have seen rate increases averaging approximately 15% withlarger increases being experienced in wind exposed regions. Amlin expects thatthis will increase as the major wind exposed programmes are renewed. Theinternational catastrophe account has seen lower increases, on average around5%, as competition was greater in zones where capacity is less constrained. For the 2006 renewal period to date Syndicate 2001 has written £183 million (atan exchange rate of $1.72:£1) of premium income, approximately 10% up on thesame period in 2005. The average renewal rate increases across all classes hasbeen approximately 4% with most insurance classes reversing last year's downwardtrend but not to the same level as the reinsurance classes. Amlin Bermuda has written $55 million (net of brokerage) of new business todate, excluding intra group business ceded to it by Syndicate 2001. Thestrategy of using London distribution for sourcing Amlin Bermuda's business hasproven to be beneficial and we have been encouraged by the strong support of theLondon brokers. 1 January is also an important date for the renewal of a number of the Syndicate2001's reinsurance programmes. In line with our experience on business written,the cost of purchasing our own programmes has increased, particularly forretrocessional cover. In the face of significant proposed price increases, thesyndicate has increased net retentions for 2006 to control overall expenditureand Amlin Bermuda has provided some capacity for the Syndicate. At this stageof the development of Amlin Bermuda this has allowed the risk appetite of eachgroup entity to be managed within their predetermined parameters. Also asignificant part of the Group's catastrophe reinsurance programmes renew post 1January and these remain in force. Investment portfolio The investment performance for the syndicate assets is estimated to be 3.6%.For the syndicate assets, the sterling assets produced an estimated return of5.4% helped by good bond market performance. Overall US$ returns were moremodest, estimated at 1.6%. However the policy employed of selling dollarprofits to sterling as they were earned has enhanced overall investment returns. Global equity markets have performed well during 2005 and Amlin's return fromits portfolio is estimated to be 27%. During the year Amlin held 7% of groupassets (including syndicate assets) in equities. Charles Philipps, Chief Executive, stated: "2006 has started well and AmlinBermuda has had a very good reception from our UK based brokers. We believethere is scope for continued rate strengthening as the year progresses, asmarkets in some classes, such as direct property insurance, have yet to respondto the increased cost of reinsurance cover, and the main renewal season for keywind affected zones of the world is later in the year. The outlook is positive." - Ends - 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 Notes to Editors: Amlin plc is a recognised leader in the London insurance and reinsurance market,providing a global client base with risk management solutions. Amlinspecialises in four business areas: Aviation; Marine; UK commercial; andInternational property and casualty insurance and reinsurance. A FTSE-250quoted company, Amlin owns 100% of its £1bn capacity for 2006, which is writtenthrough Lloyd's Syndicate 2001. Amlin's Syndicate is rated 'A' (Excellent) byAM Best and 'A1' (Stable) by Moody's. In November 2005, the company established Amlin Bermuda, a reinsurance businesscapitalised at US$1 billion and rated A- (Excellent) by A.M. Best and A byStandard & Poor's. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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