Amlin PLC (AML) - Interim Management Statement
RNS Number : 1660R
15 November 2012
For immediate release
15 November 2012
Interim Management Statement for the period from 1 July 2012
The underwriting environment for the period from 1 July was encouraging, with
rate improvements and limited catastrophe loss activity. Rate improvements
have been achieved for more than 80% of the portfolio during the ten month
period to 31 October and overall, renewal rate increases have averaged 3.8% in
As previously reported, pricing for catastrophe reinsurance during 2012 has
reacted strongly to the extraordinary loss activity of 2011. In our insurance
markets, rates for US commercial property have steadily improved and we
continue to achieve improvement in our UK commercial business.
Investment markets have continued to prove challenging, but Amlin's balanced
portfolio of assets delivered good returns for the quarter.
Hurricane Sandy, which made landfall in the United States on 29 October, has
caused material damage to the US east coast. Given the timing and magnitude
of the event, and the fact that ongoing disruption in the affected area means
information is limited, Sandy's impact is still to be determined. However, a
favourable first nine months means we are well placed to absorb claims.
Amlin remains in a healthy financial position and is well capitalised to
support growth as conditions improve and opportunities materialise. The core
profitability of our London and Bermuda business is strong and profitability
continues to improve in our UK business. Additionally, there is increasing
evidence that the action taken at ACI is having a positive effect. In a low
interest rate environment, our profit focused underwriting strategy should
encourage the business to prosper.
The Group's gross written premium for the ten months ended 31 October 2012 was
up 11.1% at £2,278.8 million (31 October 2011: £2,051.9 million). The average
renewal rate increase was 3.8% (31 October 2011: 0.9%) with a renewal
retention ratio of 84.5% (31 October 2011: 82.1%).
The underlying increase in gross written premium of £161.0million, after
taking account of renewal rate movements, was attributable to growth in Amlin
London, Amlin UK, Amlin Bermuda and Amlin Re Europe.
The changes to premium by division are analysed in the table below
Renewal Renewal Renewal Renewal
Gross written rate retention Gross rate retention
premium to 31 change ratio written change ratio
October 2012 premium
to to 31 to to to 31
£ million October 2012 October
31 31 31 2011
October % October October
2012 2011 2011 %
% £ million %
Amlin London 981.0 4.9 84.3 880.8 1.1 83.5
Amlin UK 342.8 5.2 78.2 269.7 5.2 83.7
European 458.3 0.2 85.0 497.6 (0.5) 73.8
Amlin 330.4 6.2 87.5 305.4 0.5 90.1
Amlin Re 166.3 2.2 91.0 98.4 - -
Total / 2,278.8 3.8 84.5 2,051.9 0.9 82.1
Note: Gross written premium by division is shown excluding the impact of
As previously reported, the period to the end of October 2012 saw a healthy
increase in catastrophe reinsurance rates, following the extraordinary loss
activity of 2011. North American catastrophe business achieved an average
renewal rate increase of8.1%,whilst our international reinsurance account
achieved an average increase of 15.0%. Rate increases were more marked in
loss affected territories, such as Australasia and Japan. Rate increases
slowed from the second quarter, reflecting limited loss activity in the period
and the fact that for a number of contracts, significant rate increases had
been achieved in 2011. We expect catastrophe reinsurance pricing to remain
strong, with our US and international books trading at near peak levels, with
Hurricane Sandy helping to limit downward pressure.
Property and Casualty rates have continued to improve since the half year,
generating an average renewal rate increase of 3.8% in the ten month period.
The direct and facultative property business achieved an average increase of
8.2%.We expect that losses from Hurricane Sandy will add further positive
momentum to US property rates.
Rates within our London Marine business were stable, with an average renewal
rate increase of 0.5% to 30 October. Variation continued across classes.
Liability and yacht business had average rate increases of 2.9% and 1.6%
respectively, whereas war and specie classes experienced respective rate
decreases of 2.4% and 1.9%.
The trading environment for Amlin UK remains positive,with an average rate
increase of 5.2%for the year to date. Increases to fleet motor rates now
average9.4%. Elsewhere, property rates increased by1.9%in the period and
liability classes have also begun to show signs of improvement. Notably,
employer's liability and public liability business achieved rate increases of
3.4% and 7.3% respectively for the ten month period. Recent strategic
initiatives, including investment in new distribution channels and the
addition of a new high net worth underwriting team, contributed to £99.6
million of new business.
In Continental Europe, market conditions continue to prove competitive, though
rating levels remain steady. Action taken to improve the profitability of
ACI's marine business is having a positive impact on the underlying
performance of the business. The majority of changes to ACI's marine
portfolio are complete and we believe that, with increased profit focus and
direction, it is now in a position to grow income when market conditions in
the Benelux improve. ACI's non-marine business continues to perform
satisfactorily in competitive trading conditions.
Amlin Re Europe has continued to make good progress in line with original
plans and has achieved significant growth in its client base. In the ten month
period to 30 October, the business wrote €205.0million of gross written
premium, with the rating environment marginally positive. As previously
reported, with the initial costs of start up being incurred ahead of
development of earned premium, we do not expect the business to make a
material profit contribution to the Group in the current year, however, we
remain confident of its long term prospects.
Reinsurance expenditure in the period to 30 September was £342.5 million, an
increase of 35.5%, representing 15.6% of gross written premium (Q3 2011:
£252.7 million and 12.9%). The increase in outwards reinsurance expenditure
reflects the increased costs of retrocessional programmes since the losses of
2011, greater cover bought by Amlin Bermuda, together with the purchase of a
catastrophe bond. The increased expenditure has been more than offset by
increased income in the nine months and this is expected to be the case for
the full year.
Claims and reserves
The period to 30 September was a relatively benign period for catastrophe
activity, in contrast to the prior year.
The only significant catastrophe loss to the Group in the period was Hurricane
Isaac, impacting the US Gulf Coast in September. Estimated claims to Amlin
from this event amount to approximately US$25 million (net of reinsurance and
Net claims from 2010 and 2011 catastrophe events, including the New Zealand
'Christchurch' earthquake in February, the Japanese earthquake in March and
the Thailand flooding in the second half of the year remain materially
consistent with those disclosed in our 2011 Annual Report.
For Amlin European Insurance, there were no new large claims above €5.0m in
the period and attritional claims patterns have continued to show
In the quarter to 30 September 2012, following the normal quarterly review of
claims reserves, £16.4million was released from reserves, bringing cumulative
releases for the nine months to 30 September 2012 to £69.4 million (30
September 2011: £71.2 million).
During the last week of October, Hurricane Sandy travelled through the
Caribbean and up the east coast of the United States causing extensive damage,
particularly after its landfall in New Jersey. It is estimated to have been
the largest Atlantic storm by diameter on record, although the wind speeds at
the centre of the storm were only at category one status. The resultant
damage is complicated, with multiple causes including wind damage, storm surge
and flooding from rainfall. Damage is also spread over a large number of
states. As non government agency insurance in the United States often
excludes flood or in some cases storm surge damage, the actual insured claims
and, in particular the claims impacting Amlin direct or through its
reinsurance client base, are at this stage unclear.
The Group's investment return for the nine months to 30 September was 3.6%,
with average funds under management of £4.1 billion. During this period bonds
returned 3.9%, Libor plus 4.9%, cash and cash equivalents 0.4%, equities 9.5%
and property 5.3%.
The asset allocation (based on allocations to sub-advisors) at 30 September
2012 was 50% bonds, 17% Libor+, 24% cash and cash equivalents, 6% equities and
On 17 August, Amlin announced the appointment of Shonaid Jemmett-Page, FCA, MA
as an independent non-executive director of Amlin, effective 1 September
2012. On the same date, it was announced that Martin Feinstein would join and
become Chairman of the Risk & Solvency Committee with effect from 1 September
On 20 September, Amlin announced that Charles Philipps and Richard Hextall
would resign as directors of Amlin Underwriting Limited (AUL) with effect from
1 October 2012 and that Simon Beale would hand over his responsibility as
Underwriting Director of Amlin London to Kevin Allchorne with effect from the
same date. Simon Beale remains on the Board of AUL as a non-executive
As previously reported, Amlin Reinsurance Managers, Inc commenced trading on 1
October, operating from offices in New Jersey under the leadership of Paul
Brauner. The operation seeks to establish a lead US market for casualty
reinsurance targeting nationwide business with a focus on general and
professional liability classes. The business will be sourced direct from US
brokers and underwritten on behalf of Syndicate 2001.
Charles Philipps, Amlin's Chief Executive, commented
"Our strong first half performance continued in the third quarter with solid
progress achieved on a number of fronts, including at ACI. While the
complexity surrounding Hurricane Sandy means that it will take time to
establish a meaningful estimate of loss, we believe it will be readily
absorbed and that it will help continue the improvement in US property
insurance rates that has been evident so far this year"
Charles Philipps, Chief Executive, Amlin plc 0207 746 1000
Richard Hextall, Finance and Operations Director, Amlin plc 0207 746 1000
Analysts and Investors
Julianne Jessup, Head of Investor Relations, Amlin plc 0207 746 1961
Hannah Bale, Head of Communications, Amlin plc 0207 746 1118
John Waples, FTI Consulting 0207 269 7292
This information is provided by RNS
The company news service from the London Stock Exchange
IMSKMMMMNDGGZZM -0- Nov/15/2012 07:00 GMT
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