TIDMAML
RNS Number : 3877X
Amlin PLC
19 November 2014
Amlin plc
PRESS RELEASE
For immediate release
19 November 2014
Interim Management Statement for the nine month period to 30
September 2014
Amlin has continued to generate healthy returns despite the
ongoing challenging trading environment, supported by its
increasingly diversified nature and strong client proposition.
Underwriting
Gross written premium for the nine months ended 30 September
2014 was up 4.2% at GBP2,288.1 million (30 September 2013:
GBP2,195.7 million). At constant rates of exchange, the increase
was 9.9%. As previously reported, growth includes income
attributable to multi-year reinsurance contracts, and adjusting for
the premium attributable to future years, growth at constant rates
of exchange was 7.9%.
Average renewal rates were down 3.5% (30 September 2013: flat)
and the renewal retention ratio was healthy at 85.5% (30 September
2013: 86.5%).
Following the changes made to outwards reinsurance at the start
of the year, net written premium increased by 8.8%.
Premium income by division is analysed in the table below.
Gross Renewal Renewal Gross Renewal Renewal
written rate written rate
premium change premium change
to 30 to to 30 to
Sept Sept
2014
GBP million 30 Sept retention 2013 30 Sept retention
ratio 2013 ratio
to to
2014 30 Sept GBP million % 30 Sept
% 2014 2013
% %
Amlin London 1,076.6 (5.3) 85.6 985.3 (0.8) 86.4
Amlin UK 257.4 2.9 78.8 269.6 4.2 86.2
Amlin Bermuda 340.2 (8.3) 85.1 331.3 (3.1) 83.3
Amlin Re Europe 242.5 (0.9) 92.3 196.3 2.4 90.3
Amlin Europe 371.4 (0.3) 86.6 413.2 0.1 88.0
Total / average 2,288.1 (3.5) 85.5 2,195.7 (0.1) 86.5
Note: Gross written premium by division is shown excluding the
impact of intra-group transactions.
The underwriting environment has become more challenging in
property catastrophe reinsurance. However, Amlin's strong client
proposition, enhanced by Leadenhall Capital Partners, has enabled
Amlin to achieve modest growth of 5.3% with a focus on those areas
where pricing meets hurdle rates of return. The average renewal
rate decrease was 8.2%.
Other reinsurance classes have not experienced the same degree
of pressure and Amlin Re Europe has continued to develop
positively, adding GBP41.1 million of new business for the nine
months period, mostly from growth in non-catastrophe lines, which
achieved an average rate increase of 0.3%. In addition, Amlin
Bermuda added GBP16.8 million of new proportional reinsurance
business.
In our UK commercial business, UK fleet motor rates have
continued to rise, with an average increase of 5.7% in the first
nine months. Most other UK commercial classes have had more modest
increases.
Rates for Amlin London's Property & Casualty business
declined by 1.2%. However, new income of GBP64.5 million was added
across classes. Renewal rates for Amlin's London Marine &
Aviation business decreased by an average of 3.9%, with the energy
class experiencing a rate reduction of 8.9%.
Continental European insurance markets remain competitive but
rates have been stable.
Outwards reinsurance
Reinsurance expenditure in the nine months to 30 September 2014
was GBP273.1 million, representing 11.9% of gross written premium
(30 September 2013: GBP343.5 million and 15.6%). As previously
reported, the reduction reflects the closure of Special Purpose
Syndicate 6106, which accounted for GBP34.2 million of reinsurance
expenditure in the prior period, together with improved
retrocessional purchase, with lower rates and greater cover
available on attractive terms. In addition, outwards reinsurance
expenditure for insurance classes has been reduced. With the
assistance of more sophisticated modelling, the Group decided to
internalise a proportion of a number of programmes.
Claims and reserves
There were no major catastrophe losses in the third quarter. The
largest loss events in the year to date remain the European
hailstorms and Nebraska tornado, both in June. Claims estimates for
both these events have increased in the quarter, by GBP7.7 million
to GBP32.9 million and GBP6.1 million to GBP29.8 million
respectively.
Smaller catastrophe and large risk losses in the quarter, the
most significant of which resulted from the terrorist attacks at
Tripoli Airport, amounted to GBP33.4 million, bringing the nine
month total to GBP59.9 million.
Claims reserves for prior years have continued to run-off
positively with releases in the first nine months totalling GBP63.6
million (30 September 2013: GBP79.3 million). Releases in the third
quarter of GBP23.5 million were predominantly due to positive
claims development in Amlin London and Amlin Europe.
Investment returns and foreign exchange
The investment return for the nine month period was 1.8%, with
average funds under management of GBP4.3 billion. During the period
bonds - duration returned 1.4%, bonds - absolute return 1.5%, cash
and cash equivalents 0.4%, equities 2.6% and property 5.8%.
The asset allocation (based on allocations to sub-advisors) at
30 September 2014 was 20% bonds - duration, 54% bonds - absolute
return, 6% cash and cash equivalents, 14% equities and 6%
property.
The strengthening of the US dollar during the third quarter
generated GBP28.0 million of foreignexchange gains on translation
of foreign operations (net of designated hedges) through reserves,
partially reversing previous translation losses.
Other developments
On 24 October, Amlin announced that it had increased its
existing interest in Leadenhall Capital Partners (LCP) from 40% to
75%. The remaining 25% interest will continue to be held by the
individual partners of LCP. The current management team of John
Wells (Chairman) and Luca Albertini (CEO and CIO) will remain in
their existing roles. The team manages $1.8 billion (as at
September 2014) of assets across three separate funds and managed
accounts.
LCP provides asset management solutions to institutional clients
in the (re)insurance-linked securities (ILS) market. ILS has grown
materially over recent years, particularly in reinsurance, and
Amlin is one of only a few (re)insurers to have an aligned business
in this area. Significant synergies have already been developed
between LCP and Amlin's reinsurance business, and the increased
stake provides both businesses with a valuable strategic
advantage.
On 1 September, Amlin reorganised its client facing operations
into three global strategic business units: Reinsurance, Marine and
Aviation and Property and Casualty. This will allow an even greater
focus on clients' needs and relationships and is expected to
enhance our long term growth potential through a globally
co-ordinated market approach. At the same time, the Group
consolidated Amlin's claims and business support functions to
improve service to our clients. In addition, the changes will
increase efficiency and scalability over the medium term.
On 21 August, Amlin appointed Oliver Peterken as an Independent
Non-Executive Director.
Charles Philipps, Amlin's Chief Executive, commented: "We are
pleased with our progress to date in 2014 and are confident that we
can continue to deliver healthy returns for shareholders. Against a
backdrop of intensifying competition as a result of increasing
industry capital, we have successfully maintained underwriting
discipline while making good progress in building a more
diversified business which is better suited to meeting the
challenges of the current environment."
Enquiries:
Charles Philipps, Chief Executive,
Amlin plc 0207 746 1000
Richard Hextall, Chief Finance & Operations
Officer, Amlin plc 0207 746 1000
Analysts and Investors
Julianne Jessup, Global Head of Investor
& Media Relations, Amlin plc 0207 746 1961
Media
Ed Berry, FTI Consulting 0203 727 1046
This information is provided by RNS
The company news service from the London Stock Exchange
END
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