TIDMAML
RNS Number : 8521N
Amlin PLC
21 May 2015
Amlin plc
PRESS RELEASE
For immediate release
21 May 2015
Quarterly Management Statement for the three month period to 31
March 2015
Amlin has had a good start to 2015 with limited loss activity
and an excellent investment return of 1.7% for the first
quarter.
Underwriting
Gross written premium for the three months ended 31 March 2015
was GBP1,260.2 million (31 March 2014: GBP1,276.7 million). At
constant rates of exchange, gross written premium decreased by
1.4%. Income growth from strengthening of the US dollar was largely
offset by weakening in the Euro, reflecting the geographical
diversity of Amlin's business.
Whilst our Reinsurance business benefitted from the prominence
of its US Dollar revenue stream, income in both our Marine and
Aviation and Property and Casualty businesses was impacted by
weakness in the Euro.
Average renewal rates were down 3.5% (31 March 2014: decrease
2.3%) and renewal retention rates remained healthy at 89.1% (31
March 2014: 88.2%).
Following the transition in our 2014 results for North American
windstorm exposed business to a seasonally adjusted earnings
profile, there was a reduction in earned premium in the first
quarter of approximately GBP20 million, compared to the 2014
period. The profile change reduces earnings in the first and second
quarter, and to a lesser extent in the fourth quarter, with the
majority earned in the third quarter reflecting the risk profile of
the business.
Premium income by Strategic Business Unit (SBU) is analysed in
the table below:
Gross Renewal Renewal Gross Renewal Renewal
written rate written rate
premium change premium change
to 31 to to 31 to
March March
2015
GBP 31 March retention 2014 31 March retention
million 2015 ratio 2014 ratio
to to
% 31 March GBP % 31 March
2015 million
% 2014
%
--------------------- ---------- ---------- ----------- ---------- ---------- -----------
Reinsurance 603.6 (6.3) 89.6 599.8 (4.7) 87.9
--------------------- ---------- ---------- ----------- ---------- ---------- -----------
Property and
Casualty 465.3 0.6 89.3 480.3 0.2 88.3
--------------------- ---------- ---------- ----------- ---------- ---------- -----------
Marine and Aviation 191.3 (4.1) 87.1 196.6 (1.3) 88.1
--------------------- ---------- ---------- ----------- ---------- ---------- -----------
Total / average 1,260.2 (3.5) 89.1 1,276.7 (2.3) 88.2
--------------------- ---------- ---------- ----------- ---------- ---------- -----------
Note: Gross written premium by SBU is shown on a direct basis,
excluding the impact of any intra group transactions.
Competition within Reinsurance lines remains challenging. Amlin
has continued to be selective, focussing on areas where pricing
meets acceptable rates of return. Overall, reinsurance renewal
rates decreased by 6.3%. US catastrophe renewal rates reduced by an
average of 6.5%, while international catastrophe renewals
experienced average rate decreases of 10.5%. However,
non-catastrophe reinsurance classes, which now amount to
approximately 20% of our estimated annual premiums, saw less
pressure, with renewal rates decreasing by 4.8% and new business of
GBP58.8 million being added in the period. We believe our strong
client position, enhanced by Leadenhall Capital Partners which now
has funds under management of US$1,921.0 million (31 December 2014:
US$1,880.8 million), continues to differentiate Amlin from other
markets. Income includes amounts of GBP31.2 million relating to
multi-year deals.
US property and casualty rates were down 2.8%. New business of
GBP38.1 million was added in the period across property and
casualty classes. In our UK commercial business, UK fleet motor
rates continued to rise, with an average of 6.3% in the first three
months.
Renewal rates for Marine and Aviation business came under
pressure across classes, but most notably for energy, which saw a
rate decrease of 13.3% as falling oil prices impacted construction
and drilling activity.
Outwards reinsurance
Reinsurance expenditure, excluding the cost related to Tramline
Re Limited, in the three months to 31 March 2015 was GBP203.1
million, representing 16.1% of gross written premium (31 March
2014: GBP211.4 million and 16.5%). The decrease represents savings
achieved through the purchase of one group-wide retrocessional
programme, and more attractive terms. Increased cover was acquired,
with lower retentions, protecting both the Reinsurance and the
Marine and Aviation businesses.
In December 2014, the Group acquired coverage for US earthquake
and storm and European windstorm perils up to $200 million from a
Bermudian special purpose insurer, Tramline Re II Limited, which in
turn issued a catastrophe bond into the markets. The transaction
provides the Group with fully collateralised protection over a four
year period with effect from 1 January 2015. The costs relating to
Tramline II of GBP52.7 million have been recognised in full during
the quarter, but will be earned across the four year term of the
contract.
The transition to a seasonal earnings profile for outwards
reinsurance costs associated with the North America Windstorm
business has led to a reduction in earned reinsurance expenditure
of approximately GBP13 million for the first quarter, although this
difference will unwind on a full year basis.
Claims and reserves
There were no major catastrophe losses in the period and large
losses were modest at GBP6.6 million (31 March 2014: nil and
GBP7.5m). Following action taken in the UK part of the Property and
Casualty business, there are good signs of its claim ratio
returning to a more respectable level.
Claims reserves for prior years have continued to run-off
positively with releases in the first three months totalling
GBP29.2 million (31 March 2014: GBP17.4). Releases largely reflect
positive claims development within the Reinsurance and the Property
and Casualty businesses.
Investment returns
The Group's investment return for the quarter ended 31 March
2015 was ahead of expectations at 1.7%, with average funds under
management of GBP4.4 billion. During this period bonds returned
0.9%, zero duration bonds returned 1.0%, cash and cash equivalents
0.1%, equities 5.7% and property 2.5%.
The asset allocation (based on allocations to sub-advisors) at
31 March 2015 was 21% bonds, 50% zero duration bonds, 5% cash and
cash equivalents, 17% equities and 7% property. The average
duration of the portfolios at the end of March was 0.4 years.
Towards the end of April the equity weighting was reduced to 16%,
with the proceeds invested predominantly in zero duration
bonds.
We believe that the outlook for global economic growth is
supportive for equities and property but investment return
accumulation is expected to be more muted for the rest of the year
with volatility picking up as the US Federal Reserve Bank starts to
raise rates from current historically low levels.
Charles Philipps, Amlin's Chief Executive, commented: "We have
had a good first quarter bearing in mind the more competitive
market conditions which demand high levels of diligence in risk
selection. We are also realising a number of benefits from the
changes made to our organisational structure in 2014, in particular
with the combination of outwards reinsurance programmes, from
increased knowledge sharing and the ability to offer a wider
product offering to some clients. We expect our business and
geographical diversity, which has grown over recent years, to be of
increased importance in the current environment."
Enquiries:
Charles Philipps, Chief Executive, 0207 746
Amlin plc 1000
Richard Hextall, Chief Finance
& Operations Officer, Amlin 0207 746
plc 1000
Media
0203 727
Ed Berry, FTI Consulting 1046
This information is provided by RNS
The company news service from the London Stock Exchange
END
IMSPKKDBKBKBBPB
Aston Martin Lagonda Glo... (LSE:AML)
Historical Stock Chart
From Mar 2024 to Apr 2024
Aston Martin Lagonda Glo... (LSE:AML)
Historical Stock Chart
From Apr 2023 to Apr 2024
