INSURER Amlin yesterday reported stronger than expected profits after the firm enjoyed six months without any major catastrophes.
The Lloyd’s of London firm reported first half pre-tax profits of £184.5m against a loss of £192.3m for the same period last year.
“This is a welcome return to profit and the strength of our underwriting result underlines the quality and diversity of our business,” said chief executive Charles Philipps.
“The improving trading environment is creating many opportunities for profitable growth, for which we have both the capital and the underwriting capability to take advantage.”
In common with most insurers, Amlin was hit hard by a series of major catastrophes in 2011, including earthquakes in New Zealand, floods in Thailand, and the tsunami in Japan, resulting in hefty losses and forcing the firm to raise premiums at the start of this year.
But so far in 2012 there have been few substantial disasters, enabling the firm to report a larger than expected underwriting profit.
As a result Amlin’s claims ratio – a measure of how much underwriting income is paid out to customers – plummeted from 92 per cent to 53 per cent, while income from premiums increased by 20 per cent at £1.81bn.
Investment return on Amlin’s £4.2bn assets was doubled to £84.7m, while the firm’s effective rate of tax dropped to just eight per cent, largely thanks to the amount of business put through the insurer’s Bermudan unit.
The FTSE 250 company also told investors that it had agreed a new five-year, unsecured £300m debt facility with its lenders, replacing a £250m loan that was due to mature in September 2013.
Amlin raised its half-year dividend by 4.2 per cent to 7.5p and shares closed yesterday up 2.5 per cent at 389.1p.