Monday 16 November 2009 7:00 pm

Amlin back to strength after premiums rise

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AMLIN, the Lloyds of London property and casualty insurer, has bounced back from a tough 2008, with underwriting and investment returns both rising steeply in the first 10 months of the year.

Chief executive Charles Philipps yesterday revealed a 52 per cent spike in gross written premiums with two months trading left.

An unusually low incidence of natural disasters, including hurricanes in the US, and low levels of claims at its London marine business should ensure a far better annual result than last year when hurricanes Ike and Gustav helped strip about £325m from profits.

Amlin, which entered the FTSE 100 11 months ago, also faced a tough investment environment last year, unlike 2009 which Philipps described as “excellent”.

The insurer, which has £3.3bn in funds under management, said investment returns were 5.3 per cent in the period.

Overall, gross written premiums totalled £1.37bn compared with £904m at the same point last year.

Philipps had high praise for the performance of the company’s major acquisition, Fortis Corporate Insurance, which it has renamed Amlin Corporate Insurance (ACI). He said ACI had seen strong investment returns while it was at around break-even in terms of underwriting.

ACI was acquired from the Dutch Government in June for €350m (£301m at the time).

Insurance rates have risen 4.4 per cent on average in 2009 and Amlin said it expects further rises in UK motor insurance and continuing “unsustainably low” rates in commercial markets in the US.

Amlin’s update was received well in the City, but some analysts said the company’s strong performance was already reflected in the share price.


Even though these are probably the best results in the sector I’m a seller of Amlin because the multiple looks fairly full. Things like a lack of natural disasters, rising insurance rates and a very strong investment return environment don’t come along at the same time every year.

The positive surprise came from reserve releases from the underwriting business while investment returns look at be around the top of the sector, although rivals are also doing well on that front. We’re quite positive that Amlin will deliver sector-leading returns in the full year.

Amlin’s numbers show how a business can flourish despite a recession. A weak dollar and a solid management team have seen revenue increase 52 per cent. Entry into the FTSE 100 is likely to push the shares higher, but any strength in the dollar could impact on future earnings.