Lloyd’s Amlin Upbeat on 2005/2006

January 10, 2006

Lloyd’s insurer Amlin plc has issued a very positive assessment of its 2005 results and is equally upbeat about prospects for 2006. Amlin said it “expects that, in the absence of unforeseen circumstances, its pre-tax profit for 2005 will be ahead of consensus market forecasts.”

Amlin, which operates Syndicate 2001, Lloyd’s largest, indicated that gross written premium (net of brokerage) for the 2005 underwriting year was £810 million ($1.433 billion)*.”This compares to £830 million [$1.468 billion] in the previous year converted at the same exchange rate,” said the bulletin. “However, after removing reinstatement premiums relating to the windstorm losses in each year, the reduction in premium was a modest 2 percent. The average renewal rate reduction for the 2005 year was 4 percent, weighted across premium by business class.”

Amlin noted: “2005 was the costliest year on record for natural catastrophes. Current industry estimates place the insurance cost between $60 billion and $80 billion. Amlin’s estimate of the overall impact of Hurricanes Katrina, Rita and Wilma remains broadly unchanged from that announced previously.”

As far as the January reinsurance renewals are concerned, Amlin said its “U.S. catastrophe reinsurance renewals have seen rate increases averaging approximately 15 percent with larger increases being experienced in wind exposed regions.” The company sees this trend in wind exposed areas continuing. However, it also indicated that the “international catastrophe account has seen lower increases, on average around 5 percent, as competition was greater in zones where capacity is less constrained.”

Amlin said that to date Syndicate 2001 has written £183 million [$324 million] of premium income, “approximately 10 percent up on the same period in 2005. The average renewal rate increases across all classes has been approximately 4 percent with most insurance classes reversing last year’s downward trend but not to the same level as the reinsurance classes.”

Its recently established Bermuda-based subsidiary has written $55 million (net of brokerage) of new business to date, excluding intra group business ceded to it by Syndicate 2001. “The strategy of using London distribution for sourcing Amlin Bermuda’s business has proven to be beneficial and we have been encouraged by the strong support of the London brokers,” the bulletin added.

CEO Charles Philipps commented: “2006 has started well and Amlin Bermuda has had a very good reception from our UK based brokers. We believe there is scope for continued rate strengthening as the year progresses, as markets in some classes, such as direct property insurance, have yet to respond to the increased cost of reinsurance cover, and the main renewal season for key wind affected zones of the world is later in the year. The outlook is positive.”

*The figures used are the current rates of $1.7687 to £1. Amlin used a lower figure of $1.72 to £1.

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