Trading Update

RNS Number : 6022L

Amlin PLC

02 August 2011

 



AMLIN PLC

PRESS RELEASE

For immediate release

2nd August 2011

TRADING UPDATE

Following completion of its second quarter reserve review, it has become clear that Amlin is unlikely to meet previous profit expectations for the year ending 31 December 2011.  Overall, Amlin estimates that, for the first half year, it is £65 million below its previous pre tax expectations and £53 million below after tax expectations. 

During July Amlin received a material increase in notified claims from a client relating to the New Zealand Christchurch Earthquake in February 2011, bringing total catastrophe claims reserved in the six months ended 30 June 2011 to £314 million.  This was partially offset by a reduction in estimated losses from the Japanese earthquake in March 2011 and for Amlin London this net deterioration was largely absorbed by its reinsurance programme.  However Amlin Bermuda has had to increase its net major catastrophe reserves and this has contributed £27 million to the shortfall in profit expectations.

ACI's performance has also been below our expectations as a result of a higher than normal frequency of large claims advices on its property and marine accounts, particularly in June 2011. Consequently the result for ACI for the first half of 2011 is £28 million below our previous expectations.

Improving the performance of ACI, particularly its marine account, has been an area of major focus since its acquisition in 2009 and, given the improving trends which were becoming apparent earlier in the year, this is particularly disappointing.  Amlin believes that ACI has taken and continues to take the right actions to improve performance and would not ordinarily expect a recurrence of the same extent of claims activity. 

Syndicate 2001 released reserves of £6 million in the first half, which is approximately £10 million below Amlin's normal expectations.  This was predominantly caused by Amlin UK which had modest reserve deteriorations of £3 million (six months to 30 June 2010: reserve releases of £17 million).  Worse than expected claims development was experienced on the 2009 underwriting year in Amlin UK's motor and property accounts.  In line with Amlin's prudent approach to reserving, this has led to a more cautious appraisal of 2010 and 2011 underwriting year loss ratios.  However, if development patterns return more to trend over the second half of the year, and 2009 development is an unusual year, then this deterioration could be partially or fully reversed by 31 December 2011.

Amlin expects some of the overall shortfall in profit expectations to be offset in the second half of the year by increased income from catastrophe reinsurance, which has been written in the second quarter in an improved rating environment, whilst containing exposure to peak catastrophe disaster scenarios to well within normal risk appetite.

As previously announced, Amlin will be releasing its results for the six months ended 30 June 2011 on 22 August 2011.

Charles Philipps, Amlin's CEO, commented: "The first half of 2011 has seen an unprecedented level of catastrophes that have affected the non-life insurance sector as a whole.  Despite this, we are disappointed by these further developments and their impact on our 2011 performance. We have continued with our cautious approach to reserving and if loss activity returns to more normal levels we would expect a strong performance in the second half of the year. We also remain confident that our actions to strengthen ACI's underwriting practices, risk management and reserving will show through in future results.  The balance sheet remains robust and with conditions improving on key lines of business we are well placed in our markets."

ENDS

Enquiries:
Charles Philipps, Chief Executive, Amlin plc	0207 746 1000
Richard Hextall, Finance Director, Amlin plc	0207 746 1000
Analysts and Investors
Julianne Jessup, Head of Investor Relations, Amlin plc	0207 746 1961
Ed Berry, Vice-President, Financial Dynamics	0207 269 7297
Media
Hannah Bale, Head of Communications, Amlin plc	020 7746 1118
Ed Gascoigne-Pees, Managing Director, Financial Dynamics	020 7269 7132

Notes to Editors:

Amlin plc is a leading independent insurance group operating in the Lloyd's market through Amlin London and additionally in the UK, Continental European and Bermudian markets. We specialise in providing insurance cover to commercial enterprises across a broad range of risks including aviation, marine and international property & casualty. We also provide reinsurance protection to other insurance companies around the world.

A FTSE 250 quoted company domiciled in the UK, Amlin's Syndicate 2001 is highly rated at 'A+' (Excellent) by AM Best and 'A1' (Stable) by Moody's.

 

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