Syndicate Forecasts
Amlin PLC
27 November 2001
PRESS RELEASE
DATE 27 November 2001
Strong Outlook. Continued improvement in underlying performance
Amlin Underwriting Limited, the leading managing agency owned by Amlin plc,
has updated its forecasts for the 1999 and 2000 years of account. The
forecasts indicate a continued improvement in the underlying trading
performance of Amlin's core ongoing Syndicate 2001.
Financing
On 15 October 2001 Amlin announced a 39% increase in capacity for Syndicate
2001 to £800 million. Following the completion of the Lloyd's auction
process, Amlin expects to take its ownership of Syndicate 2001 to 72%.
Support from third party capital providers has been strong reflecting the
recent outperformance of Syndicate 2001 relative to the Lloyd's market.
To support its share of Syndicate 2001's capacity for the 2002 year of account
Amlin has completed its financing arrangements. The arrangements for the
short term credit facility with State Farm have been finalised and the final
amount was determined at $130 million. In addition Amlin will increase the
draw down on its existing bank facility to £39.3 million.
11th September
The impact on Amlin plc of the estimated losses arising from the terrorist
attacks of 11 September 2001 remains in line with that published on 15 October
2001. The terrorist attacks impact the 2000 and 2001 years of account.
The company is pleased to report that Syndicate 2001 met its US gross funding
requirements without the need for a cash call on its capital providers. This
is an indication of the underlying balance sheet strength of the syndicate.
Current trading and outlook
While it is early to predict the outcome of the 2001 year of account, Amlin
believes that the continued improvement in Syndicate 2001's underlying
performance will mitigate significantly the estimated impact of the terrorist
attacks on 11 September 2001.
The current year is benefiting from rate increases that were gathering
momentum prior to 11 September 2001 and have accelerated significantly since
then. It is also benefiting from cost savings and other efficiencies that
have resulted from the reorganisation implemented in October 2000.
Trading conditions over the next several years are expected to be excellent
and, with the substantial increase in capacity confirmed, Amlin believes that
Syndicate 2001 is well positioned to take advantage of these conditions.
Amlin expects to grow its market position in such an environment.
The following is indicative of rate changes achieved since 11th September
2001:
Airline hull and liability + 200% (including terrorism surcharges)
Direct property + 50%
Hull + 30%
Specie + 50%
Additionally, policy terms are being tightened, insured retentions are
increasing and terrorism cover is being limited or excluded in a number of
areas.
1999 and 2000 account forecasts
The forecasts, which are set out below, are expressed in a 5% range as a
percentage of capacity and are after standard Names' expenses, including
agent's fees and commission.
1999 year of account forecasts
This year of account has developed broadly in line with expectations. The
improvement in Syndicate 2001's forecast reflects strong investment returns to
date and a continued improvement in closed year loss ratios. Following the
events of 11 September 2001, and given the longer tail nature of Syndicate
1141's account, the provision for reinsurance bad debt has been increased by £
2.2 million.
Syndicate No. Capacity £m % owned by Amlin Latest forecast Previous
% to % forecast
% to %
902 37.6 45.5% 7.0) to (2.0) (7.0) to (2.0)
1141 76.2 52.1% (25.0) to (20.0) (23.0) to (18.0)
2001 453.0 35.2% (4.5) to 0.5 (5.5) to (0.5)
Total 566.8 (7.4) to (2.4) (8.0) to (3.0)
2000 year of account forecasts
The changes in forecasts for this year of account are attributable largely to
the events of 11 September, which are estimated to have impacted the 2000 year
of account of Syndicates 902, 1141 and 2001 by £1.8 million, £0.9 million and
£19.2 million respectively.
In addition investment return forecasts for next year have been lowered
following the stronger than expected performance during the last six months
for our bond portfolios.
Syndicate No. Capacity £m % owned by Amlin Latest forecast Previous
% to% forecast
% to %
902 37.6 56.7% (32.5) to (27.5) (22.5) to (17.5)
1141 76.2 69.7% (28.0) to (23.0) (23.0) to (18.0)
2001 423.4 55.8% (5.0) to 0.0 0.0 to 5.0
Total 537.2 (10.2) to (5.2 ) (4.9) to 0.1
Charles Philipps, Chief Executive of Amlin, said:
'Despite the losses we incurred due to the terrorist attacks, our underlying
underwriting results are improving and we are well positioned to take
advantage of the rapidly improving rating environment.'
Enquires:
Charles Philipps, Amlin plc 0207 746 1050
Richard Hextall, Amlin plc 0207 746 1054
David Haggie, Haggie Financial Limited 0207 417 8989
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