Amlin’s ACI unit, bought from Fortis in 2009, is the only blemish in an otherwise solid set of first-half results

Amlin’s return to profitability in the first half of 2012 has mirrored that of many of its Lloyd’s counterparts, such as Hiscox and Catlin, which have bounced back from an unprecedented year of catastrophe losses in 2011.

Amlin performed well on most fronts, with GWP up 19%, the group’s combined ratio dropping below 100% and investment income doubling.

Added to this has been an improvement in pricing across the board – with an average increase of 4.2% and a renewal retention rate of 86% – driven mainly by catastrophe reinsurance.

In the UK, Amlin UK’s combined ratio improved to 99% from 111% as the insurer’s UK commercial business enjoyed an average rate increase of 5.5%. UK commercial motor was particularly strong, with fleet motor rates up 10% over the period.

Considering Amlin suffered a £500m hit from catastrophe losses last year in what chief executive Charles Philipps described as the company’s worst year since 2001, all in all it seems to have produced a good set of results.   

But, despite this, the Amlin Corporate Insurance (ACI) unit continues to drag the insurer down.

The poor performance of ACI, which Amlin bought from Fortis (now Ageas) in 2009, was reflected in the 98% combined ratio of its European business, which includes ACI.

The ratio was driven by a significant reserve release of £18m, which implies an underlying combined ratio of 106.6%.

On the reinsurance side, expenditure climbed 63.2%, reflecting Amlin’s strategy to better protect its core business this year in the wake of 2011’s costly catastrophe claims, particularly Amlin Bermuda and Syndicate 2001.

While further catastrophe losses would be required to push property and casualty rates materially higher, Amlin looks set to deliver good profitability for the next two years at least.

Failing businesses on the wane

In other news, the number of insurers going bust fell by 86.1% last month, the latest figures from data services provider Experian have revealed.

That only serves to reinforce the message of how well the industry has weathered the economic storm as many of the other sectors continue to struggle – in particular, banking and financial services. While the number dropped by 13%, the sector still reported 67 firms going out of business.

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