Amlin reports Q1 premium drop

Amlin, the Lloyd's insurer, has reported a 10% fall in premiums and 7% fall in renewal rate for the first quarter of 2008, citing difficult trading conditions.

The Group’s gross written premium (before deduction of brokerage) incepting in the first three months ended 31 March 2008 was £395.9m (2007: £440.2m at March 2008 rates of exchange), a drop of 10% compared to the same period in 2007.

Syndicate 2001 contributed £333.3 million, a drop of 13%. The majority of this decrease cames from non marine and UK commercial classes. Of this income, £17.1m (2007: £16.2m) was specifically written to be ceded to Amlin Bermuda with up to a further 12.5% ceded through the renewal of a whole account quota share reinsurance contract.

Amlin Bermuda wrote $123.9m of direct income in the first three months, in addition to the reinsurances of Syndicate 2001.

Insured loss estimates for first quarter events were $6 billion. These included the British Airways airline crash at London Heathrow, Cyclone Emma affecting Central Europe in March, significant tornado damage in Atlanta Georgia, a Crane collapse in Manhattan and Australian mine floods.

The Group’s investment return for the first quarter was 0.8% on average funds under management of £2.5 billion.

A statement said: "The Group continues to write a well balanced portfolio of business. While rates are softening in our Non marine, Marine and Bermudian lines albeit from historic high levels, we remain well positioned to benefit from an upturn, when it comes, in our UK commercial and aviation lines.

"The average renewal rate reduction for the Group for the first three months was 7% with renewal retention at a healthy 86%.

"Our reinsurance classes, written within Non marine and Amlin Bermuda, are coming off their peak rating levels but prospective margins remain acceptable. The US catastrophe account has experienced reductions of between 10% and 12%. The international catastrophe book is under continued pressure but there remain attractive areas, particularly where there have been recent losses, such as the UK and Australia. The recent Japanese catastrophe reinsurance renewals had an average 7% reduction in rate.

"Within the balance of the Non marine division the US large property insurance book is suffering from stronger competition and we have begun to retract from this business. Other specialty classes are experiencing more modest rate reductions and continue to offer good margins.

"Within the Marine division, the energy account is under pressure, particularly from new entrants, but while rates are off their peak, they still remain acceptable. War rates continue to soften but with strong aggregate management we remain confident of good returns. Our other marine classes are experiencing small rate reductions and continue to offer good margin potential.

"Airline rates remain competitive but there are growing signs that general rate improvements will be seen in 2008. To date renewal rates have been better than expected, although this is based on the limited number of accounts renewing in the first quarter.

"Overall the Group’s investments have remained defensively positioned. Despite the efforts of Central Banks liquidity conditions in credit markets deteriorated further during the first three months. The flight to quality and expectations of further interest rate cuts was positive for our bond benchmarks, which are based on government indices. However, our bond managers’ non-government holdings, whilst being highly rated, detracted from returns. Equity manager outperformance, together with the hedges that were in place, mitigated some of the impact of equity market falls over the period.

"As communicated in our recent Annual Report and in the circular to shareholders containing the Notice of AGM, we have commenced a share buy-back programme. In the first three months we have purchased 1.81 million shares at an average price of 263.5p per share."