Amlin UK expects fleet motor rate rises due to competitor ‘stress’

Lloyd’s insurer Amlin’s UK business is expecting further rate rises in fleet motor this year because of “increased signs of stress among competitors”.

The company announced in its full-year 2012 results that UK fleet motor rates had increased 9.7% in 2012.

The company said: “We anticipate further increases in UK motor fleet pricing, as competitors continue to withdraw capacity in response to poor results.”

There have been a number of withdrawals from UK commercial motor in recent months. For example, Ecclesiatical announced it would stop writing fleet motor in November 2012, and RSA exited mid-market motor trade in September 2012.

Amlin UK achieved average rate rises of 5% across its book.

Return to profit

The rate rises were a contributor to Amlin UK’s return to profitability in 2012. The division made an operating profit of £21.8m, compared with a 2011 operating loss of £2m.

The combined ratio improved eight percentage points to a profitable 95% (2011: 103%), which was helped in part by £21m of reserve releases (2011: £5.3m).

The company said: “Amlin UK benefited from the stronger pricing in its fleet motor account achieved over the past two years and good results from investments made to grow its property account.”

It added: “The improvement in commercial property rates has been less marked, but consistent. As the market offers more growth opportunities, Amlin UK is benefiting from previous investment in this area. Liability lines are also moving upward.”

Group result

The Amlin group as a whole also returned to profit in 2012. The pre-tax profit came in at £264.2m, compared with a 2011 loss of £193.8m.

The combined ratio was 89% (2011: 108%).

The improvement came despite £500.8m of catastrophe claims, including a £141.6m hit from Superstorm Sandy.  

The group reported a positive return on equity of 17.4% in 2012 (2011: -8.6%), which beat Amlin’s cross-cycle target of 15% and was well above the company’s estimated cost of equity of 8.6%.

Amlin chief executive Charles Philipps (pictured) said: “In 2012, Amlin returned to robust profitability and generated a strong return on equity. Recent growth is building earnings momentum and with profits from our non-catastrophe business improving, we are well-positioned to continue to expand into more favourable conditions.”

Along with its results, Amlin also announced it had agreed to buy marine managing general agency RaetsMarine.