Amlin UK first-half profit up 52% on rising commercial rates

Lloyd’s insurer Amlin’s UK division made an operating profit of £7.6m in the first half of 2012, up 52% on the £5m it made in the same period last year.

The company attributed the improvement to rising UK commercial rates, particularly in fleet motor.

The division’s combined operating ratio (COR) improved by three percentage points to 96% (H1 2012: 99%) following a three-point drop in the claims ratio to 58% (H1 2012: 61%).

The COR was helped by reserve releases of £9.1m (H1 2012: £5.9m).

GWP drop balanced out

The improvements came despite a 6% drop in gross written premium to £212.6m (H1 2012: £227m). This was caused by a £23m reduction in income estimates made in 2012 for binding authority business.

The company said in its results statement on the UK performance: “The trading environment for this business continues to improve.

“In the six-month period, fleet motor income increased by 20.8%, with average renewal rate increases of 7.6% and new business income of £19.4m (net of brokerage).”

The company added that commercial property rates rose 1.2% and rates for liability business were “positive”.

Further strengthening

Amlin expects the conditions in the UK commercial insurance market to continue to improve.

The company said: “We expect further strengthening in the UK commercial market as competitors react to poor results with withdrawal of capacity and re-pricing.

“The upward trend, which began in fleet motor in 2010, is now more evident in the UK commercial property and liability classes.

“Amlin UK is well positioned to generate increasing levels of profitability in this trading environment, following substantial investment in distribution and underwriting in recent years, and having grown its gross premium by £80.8m (gross of brokerage) over the two years to December 2012.”

Group performance

Group-wide, Amlin made a profit after tax of £140.2m in the first half of 2013, down 17% on the £168.9m it made in the same period last year.

The COR increased by one percentage point to 85% (H1 2012: 84%) after the company paid out £32.2m in large catastrophe losses (H1 2012: nil).

Gross written premium was up 1.3% to £1.84bn (H1 2012: £1.81bn).

Underwriting profitability

Amlin chief executive Charles Philipps said: “These are a solid set of results, which demonstrate a good level of underlying underwriting profitability.

“There are positive trends in a number of our businesses, which will counteract the downward pressure on catastrophe reinsurance rates. This reinforces the benefit of our diversification strategy.”