Join our community of smart investors

Amlin feels aftershock of Chilean earthquake

TIP UPDATE: Amlin puts in a creditable performance given that large insurance losses in recent months have cast a cloud over the insurance industry
August 23, 2010

Amlin's performance so far this year looks pretty creditable given that large insurance losses in recent months, notably the Chilean earthquake and the BP oil spill disaster, have darkened the skies over the insurance industry.

IC TIP: Buy at 408p

The insurer's combined ratio (of claims to premiums) deteriorated from a market-leading 73 per cent at this stage last year to 88 per cent as underwriting profits declined from £135m to £100m. Amlin puts its exposure to Chile at $168m (£108m) and the Deepwater Horizon oil rig loss at $15m. And this is a challenging time in the insurance cycle, with no sign of the recent softening of rates being reversed especially in view of the levels of capacity available in the market at present.

The strong growth in premium income in the six-month period largely reflects the ACI acquisition, but Amlin also been targeting areas where ratings remains buoyant such as UK property and motor; and since the Deepwater Horizon accident, rates have strengthened in the marine sector. But

Even so, brokers have cut their full-year pre-tax forecasts back from £325m to just over £300m, although this should still translate into a 20 per cent hike in net tangible assets (NTA) to 331p a share.

.

More analysis of company results

More share tips and updates...

AMLIN (AML)

ORD PRICE:408pMARKET VALUE:£2bn
TOUCH:407-408p12-MONTH HIGH:438pLOW: 351p
DIVIDEND YIELD:5.1%PE RATIO:5
NET ASSET VALUE: 331pCOMBINED RATIO:88%

Half-year to 30 JunNet premiums written (£m)Pre-tax profit (£m)Investment return (£m)Dividend per share (p)
200951017753.16.5
201086310878.77.2
% change+69-39+48+11

Ex-div: 8 Sep

Payment: 7 Oct