Amlin reported a four percentage point improvement in its combined ratio (of claims to premium) last year to 72 per cent – ranking it as one of the sector’s most profitable underwriters. That reflects the fact that 2009 turned out to be one of the more benign on record for claims.
Such low claims levels will eventually mean premium rates start coming under pressure and management is anticipating "increased competition in the short term." Still, rates are hardly collapsing either. For instance, at the end of 2009, Amlin reported that the main airline renewal season saw rates increase by 8.2 per cent, while the group's London marine business managed to increase rates by 0.5 per cent. Although US catastrophe rates reductions did average 4.4 per cent. Still, last summer's acquisition of ACI has bolstered the group's presence in Benelux countries and cuts overall exposure to US catastrophe claims.
The investment book also looks in good shape. It's mainly focused on low risk bonds and other liquid asset (92 per cent), with 5 per cent in equities and 3 per cent in property. And the portfolio delivered a decent 5.9 per cent return in 2009 – well up on 2008’s weak 0.6 per cent return.
KBC Peel Hunt expects adjusted pre-tax profits of £368m, giving EPS of 57.9p.
AMLIN (AML) | ||||
|---|---|---|---|---|
| ORD PRICE: | 408p | MARKET VALUE: | £2.02bn | |
| TOUCH: | 407-408p | 12-MONTH HIGH: | 409p | LOW: 291p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 4 | |
| NET ASSET VALUE: | 322p | COMBINED RATIO; | 72% | |
| Year to 31 Dec | Net premiums (£bn) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 0.83 | 187 | 90.9 | 10.2 |
| 2006 | 1.01 | 343 | 115 | 12.0* |
| 2007 | 0.94 | 445 | 157 | 15.0 |
| 2008 | 0.92 | 122 | 18.0 | 17.0 |
| 2009 | 1.32 | 509 | 208 | 20.0 |
| % change | +44 | +317 | +1056 | +18 |
Ex-div:17 Mar Payment:31 Mar Capacity owned: 100% *Excludes 8p special dividend | ||||
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