An absence of major catastrophes and £134m of reserve releases explains most of Amlin's (AML) impressive 2013 earnings performance. Its combined ratio of claims to premiums improved by three percentage points to 86 per cent, leaving Amlin one of the most profitable underwriters at Lloyd's.
Amlin did suffer losses from smaller-scale events such as last summer's floods in central Europe and year-end windstorms in northern Europe. But sector-wide losses from such claims aren't large enough to reverse the pricing pressures that are building and Amlin's average premium rate at January's renewals fell 2 per cent. Unsurprisingly, rates are softening most on catastrophe-related lines, where Amlin's prices slipped 8 per cent - though at least that was better than the market's 15-20 per cent rate slippage. For non-catastrophe business, meanwhile, management says rates are generally stable.
The investment book managed a 3.6 per cent return, which isn't bad given today's low interest rates and the backdrop of 'tapering' monetary expansion. This partly reflects Amlin's relatively heavy exposure to higher-yielding assets such as equities (11.7 per cent) and property (4.1 per cent).
Numis Securities expects EPS of 40.8p for 2014 (from 59.1p in 2013) and net tangible assets (NTA) of 302p.
AMLIN (AML) | ||||
|---|---|---|---|---|
| ORD PRICE: | 462.2p | MARKET VALUE: | £2.31bn | |
| TOUCH: | 462.2-462.3p | 12-MONTH HIGH: | 472p | LOW: 372p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 335p | COMBINED RATIO: | 86% | |
| Year to 31 Dec | Gross premiums (£bn) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 1.54 | 509 | 208 | 20 |
| 2010 | 2.00 | 259 | 175 | 23 |
| 2011 | 2.22 | -194 | 41 | 23 |
| 2012 | 2.32 | 264 | 149 | 24 |
| 2013 | 2.44 | 326 | 143 | 26 |
| % change | +5 | +23 | -4 | +8 |
Ex-div: 16 Apr Payment: 29 May Capacity owned: 100 per cent | ||||
