Amlin posts solid results; warns on change

Re/insurance group Amlin has posted strong results for 2013 but also warned of rapid changes and challenges in some of its key markets highlighting the influx of alternative capital and a consolidation of capacity driven by brokers.

The company made a pre-tax profit of £325.7 million for the year, a 23.3 percent increase on the £264.2 million it made the year before. Its combined ratio dropped by a few notches to 86 percent compared with 89 percent in 2012. Its gross written premiums saw slight growth to £2.46 billion from £2.4 the year before.

The company said its profits were helped by limited catastrophe activity in 2013 with Amlin London and Amlin Bermuda showing very good performance and Amlin Europe continued improvement.

But Charles Philipps, chief executive of Amlin, highlighted some specific changes occurring in the market that he said would pose fresh challenges for the business. He said the influx of alternative or ‘convergence’ capital into the reinsurance markets is one challenge.

He also said that the industry’s big brokers increasingly consolidated capacity last year by channelling premium to fewer, larger carriers through placement platforms and exclusive agreements with selected insurers. “This was particularly evident in the London subscription market,” he said.

“At Amlin, we are well placed to keep meeting these challenges, thanks to our strong franchise and lead market position,” he said. “We have a particularly robust position in reinsurance. Amlin is a preferred counterparty for all three global reinsurance brokers, and has a lead position on more than 50 percent of our London-market business.”

He added: “Reinsurance is increasingly becoming a two-tier market and Amlin is benefiting from its position in the premier tier.”

In the context of these changes in the industry, he also said the company plans to grow and better leverage its own alternative capital vehicle, Leadenhall Capital Partners, which has grown its assets under management in 2013 by £437.7 million to £966 million.

“We will continue developing the synergies between Leadenhall Capital Partners and our reinsurance business,” Philipps said. “We currently have a 40 percent partnership share and we expect to increase this either partly or fully, during 2014. In the longer term, our strategic goal for Leadenhall is to be one of the top-three global fund managers in insurance-linked securities.

“Over time, we expect that Leadenhall’s growth, and its ability to supplement Amlin’s reinsurance capacity, will help us grow our share of the global reinsurance market.”