Amlin plc – Trading Statement - 14.1.08

Amlin plc made the following trading statement recently.  The full press release is available here.   

TRADING STATEMENT

Current trading

2007 Underwriting

The Group's gross written premium (before deduction of brokerage) in the year
ended 31 December 2007 was £1.03 billion, down by 5% over the same period in
2006.

Syndicate 2001's gross written premium was £890 million (at rates of $1.98:£1)
compared with £968 million for the previous year at similar rates of exchange.
This includes £38.5 million of additional business written on behalf of Amlin
Bermuda.

Amlin Bermuda's gross written premium, including the business written in Lloyd's
but excluding the whole account reinsurance of Syndicate 2001, increased by 17%
to $368 million.

The Group average renewal rate reduction for the year was 5% with renewal
retention of 78%. The main renewal season for the 2007 account since the last
update has been for the competitive airline account where rates fell a further
17%. However, the Amlin airline portfolio has been reduced to a core number of
clients. It now accounts for approximately 1% of gross premium income and so
these reductions have little effect on the expected financial prospects for the
Group. We believe that the airline insurance market as a whole made a loss for
2007, despite a lack of major airline disasters, and this should increase
pressure on our competitors to raise future rates to more appropriate risk
adjusted levels.

2008 Underwriting

1 January is a major renewal date for a number of key classes. Amlin has written
total income (before deduction of brokerage) to date of £298 million. This is a
7% reduction on the previous year. Overall renewal rates for Amlin have declined
by 8% with a retention ratio of 87%. We believe that at these rating levels we
continue to write business which will produce an acceptable return. Amlin
Bermuda increased gross written premium by 22% to $127 million (2006: $104
million).

Property reinsurance rates remained satisfactory across the whole portfolio. US
catastrophe reinsurance rates fell by 10%, albeit from strong levels.
International catastrophe rates reduced by 12% but discipline varied by
territory. Overall the reinsurance market still offers an acceptable prospect
for return.

Experience on other classes varied widely. Large commercial property insurance
rates fell by as much as 20%, continuing the downward pressure seen in 2007.
However, the marine account saw only a modest 1% fall in rates.

Investment returns

Fourth quarter 2007 investment returns were a good 1.9%, principally driven by
strong bond returns of 2.4%.

The weighted average investment return for 2007 is estimated to be 6.7% on
average Group cash and investments of £2.5 billion. The bond portfolio returned
6.3% with excellent returns on government bond holdings offset by weakness on
the credit portfolio. The equity portfolio delivered a 10.2% return in volatile
markets. Cash returned 5.5% for the year across all currencies.

Charles Philipps, Chief Executive of Amlin, stated:

'2007 was another excellent year for Amlin. Premium income was modestly lower
but the claims environment was benign and investment returns were strong. The
underwriting environment in 2008 is softening as expected but good margins exist
for selective underwriters. Our underwriting team has a consistent history of
outperformance, particularly in a softening market. This record, together with
effective capital management as evidenced by the recent £120 million return of
capital, gives us confidence that we can continue to deliver for shareholders.'