|
|
|
|
|
 |
OPERATING AND FINANCIAL REVIEW / FINANCIAL PERFORMANCE
 |
| UNDERWRITING PERFORMANCE (100% SYNDICATE 2001) |
|
The following commentary is provided as if we
owned 100% of Syndicate 2001 across all recent
years of account. This removes any distortion in
performance which is attributable to changing
levels of our ownership of Syndicate 2001.
Overall the combined ratio improved to 82%
from 83% in 2003. This is a highly creditable
performance given the higher level of natural
catastrophes. This ratio reflects strong trading
in the 2003 and 2004 underwriting years.
In addition the year benefited from £62.7
million (2003: £34.3 million) of releases from
reserves established in prior periods. This once
again highlights the prudent reserving policy
that we pursue.
| |
|
| 2004 |
Total |
Non-
marine |
Marine |
Aviation |
UK
Commercial
|
|
| Gross premiums written |
942.2 |
521.7 |
158.0 |
91.1 |
171.4 |
|
| Net premiums written |
781.6 |
425.6 |
142.1 |
60.9 |
152.9 |
|
| Net earned premiums |
751.0 |
400.0 |
134.2 |
65.5 |
151.3 |
|
| Claims ratio (%) |
52 |
50 |
51 |
56 |
58 |
|
| Expense ratio (%) |
30 |
30 |
35 |
33 |
25 |
|
| Combined ratio (%) |
82 |
79 |
86 |
88 |
83 |
|
| 2003 |
Total |
Non-
marine |
Marine |
Aviation |
UK
Commercial
|
|
| Gross premiums written |
1,097.5 |
580.3 |
188.1 |
106.7 |
222.4 |
|
| Net premiums written |
922.0 |
482.6 |
167.1 |
69.5 |
202.8 |
|
| Net earned premiums |
867.8 |
452.4 |
146.9 |
77.7 |
190.8 |
|
| Claims ratio (%) |
51 |
46 |
46 |
51 |
66 |
|
| Expense ratio (%) |
32 |
32 |
36 |
41 |
26 |
|
| Combined ratio (%) |
83 |
78 |
82 |
92 |
92 |
|
NON-MARINE
The business written is a blend of classes
exposed to catastrophic, or large loss events,
and attritional property and casualty classes.
The division remained US focused with 68%
of business written in US$. After adjusting
for foreign exchange movements gross
premium income fell by only 2%. Across the
portfolio the average renewal rate reduced
by 6%, with a retention rate of 81%. This
reflected a 6.5% reduction in property related
classes and a continued small increase in
rates on casualty business.
The combined ratio remained at an excellent
79% (2003: 78%). Naturally the division bore
the majority of the windstorm losses which
increased the combined ratio by 15%. The only
other major natural catastrophe in 2004 was
the Asian Earthquake and Tsunami which had
no material impact on the division’s result.
Continued reserve releases of £36.6 million
offset much of the cost of the windstorms.
MARINE
The marine division writes a blend of volatile
classes, such as energy and war, alongside more
attritional classes, such as hull, cargo and yacht.
Rates were stable during 2004 (2003: 8%
increase). However the underlying class
movement reflected the recent changes
in conditions. For example, energy which was
significantly repriced in 2001, 2002 and
2003 began to weaken in 2004 with an
average decline in rates of 11% for the year.
In contrast hull risks, which were slower to
improve than many other classes, achieved
a 7% rate improvement.
Overall gross premium income fell by
16% to £158 million partly as a result of
exchange rate changes.
The combined ratio was once again strong at
86% (2003: 82%). Steady, good performance
across most classes, with very strong results
in energy and war, combined to deliver an
excellent outturn. The offshore energy industry
loss from Hurricane Ivan is estimated to be
$2.5 billion. However, the marine division’s
gross loss from this is estimated to be a
modest $8.5 million and, with significant
reinsurance protection available, the net
energy loss is robustly reserved. Reserve
releases were slightly lower than last year
at £9.4 million (2003: £10.4 million).
AVIATION
The airline portfolio was again an area where
competition increased during 2004 and for this
account, premium income was down £15.6
million. Average rate falls were 10% (2003:
1.5%). However, as air traffic continued to
increase during the year, this offset the
underlying fall in rates.
Other aviation classes continued to experience
renewal rate increases, particularly on the
products account where, after a number of
disappointing years, we pressed for and
achieved rating improvements. Overall the
division’s renewal rate reduction was 0.1%
with 73% of 2003 business being renewed.
There were no significant airline losses during
the year. For the fourth consecutive year, the
number of fatal revenue passenger airline
accidents diminished with only 11 being
recorded in 2004. Amlin had an exposure to
only two of these.
Consequently the combined ratio remained low
at 88% (2003: 92%).
UK COMMERCIAL
Premium income in the UK commercial
division reduced by £51 million during the
year. Competition in UK commercial motor
increased during the year although renewal
rates were largely unchanged and retention
rates were a good 82%. Competition for new
business was more intense and levels of new
business fell by £18 million. Also, final income
received from liability business was lower than
anticipated last year and this had a knock-on
effect to levels in 2004.
However, the overall combined ratio was 83%
(2003: 92%). Reserve releases of £13.1
million were high as both motor and liability
accounts ran off well. The underlying ratio of
92% reflects the healthy environment that has
existed in the UK in recent years.
|
|
|
|
|
|
  |
|
|
|
|
