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OPERATING AND FINANCIAL REVIEW / THE COMPANY / VISION, STRATEGY, DELIVERY
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CHARLES PHILIPPS CHIEF EXECUTIVE
“Our vision for 2009 is to become the ‘global reference point for quality’ in our markets.”
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Since October 2000 Amlin has been focussed
on delivering its Vision for 2005. In 2000 we
set out to:
- Become the most astute leader of insurance
risks, with exceptional risk management
expertise;
- Become recognised by brokers, insureds and
reinsurers for financial strength, durability
and client responsiveness;
- Become “the place to work” in the industry;
- Deliver excellent returns to shareholders.
Our performance in meeting these objectives is
detailed in the remainder of this Operating and
Financial Review. We have made good progress
and this is evidenced by:
- Syndicate 2001’s performance, measured
as average return on capacity for the 2001,
2002 and 2003 years of account1, has
been the highest among the 10 largest
managing agents in Lloyd’s – a sign of astute
underwriting and risk management;
- In a survey conducted during 2004 among
some 400 placing brokers Syndicate 2001
was top ranked for perceived financial
strength among Lloyd’s businesses;
- In a survey of employees conducted by MORI
in May 2004, Amlin compared extremely
favourably against financial services company
norms for employee satisfaction. Retention of
our senior underwriters has been greater than
95% for the fourth year in succession;
- Amlin’s total shareholder return since
1 January 2000, of 96%, has been high
relative to insurers internationally.
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NEW VISION |
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The progress made to date provides the
platform for future success. During 2004,
we have set a new Vision for 2009 which is
intended to stretch our leadership position in
the London insurance market.
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Our aim is to become “the global
reference point for quality” in our
markets. In achieving this we will
concentrate on:
Profit focused underwriting
excellence – this is the principal
driver of our financial performance;
Improving our understanding of
client needs and market trends –
so that we can target good areas
of growth in the future;
The delivery of first class client
service standards – so that we can
grow our appeal to clients and
attract the quality and volume of
business that we want to underwrite;
Cycle management, combining
underwriting, reinsurance, capital
and investment strategies – to
optimise risk weighted shareholder
returns over the insurance cycle.
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We expect 2009 to coincide with the bottom of
the insurance pricing cycle. Financially, our
aims are to:
- Deliver a cross cycle return on equity
(covering the period 2002 to 2009) of at
least 15%, considerably above our cross cycle
cost of equity of approximately 8.5%, and
- Trade profitably through the soft part of the
cycle, something we along with most of our
peers failed to do in the last soft market.
The achievement of these goals will make
Amlin a rare breed in our industry. We
recognise that the most difficult part of
the cycle lies ahead. However, the Group’s
positioning in terms of skills, shared
understanding of underwriting strategy and
management information is significantly
better than in the last downturn.
The achievement of our Vision and
financial goals will require the successful
implementation of strategies covering:
Underwriting and the proper contraction of
exposures as competitive forces drive down
margins to less attractive levels;
Investments, so that we optimise returns
from our pool of investment assets (up
186% over the past four years) in a period
when we expect lower underwriting returns;
Clients, their needs and our ability to deliver
the level of service to which we aspire;
People, their expertise, experience and
motivation to meet the standards we require;
Infrastructure, in particular our use of
technology to support our underwriting and
client service plans;
Risk management, so that we can more clearly
and easily identify risks to the achievement
of our ambitions, giving us more scope to
successfully address them;
Balance sheet management, so that we
successfully balance the need for capital
to support the business over the long term, with
the aim of meeting our return on equity target
and of continuing to deliver superior total
shareholder returns.
In some areas these strategies are well
developed. In others, such as the claims
aspects of client service, they are undergoing
detailed review and enhancement so that their
implementation gives us the best possible
prospects of becoming “the global reference
point for quality” in our markets. Each area is
addressed further in the relevant part of this
Operating and Financial Review.
With our focus on “quality” we intend that we
will be in an enviable position to successfully
deliver and manage good long term organic
growth recognising that, in the period to
2009, there will most likely be a period of
contraction as insurance rates soften.
1 Based on managing agents’ published results and forecasts as
30 September 2004
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