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OPERATING AND FINANCIAL REVIEW / THE COMPANY / DELIVERING VALUE /
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| EXPERIENCE |
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The classes of business written have been
developed over many years and new products
are not launched without significant
investigation. Even then, the premium income
capacity allocated to a new class would
initially be low and the profile of the class
would be built up slowly and carefully over
several underwriting years in order to build
confidence and knowledge. Therefore the bulk
of the premium income written is on business
where Amlin has strong knowledge, expertise
and historical data. This assists in the planning
and modelling of potential outcomes.
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| CYCLE MANAGEMENT OF VOLUME |
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Amlin has a premium income capacity
allocated to each line of business for each
calendar year, but these are not targets. It is
clear for all underwriting staff that underpriced
business is to be declined and that gross
underwriting profit takes precedence over
volumes of business. For the syndicate as a
whole, this philosophy can be seen in the
reduction in gross premium income and market
share during the environment of soft pricing.
The graph above shows an analysis of the
underwriting performance, as measured by
gross ultimate loss ratios at 31 December
2003, of Amlin’s ongoing business over the
period 1993 to 2003.
The orange line shows Amlin’s own market
share as a percentage of the market over
the same period. There are three important
conclusions that can be drawn from this chart.
First, Syndicate 2001’s ongoing business has a
record of strong outperformance across the
cycle. Second, that outperformance is most
strongly visible when market conditions are
most difficult and overall loss ratios are poor.
Third, that Amlin’s market share is highest
when market conditions are at their most
favourable and, conversely, market share
is lowest when loss ratios are at their worst.
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