Amlin : record loss after series of catastrophes

Amlin announced a record first-half loss due to an unprecedented series of catastrophes, with worldwide natural disasters already making 2011 the most costly year on record.

The biggest listed insurer operating in the Lloyd’s of London market said it had made a pretax loss of GBP192.3 million for the six months ended June 30, after a profit of GBP107.6 million a year earlier.

“Exceptional catastrophe losses in the first half of 2011 have taken a heavy toll on the reinsurance industry, and Amlin has been no exception,” Chief Executive Charles Philipps said, adding that the results were “disappointing.”

At 0720 GMT, Amlin shares were down 1.2% at 319 pence, giving the company a market capitalization of just over GBP1.6 billion and underperforming the wider FTSE 250 index, which was 0.3% higher.

The company’s losses for major catastrophe related claims were GBP314.3 million, compared with GBP127.1 million a year earlier. Combined catastrophe losses added 34% to Amlin’s claims ratio in the first six months, compared with 15% a year earlier.

As a result, Amlin’s claims ratio increased to 92%, compared with 63% a year earlier, largely because of New Zealand and Japanese earthquake claims, but also due to losses from Australian floods and U.S. tornados.

However, Philipps said he expected the company to “significantly recoup” those losses in the second half and was maintaining an interim dividend of 7.2 pence a share as a sign of confidence.

Amlin said that its corporate insurance arm ACI had produced a disappointing financial return, in posting an underwriting loss of GBP43.1 million, compared with a loss of GBP800,000 a year earlier. It said ACI had been hit by a high frequency of large claims across the marine and property books in June, totaling EUR24.2 million.

“We believe that is bad luck as opposed to bad underwriting,” Phillips said, adding that a “huge amount” had been done to improve performance at ACI and there were now encouraging underlying trends.

The company said its new reinsurance platform for Continental Europe had a “strong start.” Amlin Re Europe wrote GBP79.2 million of income after its creation in October 2010, and the company said that reinsurance rates in both its U.S. and international accounts have also improved.

Phillips said the unit’s combined ratio of 98% was good as it included an expense ratio of 36%, reflecting material start up costs. He added that he was hopeful Amlin Re Europe would make a “very small” profit over the full year.