Amlin first-half profit drops on accounting change, but dividend lifted

24th Aug 2015 07:53

(ShareCast News) - Insurer Amlin posted a fall in interim pre-tax profit, mainly on the back of a change to its accounting for the seasonality of catastrophe and reinsurance earned premium.Pre-tax profit for the six months ended 30 June was £143.3m, down from £148.5m in the first half of last year, while the net earned premium fell by 7.5% to £1.02bn.Still, the interim dividend was increased 3.7% to 8.4p from 2014.Chief executive Charles Philipps said: "This is a solid set of results in the more challenging market which prevails. Were it not for our change in accounting for the seasonality of catastrophe reinsurance earned premium, profit before tax would have been considerably ahead of the first half of last year."This will unwind in the second half. I am also pleased with the substantial progress which has been made following our reorganisation last year. New opportunities exist and efficiency gains are being realised."Gross written premium rose to £2.0bn from £1.89bn in the first half of 2014, but the company's combined ratio, which measures underwriting profit, deteriorated to 91% from 87%. A ratio below 100% shows the company is making a profit, while a ratio over 100% indicates that it is paying out more in claims than it is receiving from premiums.RBC Capital Markets, which rates the stock at 'underperform', said the results were in line at the pre-tax profit level, with a stronger investment return offsetting a weaker-than-expected combined ratio.On an underlying basis, however, it said the results were weaker than its first-half estimates.RBC rates the stock at 'undeperform'.At 1423 BST, shares in Amlin were down 2.6%at 487p.