Amlin first-half profits trimmed by blunter investments

19th Aug 2013 07:17

First-half profits were trimmed at specialist insurer Amlin due to lower contribution from investments and pressure on catastrophe reinsurance rates.But management sees a number of encouraging trends and insists there remains good margin potential for the FTSE 250 group, despite the 12.5% fall in pre-tax profits to £161.4m.Chief Executive Charles Philipps said: "These are a solid set of results which demonstrate a good level of underlying underwriting profitability. "There are positive trends in a number of our businesses which will counteract downward pressure on catastrophe reinsurance rates and this reinforces the benefit of our diversification strategy. We are optimistic about the out-turn for the full year."London-based Amlin's underwriting return was strong, supported by growth in premium across 2012 and 2013 and limited catastrophe activity, with underwriting contribution increased to £158.2m from £153.5m.Phillips pointed to catastrophe reinsurance income having increased by approximately 12% since June 30th 2011, with retentions remaining high, as the majority of this income was written at strong or near peak margins, although the June US renewals witnessed significant competition from new entrants.However, Amlin found playing the investment markets remained difficult, with a reasonable six-month investment return of 1.4% down from 2.0% in the comparable period. This led to a 20% fall in investment contributions to £67.4m, on the average funds under management of £4.5bn.The board expect the overall trading environment to remain "satisfactory" for the remainder of 2013, saying Amlin is well positioned in an improving UK commercial market and will also benefit from the underlying improvements in its European businesses.Amlin, which improved capital strength from £378.8m to £576.5m, hefted the dividend up 4.0% to 7.8p per share. OH