Amlin blows back into black as the storms die down

Amlin had Mother Nature and a bit of good old-fashioned discipline to thank as it swung back into the black last year. The largest Lloyd's of London insurer said yesterday that fewer catastrophe claims and selective underwriting helped it post a pre-tax profit of £264.2m in 2012, compared with a £193.8m loss a year earlier.

The improvement was almost inevitable given that 2011 was one of the costliest for insurers, with billions of claims from disasters including Japan's earthquake and Thai floods.

Amlin's catastrophe-related claims bill fell to £152.3m last year from £501m in 2011. The bulk of the 2012 bill was due to Superstorm Sandy, which cost it £141.6m.

Its chief executive Charles Philipps said: "Last year, the group delivered a strong financial performance despite the losses incurred from Hurricane Sandy, and a challenging economic environment.

"Our weighting to classes of business where rating is either strong, has improved or is improving, together with the expectation of continued progress at Amlin Europe, is encouraging for 2013's underwriting returns."

The company's combined ratio improved from 108 per cent to 89 per cent, meaning it took in more in premiums than it paid out in claims. Investment returns rose 4.1 per cent to £165.3m despite moribund markets as the company invested in riskier assets instead of low-yielding bonds. However, Mr Philipps warned this would be hard to replicate in 2013.

"While we have had a better-than-expected start to the year for investment returns, the extremely low yields on cash and bonds will make it difficult to achieve a similar investment return to 2012," he added.

The shares yesterday dipped 5.7p to 425.5p even though Amlin raised its final dividend by 4.4 per cent to 16.5p. The company also announced a £50m deal to buy Dutch insurer RaetsMarine to boost its marine underwriting business.

Folkert Strengholt, the managing director of RaetsMarine, said: "Having worked with Amlin for a decade, we look forward to becoming part of the group and benefiting from the close working relationship we already have with the company."