Amlin, the Lloyd's of London insurer, surprised investors with a reverse profits warning yesterday, claiming that its full-year earnings were on track to come in much higher than forecasts after an unexpectedly calm hurricane season in the US and Caribbean.
The London-listed insurer, which opened up a new operation in Bermuda earlier this year, said its gross written premiums were up 25 per cent over the first nine months of the year, while claims had come in at a record low of just 10.5 per cent.
The company pointed out that if its new Bermuda operations were taken into account - which to date has had negligible claims - the ratio falls to just 9.9 per cent. The previous low was in 2003, when claims came in at a much higher 11.9 per cent of premiums.
In a statement to the market yesterday morning, the group acknowledged that a benign hurricane season and absence of any other major disasters around the world had been behind the strong results. After 2005's record hurricane season - which saw Hurricane Katrina cause some $50bn of damage as it ravaged New Orleans - many insurers upped their capacity for 2006 to take advantage of the increase in premiums.
Although meteorologists had predicted another heavy storm season this year, none of the biggest hurricanes hit land. Several of Britain's other insurers are now expected to publish reverse profit warnings over the coming weeks.
Charles Philipps, Amlin's chief executive, said: "2006 performance to date has exceeded expectations owing to an exceptionally low level of claims in a year when we have increased premiums, particularly for catastrophe-exposed business."
Although premium growth has been most rapid in the company's non-marine division over the past year, it also saw more modest rate increases in the aviation and marine markets. The only division where rates fell was the group's UK commercial division.
Analysts moved to upgrade their forecasts for Amlin's full-year results, while Bridgewell also upgraded its overall recommendation on the stock from underweight to neutral.
Shares in the company rose more than 5.3 per cent to close at 305.5p, giving the group a market value of £1.63bn. The shares have now risen more than 22 per cent since the start of the year.Reuse content