In their respective interim statements, two of the FTSE250’s insurance groups reported on a tough trading period in which each company was hit by costly catastrophe claims.
Both Amlin (LON:AML) and Hiscox’ (LON:HSX) profits were hit by severe weather, natural disasters and both had exposure to the BP (LON:BP) / Transocean oil spill in the Gulf of Mexico.
Despite a 56.4% increase in gross written premium, to £1.48bn (H109: £950.1m), Amlin’s pre-tax profits came in significantly lower than the first half of 2009, down approximately £70m to £107.6m (H109: £177.1m). Similarly earnings per share (EPS) dropped to 17.1p (H109: 35.2p). However, the insurer upped its dividend by more than 10% to 7.2p per share (H109: 6.5p).
Hiscox saw a similar impact, as it pointed to claims relating to the UK winter freeze, Chile, Windstorm Xynthia and Deepwater Horizon, after it reported a £44m drop in pre-tax profits to £97.2m (H109: £141.4m). The company maintained the level of its gross written premiums at £904.3m (H109: £906.0m)
Earnings per share shed over a third, compared to last year, with H1 EPS at 20.9p (H109: 33.2p), similarly Hiscox’ return on equity fell to 14.8% (H109: 27.5%).
In terms of their outlook for the remainder of 2010, both insurers remained fairly positive despite the catastrophe losses in the year to date.
According to Amlin, rating levels for catastrophe reinsurance “remain attractive”, meanwhile Hiscox stated that “the world insurance market remains plentiful despite insured disaster losses of $22 billion in the first six months of this year”.