Bloomberg News

Amlin, Beazley See 4% Increase in Rates Following 2011 Disasters

February 07, 2012

Feb. 7 (Bloomberg) -- Amlin Plc and Beazley Plc, Lloyd’s of London insurers, said premium rates during the January policy renewal period increased as much as 4 percent after the most costly year for natural disasters on record.

Amlin said revenue so far this year climbed 19 percent to 746.4 million pounds after “a notable uplift in reinsurance rates,” the London-based firm said today in a statement. Beazley’s renewal rates increased by between 2 percent and 4 percent Chief Executive Officer Andrew Horton said.

“We’re expecting rates to turn from where they have been,” Horton said today in a telephone interview. “It’s a slow and gentle turn, but at least it’s turning.”

Earthquakes in Japan and New Zealand, windstorms in the U.S. and flooding in Thailand cost insurers about $105 billion last year, making it the industry’s most expensive year on record, surpassing the $101 billion paid out in 2005, when Hurricane Katrina struck New Orleans, according to Munich Re. Losses erode insurers’ capital reserves, forcing them to put up prices to compensate.

“The Jan. 1 renewal growth looks strong,” Joy Ferneyhough, a London-based analyst at Espirito Santo Investment Bank, wrote in a note to clients today, referring to Amlin’s statement. “Both Hannover and Munich Re also spoke of very strong catastrophe renewals in their calls last week.”

Hannover Re, the world’s fourth-biggest reinsurer, said rates rose 6 percent for policies renewed in January.

Hardy Talks

The steepest rate increases came in Beazley’s property reinsurance products, Horton said. The firm is expecting rates overall to increase by 1 to 2 percent this year following a 1 percent rise in 2011 and a 2 percent fall in 2010, he said.

Beazley’s pretax profit for 2011 dropped 75 percent to $62.7 million in 2011. That missed the $70.4 million median estimate of eight analysts surveyed by Bloomberg.

Takeover negotiations with Lloyd’s rival Hardy Underwriting Bermuda Ltd. are “ongoing” and any bid would be made using the firm’s $200 million of surplus capital and $225 million credit facility, Horton said. Beazley previously had offers for the firm rejected in 2010.

Amlin, the biggest Lloyd’s insurer by market value, said losses from the Thai floods will be between 50 million pounds and 70 million pounds. The bulk of the loss will lie in its property and catastrophe reinsurance account, it said.

The firm expects to pay out less than 10 million pounds, net of reinsurance, for the Costa Concordia cruise ship disaster last month.

Amlin rose 0.9 percent to 340 pence as of 8:12 a.m. in London trading, while Beazley dropped 1.9 percent to 141.3 pence.

--Editors: Edward Evans, Jon Menon.

To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net;


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