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Amlin shares plunge on profit warning

Shares of Lloyd’s insurer Amlin plc yesterday plummeted after a profit warning partly driven by the need of its Bermuda unit to increase catastrophe reserves by £27 million ($44 million).

After Amlin issued a statement saying that results would likely fall about £65 million short of expectations, meaning a probable first-half, pre-tax loss of about £181 million ($295 million), the company’s shares fell more than 16 percent to close at 335p in London Stock Exchange trading yesterday.

It was the biggest one-day fall in Amlin’s stock price since the September 11 terrorist attacks of 2001.

Like many other insurers, Amlin has been hit by huge claims from a string of natural disasters including the Japan earthquake and tsunami, the New Zealand earthquake and a series of tornadoes in the US.

“The first half of 2011 has seen an unprecedented level of catastrophes that have affected the non-life insurance sector as a whole,” chief executive officer Charles Philipps said in the statement. “We are disappointed by these further developments and their impact.”

Amlin received additional claims relating to the Christchurch quake last month, raising total claims reserves in the first half to £314 million, the company said. An increase in losses related to Japan estimated for Amlin London was largely absorbed by its reinsurance programme. But Amlin Bermuda had to increase its net major catastrophe reserves and this contributed £27 million to the shortfall in profit expectations, the company said.

The insurer reports first-half results on August 22. “We have continued with our cautious approach to reserving and if loss activity returns to more normal levels we would expect a strong performance in the second half of the year,” Mr Philipps added.

“We also remain confident that our actions to strengthen ACI’s underwriting practices, risk management and reserving will show through in future results.

“The balance sheet remains robust and with conditions improving on key lines of business we are well placed in our markets.”

Amlin CEO Charles Philipps

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Published August 03, 2011 at 2:00 am (Updated August 03, 2011 at 10:18 am)

Amlin shares plunge on profit warning

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