Tsunami, floods, earthquakes and tornadoes hammer insurer Amlin

An “UNPRECEDENTED level” of claims from natural disasters plunged Lloyd’s of London insurer Amlin deep into the red in its latest half-year as it paid out more than £300 million to victims across the world.

Big hits from floods in Queensland, the New Zealand earthquake, US tornadoes and the Japanese tsunami pushed losses at the underwriter to £192.3m in the six months to June, as total catastrophe claims more than doubled to £314m.

The group added that the first half of 2011 was the worst on record for natural disasters and is already worse than the whole of 2005, previously the most costly year.

A jump in claims at the marine and property underwriting business of corporate arm ACI added to Amlin’s problems. The division’s underwriting losses hit £43.1m.

Losses also rose in the UK, where the company had to shoulder higher property claims after the winter freeze and rising motor losses.

At the same time, low interest rates meant income from Amlin’s investment portfolio was also sharply lower at £45.3m, compared to £78.7m the year before. The company has nearly 80 per cent of its £4.3 billion of funds invested in bonds or cash with only 9 per cent held in shares.

Chief executive Charles Philipps said: “Exceptional catastrophe losses in the first half of 2011 have taken a heavy toll on the reinsurance industry, and Amlin has been no exception.

But he added that the group is confident it “can materially recover first half underwriting losses” and that in a more normal claims environment it should be able to generate a “high level of profitability”.

“While our results are disappointing, the core underwriting businesses in London and Bermuda are well placed to take advantage of an improving rating environment, particularly in catastrophe lines,” he said.

Amlin had already flagged up a loss of about £180m, some £65m more than analysts were expecting, in a profit warning earlier this month that sent its share price tumbling.

Analysts said the warning dented Amlin’s reputation for carefully controlling its exposure to major catastrophes.

Yesterday Amlin maintained its interim dividend at 7.2p per share. It said it remained confident on its long-term prospects and hoped to maintain its full-year dividend pay-out.

It added that it was on track with plans to improve the performance of the ACI division, which it acquired from European bank Fortis for €350m (£305m) in 2009.

Amlin was the fifth largest insurer in the Lloyd’s market by volume of business last year. The specialist insurance market currently has 87 insurers.

Other Lloyds insurers to have reported first half losses due to the string of catastrophes include Hiscox, which was £86m down; Beazley with a £14m loss; and Catlin, which was in the red by £120m.