The contrasting tales of two companies

Like Amlin, Brit also benefited from reserve releases but analysts worried that these were taken too early

For the two weeks ending 23 March, it is the contrasting fortunes of the two Lloyd’s based London market insurers, Amlin (up 9.1%) and Brit (down 9.6%), which captures the attention. Particularly, as both stocks gained strongly over the latter part of 2005 (when many of their US and Bermudian counter parts fell by the way side) and the first two months of 2006. But while Amlin increased its 2005 pre-tax profits by 42% to £182.7mn, Brit suffered a 46% down turn to £64.2mn, largely as a result of catastrophe losses which added 12.3 points to the group’s combined ratio of 105.2%. Amlin, which reported a combined ratio of 82%, had a similar level of catastrophe losses (£237mn), but this was more than offset by a generous mixture of strong underwriting profits in other classes, exchange rate gains and favourable reserve development. Brit also benefited from reserve releases but analysts worried that these were taken too early.