The pull-back in non-life insurer Amlin (AML) make this a good time to back the property, casualty, marine and aviation specialist ahead of likely positive interims on 18 August.
The Lloyd’s insurer enjoyed a good start to the year with net written premiums – reinsurance costs deducted from the premiums collected – up 11.9% to £1 billion in the first quarter to some £1 billion. More good news could come next week. Analysts at broker Numis predict Amlin’s net premium growth this year could be the strongest in the sector if, as expected, the hurricane season will not have had the impact seen in previous years.
However, it may not prove enough of a boost to grow the FTSE 250 play’s pre-tax profit this year, which is forecast to fall 28% to £234.5 million. Its combined ratio – losses and expenses compared with the business it writes – is also predicted to reach 90.3% from 85.9% in 2013. The further below 100% the more the company is receiving in premiums against the amount paid out in claims.
Amlin has plenty of cash to fund generous dividend payments. At the end of 2013 the £2.1 billion cap had £284 million after it shareholder payouts, giving it a capital buffer of 21%. Numis’ forecast of 27.7p a share for this year puts the stock on a 6.3% yield, with a combined dividend cover of five times.