Final Results - Part 2

RNS Number : 0825O

Amlin PLC

02 March 2009

 



4     Segmental reporting by business group

The tables below show segmental information by business segment. Business segments are primary segments and represent the distinct underwriting units by which the Group is organised and managed. Each segment underwrites sub-classes of business. In 2008, the Non-marine business was reorganised into two business units: Property and Casualty and Reinsurance. The segmental disclosure reports these business units as Non-marine as this is how financial information was reported internally for management purposes. In November 2008, the Group acquired Anglo French Underwriters (note 29). One month's income and expense has been included in the other technical business segment. The segments are discussed in more detail in the 'The business' section of the Review.

Income and expenses by business segment Year ended 31 December 2008	Non-marine  £m	Marine £m	Aviation £m	Amlin UK £m	Total Syndicate 2001 divisions £m	Amlin Bermuda  £m	Intra group items £m	Other  technical £m	Total £m
Analysed by geographic segment
UK	47.5	53.6	9.6	136.8	247.5	125.0	(106.0)	0.5	267.0
US	263.5	35.0	18.5	-	317.0	124.2	-	-	441.2
Europe	34.2	35.3	13.2	5.3	88.0	16.3	-	-	104.3
Worldwide	10.9	22.0	0.5	1.0	34.4	-	-	-	34.4
Other	87.5	43.6	14.8	9.7	155.6	31.5	-	-	187.1
Total	443.6	189.5	56.6	152.8	842.5	297.0	(106.0)	0.5	1,034.0
Gross premium earned	456.6	195.3	57.9	144.4	854.2	271.7	(100.4)	2.3	1,027.8
Reinsurance premium ceded	(115.6)	(49.0)	(17.5)	(22.6)	(204.7)	(0.3)	90.7	-	(114.3)
Net premium earned	341.0	146.3	40.4	121.8	649.5	271.4	(9.7)	2.3	913.5
Insurance claims and claims settlement expenses	(315.7)	(114.7)	(26.6)	(68.0)	(525.0)	(176.7)	73.2	0.7	(627.8)
Reinsurance recoveries	148.8	34.7	5.5	9.2	198.2	-	(71.3)	0.2	127.1
Underwriting expenses	(67.7)	(34.5)	(8.3)	(37.8)	(148.3)	(48.5)	7.8	(1.6)	(190.6)
Profit attributable to underwriting	106.4	31.8	11.0	25.2	174.4	46.2	-	1.6	222.2
Investment return	-	-	-	-	53.0	(48.4)	-	13.4	18.0
Other operating income	-	-	-	-	2.5	-	-	0.2	2.7
Agency expenses (1)	(13.5)	(4.0)	(1.7)	(3.4)	(22.6)	-	22.6	-	-
Other non-underwriting expenses (2)									(100.1)
Finance costs (2)									(21.2)
Profit before taxation									121.6
Combined ratio	69%	78%	73%	79%	73%	83%			76%

Included within the UK gross premium written of Amlin Bermuda Ltd is premium ceded from Syndicate 2001 amounting to £106.0 million on reinsurance contracts undertaken at commercial rates (2007: £90.3 million).

• Agency expenses allocated to segments represent fees and commission payable to Amlin Underwriting Limited;

• Other non-underwriting expenses and finance costs are incurred in support of the entire business of the Group and have not been allocated to particular segments.

Assets and liabilities by business segment  At 31 December 2008	Non-marine  £m	Marine £m	Aviation £m	Amlin UK £m	Total Syndicate 2001 divisions £m	Amlin Bermuda  £m	Intra group items  £m	Other  technical £m	Total £m
Assets
Assets attributable to business segments	1,046.4	464.1	321.4	565.6	2,397.5	1,367.1	(81.2)	9.9	3,693.3
Assets allocated between the UK and Bermuda					424.5				424.5
Total assets									4,117.8
Liabilities
Liabilities attributable to business segments	924.8	432.4	307.3	511.0	2,175.5	415.4	(81.2)	8.7	2,518.4
Liabilities allocated between the UK and Bermuda					383.3				383.3
Total liabilities									2,901.7
Total net assets									1,216.1

The net assets of Amlin Bermuda Ltd are located in Bermuda and the USA. The majority of the other assets of the Group are located in the UK, the US and Canada. The corresponding liabilities are also concentrated in these countries, but given the nature of the Group's business some of the liabilities will be located elsewhere in the world.

Depreciation has been charged on property and equipment for the year amounting to £3.3 million (2007: £3.0 million) of which £0.4 million has been charged to Non-marine, £0.2 million to Marine, £0.1 million to Aviation, £0.5 million to Amlin UK and £1.0 million to Amlin Bermuda Ltd.

4     Segmental reporting by business group (continued) 

Income and expenses by business segment Year ended 31 December 2007	Non-marine  £m	Marine £m	Aviation £m	Amlin UK £m	Total Syndicate 2001 divisions £m	Amlin Bermuda  £m	Intra group items £m	Other  technical £m	Total £m
Gross premium written
Analysed by geographic segment
UK	49.4	50.1	11.1	134.0	244.6	105.1	(90.3)	1.6	261.0
US	300.0	41.8	21.3	0.1	363.2	90.2	-	-	453.4
Europe	39.3	34.7	13.6	4.9	92.5	8.3	-	-	100.8
Worldwide	17.3	21.3	0.4	1.3	40.3	-	-	-	40.3
Other	94.6	39.3	17.2	8.9	160.0	29.2	-	-	189.2
Total	500.6	187.2	63.6	149.2	900.6	232.8	(90.3)	1.6	1,044.7
Gross premium earned	534.0	198.0	71.3	151.3	954.6	216.2	(84.3)	1.5	1,088.0
Reinsurance premium ceded	(107.8)	(40.9)	(24.3)	(21.0)	(194.0)	-	78.3	-	(115.7)
Net premium earned	426.2	157.1	47.0	130.3	760.6	216.2	(6.0)	1.5	972.3
Insurance claims and claims settlement expenses	(148.7)	(83.6)	(34.0)	(84.8)	(351.1)	(73.6)	45.2	(0.6)	(380.1)
Reinsurance recoveries	31.0	15.8	19.4	4.8	71.0	-	(45.2)	0.1	25.9
Underwriting expenses	(133.2)	(59.3)	(17.2)	(31.4)	(241.1)	(26.4)	6.0	(1.6)	(263.1)
Profit attributable to underwriting	175.3	30.0	15.2	18.9	239.4	116.2	-	(0.6)	355.0
Investment return					114.1	42.9	-	-	157.0
Other operating income					2.8	-	-	-	2.8
Agency expenses (1)	(15.3)	(4.4)	(2.1)	(4.1)	(25.9)	-	25.9	-	-
Other non-underwriting expenses (2)									(49.8)
Finance costs (2)									(20.0)
Profit before taxation									445.0
Combined ratio	59%	81%	68%	85%	69%	46%			63%

• Agency expenses allocated to segments represent fees and commission payable to Amlin Underwriting Limited;

• Other non-underwriting expenses and finance costs are incurred in support of the entire business of the Group and have not been allocated to particular segments.

Assets and liabilities by business segment  At 31 December 2007	Non-marine direct £m	Marine £m	Aviation £m	Amlin UK £m	Total Syndicate 2001 divisions £m	Amlin Bermuda  £m	Intra group items  £m	Other  technical £m	Total £m
Assets
Assets attributable to business segments	934.7	382.5	272.8	534.5	2,124.5	959.4	(34.8)	10.9	3,060.0
Assets allocated between the UK and Bermuda					519.5				519.5
Total assets									3,579.5
Liabilities
Liabilities attributable to business segments	729.2	346.5	251.3	493.4	1,820.4	217.7	(34.8)	9.8	2,013.1
Liabilities allocated between the UK and Bermuda					514.1				514.1
Total liabilities									2,527.2
Total net assets									1,052.3

5     Net earned premium

	2008 £m	2007 £m
Insurance contracts premium
Gross premium written	1,034.0	1,044.7
Change in unearned premium provision	(6.2)	43.3
Gross premium earned	1,027.8	1,088.0
Reinsurance premium ceded
Reinsurance premium payable	(118.3)	(106.4)
Change in unearned reinsurance premium provision	4.0	(9.3)
	(114.3)	(115.7)
Net earned premium	913.5	972.3

 6      Investment return

		2008 £m	2007 £m
Investment income
-    dividend income		11.9	12.5
-    interest income		59.7	77.8
- cash and cash equivalents interest income		34.6	25.1
		106.2	115.4
Net realised (losses)/gains on assets held for trading
-    equity securities		(4.8)	21.6
-    debt securities		16.9	(1.5)
- property		(1.8)	(0.1)
- derivative instruments		12.0	-
		22.3	20.0
Net fair value (losses)/gains on assets held for trading
-    equity securities		(89.0)	(7.1)
-    debt securities		(15.3)	30.2
- property		(6.2)	(0.1)
- derivative instruments		-	(1.4)
		(110.5)	21.6
		18.0	157.0

7      Insurance claims and loss adjustment expenses

	2008 £m	2007 £m
Gross
Current year insurance claims and loss adjustment expenses	764.3	502.7
Reduced costs for prior period insurance claims	(136.5)	(122.6)
	627.8	380.1
Reinsurance
Current year insurance claims and loss adjustment expenses recoverable from reinsurers	(148.9)	(39.5)
Additional costs for prior period claims recoverable from reinsurers	21.8	13.6
	(127.1)	(25.9)
Total net insurance claims and loss adjustment expenses	500.7	354.2

 8      Expenses for the acquisition of insurance contracts

	2008 £m	2007 £m
Expenses for the acquisition of insurance contracts	191.8	187.0
Changes in deferred expenses for the acquisition of insurance contracts	1.2	9.0
	193.0	196.0

 9      Other operating expenses

Expenses related to underwriting	2008 £m	2007 £m
Employee expenses, excluding employee incentives	28.8	26.1
Lloyd's expenses	17.2	22.5
Other administrative expenses	27.1	25.5
Underwriting exchange gains	(75.5)	(7.0)
	(2.4)	67.1
Other expenses
Employee expenses, excluding employee incentives	9.5	10.9
Employee incentives	21.5	31.4
Asset management fees	3.4	3.1
Other administrative expenses	9.1	5.4
Group company exchange losses/(gains)	56.6	(1.0)
	100.1	49.8
	97.7	116.9

 10     Finance costs

	2008 £m	2007 £m
Letter of credit commission	2.1	1.1
Subordinated bond interest	19.0	18.8
Bank charges	0.1	0.1
	21.2	20.0

 11     Tax

	2008 £m	2007 £m
Current tax - current year
UK corporation tax	22.9	52.6
Foreign tax suffered	-	4.1
Double tax relief	-	(3.2)
	22.9	53.5
Current tax - prior year
UK corporation tax	(2.8)	-
	(2.8)	-
Deferred tax - current year
Movement in assets	4.6	5.5
Movement in liabilities	16.0	35.5
	20.6	41.0
Deferred tax - prior year
Movement in assets	-	0.2
Movement in liabilities	0.5	(0.8)
	0.5	(0.6)
Deferred tax - change in tax rate
Movement in assets	-	0.5
Movement in liabilities	-	(2.2)
	-	(1.7)
Taxes on income	41.2	92.2

In addition to the above, deferred tax of £2.3 million on taxable items taken through equity has been credited directly to equity (2007:£1.3 million debited).

Underwriting profits and losses are recognised in the technical account on an annual accounting basis, recognising the results in the period in which they are earned. UK corporation tax is charged in the period in which the underwriting profits are actually paid by the Syndicate to the corporate members.

Deferred tax is provided on the annually accounted underwriting result with reference to the forecast ultimate result of each of the years of account included in the annually accounted underwriting. Where the forecast ultimate result for a year of account is a taxable profit, deferred tax is provided in full on the movement on that year of account included in the period's annually accounted underwriting result. Where the forecast ultimate result for a year of account is a loss, deferred tax is only provided for on the movement on that year of account included in the period's annually accounted Syndicate underwriting result to the extent that forecasts show that the taxable loss will be utilised in the foreseeable future. Deferred tax has been provided on the annually accounted underwriting result for this accounting period of £218.8 million (2007:£288.5 million).

Deferred tax assets on loss provisions in respect of non-aligned syndicate participations (see note 15) are only provided for, to the extent that forecasts show that it is more likely than not that the ultimate taxable underwriting losses represented by these provisions will be utilised within the foreseeable future. Deferred tax has been provided in full on non-aligned syndicate loss participation provisions of £2.6 million (2007:£3.6 million).

Reconciliation of tax expense

The UK standard rate of corporation tax is 28.5% (2007:30%), whereas the tax charged for the year ended 31 December 2008 as a percentage of profit before tax is 33.9% (2007: 20.7%).The reasons for this difference are explained below:

	2008 £m	2008 %	2007 £m	2007 %
Profit before tax	121.6		445.0
Taxation on profit on ordinary activities calculated at the standard rate of corporation tax in the UK	34.7	28.5	133.5	30.0
Non-deductible or non-taxable items	0.2	-	(2.3)	(0.5)
Tax rate differences on overseas subsidiaries	9.7	8.0	(32.2)	(7.2)
Over provision in respect of prior periods	(2.3)	(1.8)	(0.9)	(0.2)
Reduction in future UK tax rate	(1.1)	(0.8)	(6.8)	(1.6)
Irrecoverable overseas tax	-	-	0.9	0.2
Taxes on income	41.2	33.9	92.2	20.7

The Group's tax provision for 2008 has been prepared on the basis that the Group's Bermudian subsidiaries are non-UK resident for UK corporation tax purposes. The corporation tax rate for Bermudian companies is currently 0% (2007: 0%). 

A deferred tax liability of £16.1 million (2007: £20.3million) has been provided for on profits of the Group's overseas subsidiaries expected to be distributed in the foreseeable future. A deferred tax liability has not been provided on the undistributed profits of the overseas subsidiaries of £134.4 million (2007: £169.5 million) because the distribution of these profits is not expected in the foreseeable future.

Deferred tax has been provided for at the tax rate in force when the temporary differences are expected to reverse. The tax rates used are 28.5% for temporary differences expected to reverse in 2008 and 28% for temporary differences expected to reverse in 2009 or later.

The Group is subject to US tax on US underwriting profits. No provision has been made in respect of such tax arising in 2008 (2007: £nil) as any net provision is likely to be immaterial and would be offset by brought forward US tax losses in the Group. 

Deferred income tax

The deferred tax asset is attributable to temporary differences arising on the following:

		Provisions for losses £m	Other provisions £m	Pension provisions £m	Other timing differences £m	Total £m
At 1 January 2008		1.0	5.2	0.8	6.4	13.4
Movements in the year		-	(0.5)	1.0	(2.8)	(2.3)
At 31 December 2008		1.0	4.7	1.8	3.6	11.1

The deferred tax liability is attributable to temporary differences arising on the following:

	Underwriting results £m	Unrealised capital gains £m	Syndicate capacity £m	Overseas earnings  £m	Other timing differences £m	Total £m
At 1 January 2008	102.9	0.1	4.5	20.3	0.3	128.1
Movements in the year	20.0	(0.1)	0.8	(4.2)	-	16.5
At 31 December 2008	122.9	-	5.3	16.1	0.3	144.6

Deferred tax assets have not been provided on US net operating losses of £26.5 million (2007: £30.2 million) carried forward due to uncertainty over their future use.

12     Net foreign exchange gains/ (losses)

The Group recognised net foreign exchange gains of £18.9 million (2007: £8.0 million) in the income statement during the year.

The Group writes business in many currencies and although a large proportion of the Group's balance sheet assets and liabilities are matched, minimising the effect of movements in foreign exchange rates on the Group's result, it is not possible, or practical, to match exactly all assets and liabilities in currency. Accounting standards also require that certain classes of assets and liabilities be translated at different rates (see foreign currency translation accounting policy). 

Included within the Group's foreign exchange gain in the income statement is:

	2008 £m	2007 £m
Net gains/(losses) on underwriting transactions and translation of underwriting assets and liabilities at closing rates	17.4	(7.7)
Gain on translation of net non-monetary liabilities at historical average rates	58.1	14.7
Underwriting exchange gains	75.5	7.0
(Losses)/gains on long-term US dollar borrowings	(18.1)	0.8
(Losses) on Sterling capital assets held in Amlin Bermuda (note 3)	(43.1)	-
Net (losses)/gains on non-underwriting transactions and translation of non-underwriting assets and liabilities at closing rates	(4.6)	0.2
Group company exchange (losses)/gains	(56.6)	1.0
	18.9	8.0

In addition, the following exchange movements have been charged directly to equity:

	2008 £m	2007 £m
Gain/(loss) on translation of overseas subsidiaries (note 3)
- Amlin Bermuda	256.5	(8.2)
- Anglo French Underwriters	(0.4)	-
	256.1	(8.2)
(Loss) on derivative instruments hedging investments in overseas operations (note 3)	(74.7)	-
Gains on translation of intangibles (note 19)	4.7	-
	186.1	(8.2)

Amlin Bermuda, which reports in US dollars, held Sterling assets of £182.1 million at 31 December

2008. These produced a foreign exchange loss of £41.3 million which is included within the Group's foreign exchange gain. These investments, together with certain foreign exchange hedge contracts, were held in Sterling as part of the Group's overall strategy to hedge up to 50% of its US dollar exposure in Amlin Bermuda Ltd (refer to note 3.2 for further details).

13     Cash and cash equivalents

Cash and cash equivalents represents cash at bank and in hand and short-term bank deposits which can be recalled within 24 hours.

14     Financial investments

	At valuation 2008 £m	At valuation 2007 £m	At cost 2008 £m	At cost 2007 £m
Financial assets held for trading at fair value through income
Shares and other variable yield securities	190.7	232.1	310.4	230.4
Debt and other fixed income securities	1,805.3	1,563.0	1,811.5	1,541.9
Property	83.5	75.4	94.9	72.7
Other financial assets at fair value through income
Participation in investment pools	789.0	748.0	789.0	748.0
Deposits with credit institutions	29.0	19.2	29.0	19.2
Derivative instruments	(40.0)	(1.4)	14.7	-
Other	2.0	2.6	2.0	2.6
Available for sale financial assets
Unlisted equities	8.6	-	8.6	-
	2,868.1	2,638.9	3,060.1	2,614.8
In Group owned companies	1,291.2	1,061.0	1,436.0	1,051.1
In Syndicate 2001	1,573.1	1,573.6	1,620.3	1,559.4
In non-aligned syndicates participations (see note 15)	3.8	4.3	3.8	4.3
	2,868.1	2,638.9	3,060.1	2,614.8
Listed investments included in Group: owned total are as follows:
Shares and other variable yield securities	190.7	232.1	310.4	230.4
Debt and other fixed income securities	1,739.8	1,506.5	1,746.0	1,485.6
	1,930.5	1,738.6	2,056.4	1,716.0

Included within debt and other fixed income securities are overseas deposits amounting to £71.1 million (2007: £60.2 million). Overseas deposits represent balances held with overseas regulators to permit underwriting in certain territories. The assets are managed by Lloyd's on a pooled basis and are predominantly invested in debt and other fixed income securities.

Unlisted equity investments are the Group's investments of 19.9% of the shares in Miles Smith plc and TL Dallas Group Limited acquired for £4.6 million and £4.0 million on 22 July 2008 and 13 August 2008 respectively. No provision has been made for the impairment of these investments as at 31 December 2008. 

	2008 £m	2007 £m
At 1 January	2,638.9	2,367.7
Exchange gains/(losses)	547.5	(2.5)
Net (sales)/purchases	(155.4)	232.1
Realised gains on disposals	22.3	20.0
Unrealised investment (losses)/gains	(110.5)	21.6
Losses on derivative hedging instruments realised and unrealised	(74.7)	-
At 31 December	2,868.1	2,638.9

15     Insurance contracts and reinsurance assets

	Claims reserves £m	Unearned premium reserves £m	Other insurance assets and liabilities £m	Total £m
Insurance liabilities
At 1 January 2007	1,417.5	545.5	68.6	2,031.6
Movement in the year	(70.9)	(42.4)	(35.7)	(149.0)
Exchange adjustments	3.6	(1.3)	1.1	3.4
At 31 December 2007	1,350.2	501.8	34.0	1,886.0
Movement in the year	43.9	7.8	39.8	91.5
Exchange adjustments	298.7	39.8	11.1	349.6
At 31 December 2008	1,692.8	549.4	84.9	2,327.1
Reinsurance assets
At 1 January 2007	357.0	37.7	300.6	695.3
Movement in the year	(89.4)	(10.2)	21.3	(78.3)
Exchange adjustments	2.6	-	(2.7)	(0.1)
At 31 December 2007	270.2	27.5	319.2	616.9
Movement in the year	22.3	3.5	(60.2)	(34.4)
Exchange adjustment	68.3	-	66.1	134.4
At 31 December 2008	360.8	31.0	325.1	716.9

Further information on the calculation of claims reserves and the risks associated with them is provided in the risk disclosures in note 3. Claims reserves are further analysed between notified outstanding claims and incurred but not reported claims below:

	2008 £m	2007 £m
Notified outstanding claims	1,040.9	800.3
Claims incurred but not reported	651.9	549.9
Insurance contracts claims reserve	1,692.8	1,350.2

It is estimated, using historical settlement trends, that £781.8 million (2007: £568.4 million) of the claims reserves, as at 31 December 2008, will settle in the next twelve months.

	2008 £m	2007 £m
Reinsurers' share of insurance liabilities	744.0	638.5
Less provision for impairment of receivables from reinsurers	(27.1)	(21.6)
Reinsurance assets	716.9	616.9

Other insurance liabilities are comprised principally of premium payable for reinsurance, including reinstatement premium. Other insurance assets are comprised principally of amounts recoverable from reinsurers in respect of paid claims and premium receivable on inward reinsurance business, including reinstatement premium.

The Group assesses its reinsurance assets for impairment on a quarterly basis by reviewing counterparty payment history and credit grades provided by rating agencies. The credit ratings of the Group's reinsurance assets are shown in note 3.2. As at 31 December 2008 reinsurance assets at a nominal value of £13.4 million (2007: £13.3 million) were greater than 3 months past due and provided for the value of £9.4 million (2007: £8.7 million). The Group holds collateral of £0.2 million (2007: £0.3 million) in relation to these assets.  

The ageing analysis of reinsurance assets past due but not impaired is as follows:

	2008 £m	2007 £m
3 to 6 months	1.2	1.4
6 to 9 months	1.2	1.3
Greater than 9 months	1.6	1.9
	4.0	4.6

The Group recognised a total impairment loss of £5.5 million (2007: £4.3 million gain) on reinsurance assets and insurance receivables.

From 1994 to 1999 the Group participated on a number of Lloyd's syndicates other than those managed by the Group. From 2000 the Group ceased to underwrite directly on non-aligned syndicates. However, a number of syndicates remain 'open' and Amlin's final liabilities are still to be finalised. Provisions are made for potential future insurance claims. Included within the claims provisions in the table above are provisions in respect of 'non-aligned syndicate participations' of £2.6 million (2007: £3.9 million). Syndicates that remain open at 31 December 2008 are set out in the table below.

		Syndicate capacity
Managing agent	Non-aligned syndicate	1999 £m	1998 £m	1997 £m
Non-marine
Jago Managing Agency Ltd	205	2.25	-	-
A E Grant (Underwriting Agencies) Ltd	991	2.93	2.35	-
Duncanson & Holt Syndicate Management Ltd	1101	-	2.50	2.50
Total Non-marine		5.18	4.85	2.50
Aviation
Duncanson & Holt Syndicate Management Ltd	957	-	3.00	3.00
Total capacity
Capacity remaining open at 31 December 2007 and 2008		5.18	7.85	5.50

16     Loans and receivables, including insurance receivables

	2008 £m	2007 £m
Receivables arising from insurance contracts	192.0	77.0
Less provision for impairment of receivables from contract holders and agents	(0.5)	(2.1)
Deferred acquisition costs	114.0	108.2
Insurance receivables	305.5	183.1
Other debtors	16.2	11.4
Prepayments and other accrued income	52.5	25.4
Other loans and receivables	68.7	36.8
	374.2	219.9
	2008 £m	2007 £m
Current portion	365.2	210.0
Non-current portion	9.0	9.9
	374.2	219.9

The reconciliation of opening and closing deferred acquisition costs is as follows:
	2008 £m	2007 £m
At 1 January	108.2	118.3
Exchange gains/(losses)	7.0	(0.2)
Movements in the year	(1.2)	(9.9)
At 31 December	114.0	108.2

The Group assesses its insurance receivables for impairment on a quarterly basis by reviewing counterparty payment history. As of 31 December 2008 insurance receivables at a nominal value of £3.6 million (2007: £3.2 million) were greater than 3 months overdue and provided for on the basis of credit rating to the value of £0.5 million (2007:£2.1 million).  

The ageing analysis of insurance receivables overdue, before impairment provision, is as follows:

	2008 £m	2007 £m
3 to 6 months	1.0	1.2
6 to 9 months	1.4	1.0
Greater than 9 months	1.2	1.0
	3.6	3.2

 17     Intangible assets

	Syndicate participations  £m	Goodwill £m	Other intangibles £m	Total £m
At 31 December 2007	63.2	2.8	3.0	69.0
Acquisitions	-	27.5	10.4	37.9
Amortisation	-	-	(1.4)	(1.4)
Foreign exchange gains	-	3.6	1.1	4.7
At 31 December 2008	63.2	33.9	13.1	110.2

Syndicate participations represent the ongoing rights, acquired in Lloyd's auctions and by an offer to Lloyd's Names, to trade on Syndicate 2001 within the Lloyd's insurance market. Amlin subsidiaries have supported all of the ongoing capacity of Syndicate 2001 since 1 January 2004. All remaining liabilities of the Syndicate underwritten by third party capital prior to this date were taken on by Amlin subsidiaries at 1 January 2004.

Included within goodwill and other intangibles acquired during the year are amounts relating to the acquisition of Financiere Europe Assurances group (FEA). Note 29 provides further details relating to the acquisition of FEA.

Other intangibles also include the costs of acquiring rights to customer contractual relationships. The additions during the year comprise the Group's acquisition of certain customer relationships from HCC Underwriting Agency Limited which are amortised using the straight line method over the estimated useful life of five years.

Amortisation of intangible assets is included in the operating expenses line of the Income Statement.

 18     Share capital

	2008 Number	2008 £m	2007 Number	2007 £m
Authorised ordinary shares
At 1 January authorised ordinary shares of 28.125p each (2007: 25p)	711,111,104	200.00	800,000,000	200.0
Reduction of authorised ordinary shares	-	-	(88,888,889)	-
Cancelled ordinary shares	-	-	(7)	-
At 31 December authorised ordinary shares of 28.125p each (2007: 28.125p)	711,111,104	200.00	711,111,104	200.0
Authorised redeemable non-cumulative preference shares ('B shares')
At 1 January authorised B shares of 22.4p each	544,642,000	122.0	-	-
B shares authorised	-	-	544,642,000	122.0
At 31 December authorised B shares of 22.4p each	544,642,000	122.0	544,642,000	122.0
Issued, called up and fully paid ordinary shares
At 1 January issued ordinary shares of 28.125p each (2007: 25p)	477,984,195	134.4	534,006,720	133.5
Shares issued on exercise of options	589,244	0.2	3,695,766	0.9
Reduction of issued ordinary shares	-	-	(59,718,291)	-
At 31 December issued ordinary shares of 28.125p each (2007: 28.125p)	478,573,439	134.6	477,984,195	134.4
Issued redeemable non-cumulative preference shares ('B shares')
At 1 January issued B shares of 22.4p each	537,464,619	120.4	-	-
B shares issued	-	-	537,464,619	120.4
B shares redemption	(532,129,144)	(119.2)	-	-
At 31 December issued B shares of 22.4p each	5,335,475	1.2	537,464,619	120.4

The ordinary shares issued on exercise of options were issued for a total consideration of £3.8 million at an average price of 131 pence per share (2007: £4.5 million, average price 122 pence).

The Company acquired 10,765,000 of its own shares through purchases on the London Stock Exchange during the period and the Group's Employee Share Ownership Trust (ESOT) purchased 214,694 shares. The total amount paid, including expenses, was £28.0 million (2007: £1.5 million), which was deducted from shareholders' equity as disclosed in note 19. From the shares acquired, 2,001,348, at a cost of £5.0 million, were subsequently transferred out of treasury to meet exercises of employee share options leaving 8,763,652 ordinary shares in Treasury at 31 December 2008 (2007: £nil).

On 14 November 2007, the Group announced its intention to return approximately £120 million of capital to shareholders by way of a B share issue combined with a consolidation of Amlin's existing shares on the basis of 8 new ordinary shares for 9 existing ones. This was subsequently approved by the shareholders at an Extraordinary General Meeting held on 12 December 2007.    

B shares were issued on 17 December 2007 to existing shareholders on the basis of one B share for each ordinary share held on 14 December 2007. Each B share enabled the shareholder to redeem the share at 22.4 pence per share at various dates in the future up to August 2009 or, alternatively, to receive a B share initial dividend in January 2008 of 22.4 pence per share. 

Following such dividend receipt, the relevant B shares were converted into deferred shares which were themselves redeemed on 14 January 2008 for a total redemption value of one penny in all. In total 532,129,144 million B shares were redeemed during the year at a value of £119.2 million. The amount outstanding to be returned to B shareholders at 31 December 2008 has been recognised as a liability in note 20. The total cost of the issue including expenses was £120.4 million which is charged against retained earnings as the B shares are redeemed.

 19     Reserves

	Share premium  £m	Other  reserves £m	Treasury  shares £m	Minority interest £m	Retained earnings £m
At 1 January 2008	230.8	(30.2)	(2.1)	0.4	719.0
Purchase of treasury shares (note 18)	-	-	(28.0)	-	-
Defined benefit pension fund actuarial loss (note 22)	-	(5.9)	-	-	-
Currency translation differences on overseas operations (note 3)	-	256.1	-	-	-
Losses on revaluation of hedge instruments	-	(74.7)	-	-	-
Foreign exchange gains on translation of intangibles arising from investments in overseas operations (note 3)	-	4.7	-	-	-
Deferred tax (note 11)	-	2.8	-	-	-
Profit for the financial year	-	-	-	0.1	80.3
Share option valuation charge	-	0.4	-	-	-
Issues of share capital on exercise of options over new shares (note 18)	0.7	-	5.0	-	(2.1)
Dividends paid (note 24)	-	-	-	(0.2)	(75.6)
Return of capital (note 18)	-	119.2	-	-	(119.2)
At 31 December 2008	231.5	272.4	(25.1)	0.3	602.4

	Share premium  £m	Other  reserves £m	Treasury  shares £m	Minority interest £m	Retained earnings £m
At 1 January 2007	347.6	(21.8)	(0.6)	0.3	477.4
Net purchase of treasury shares	-	-	(1.5)	-	-
Gains on revaluation of employee share ownership trust recognised directly in equity	-	(0.1)	-	-	-
Currency translation differences on overseas operations	-	(8.2)	-	-	-
Deferred tax	-	(1.3)	-	-	-
Profit for the financial year	-	-	-	0.1	352.7
Share option valuation charge	-	1.2	-	-	-
Issues of share capital on exercise of options over new shares	3.6	-	-	-	-
Dividends paid (note 24)	-	-	-	-	(111.1)
Return of capital (note 18)	(120.4)	-	-	-	-
At 31 December 2007	230.8	(30.2)	(2.1)	0.4	719.0

Other reserves is comprised of £45.7 million (2007: £45.7 million) being the cumulative amount of goodwill written off to reserves on acquisitions prior to January 1999, a capital redemption reserve, charges for share options issued, deferred tax in respect of share options, cumulative foreign exchange gains of £196.8 million (2007: £59.3 million loss) on investments in overseas operations and £74.7 million (2007: £nil) cumulative losses on hedges of investments in overseas operations.

 20     Trade and other payables and deferred income

	2008 £m	2007 £m
Trade payables and accrued expenses	118.7	84.3
Social security and other tax payables	3.3	2.4
Issued redeemable non-cumulative preference shares ('B shares') (note 18)	1.2	120.4
	123.2	207.1

	2008 £m	2007 £m
Current portion	110.0	201.4
Non-current portion	13.2	5.7
	123.2	207.1

On 8th November 2008, the Group announced that with effect from 1 January 2009 no new policies would be transacted in respect of its credit insurance business. Costs associated with the closure of this business amounting to £4.3 million have been provided for and are included within trade payables and accrued expenses. 

 21     Financial liabilities - borrowings

	2008 £m	2007 £m
Bank loans	-	0.1
Subordinated debt	295.9	277.4
	295.9	277.5

	2008 £m	2007 £m
Current portion	-	0.1
Non-current portion	295.9	277.4
	295.9	277.5

The Group's borrowings comprise three issues of subordinated debt. Details of the subordinated debt issues are as follows:

Issue date	Principal amount	Reset date	Maturity date	Interest rate to reset date %	Interest rate from reset date to maturity date %
23 November 2004	$50m	November 2014	November 2019	7.11	LIBOR + 3.48
15 March 2005	$50m	March 2015	March 2020	7.28	LIBOR + 3.32
25 April 2006	£230m	December 2016	December 2026	6.50	LIBOR + 2.66

The bonds will be redeemed on the maturity dates at the principal amounts, together with any outstanding accrued interest. The Company has the option to redeem the bonds in whole, subject to certain requirements, on the reset dates or any interest payment date thereafter at the principal amount plus any outstanding accrued interest.

The directors' estimation of the fair value of the Group's borrowings is £360.4 million (2007: £322.2 million).

On 3 September 2008 the Company and certain of its subsidiaries entered into a renegotiated debt facility with its banks which is available for five years from the date of signing and provides an unsecured £250 million multicurrency revolving credit facility available by way of cash advances or letter of credit (LOC) and a secured $200 million LOC. The facility is guaranteed by the Company's subsidiaries Amlin Corporate Services Limited and Amlin (Overseas Holdings) Limited. The secured LOC is secured by a fixed charge over a portfolio of assets managed by Insight Investment Management (Global) Limited with State Street Bank and Trust Company as custodian. As at 31 December 2008 the facility was undrawn.

On 3 September 2008 Amlin Bermuda Ltd cancelled its previous unsecured revolving credit facility of $100 million.  On 23 October 2008 Amlin Bermuda Ltd extended its existing secured LOC facility of $200 million to 31 December 2009. The secured LOC facility is secured by a registered charge over a portfolio of assets managed by Aberdeen Asset Management Limited with State Street Bank and Trust Company as custodian.  As at 31 December 2008 $36.8 million (31 December 2007: $28.7 million) LOCs were issued with an additional $24.2 million LOCs issued in January 2009.

22     Retirement benefit obligations 

The Group participates in a number of pension schemes, including defined benefit, defined contribution and personal pension schemes. The total (credit)/charge to the income statement for these schemes is shown in the table below: 

	2008 £m	2007 £m
Defined benefit schemes
Lloyd's Superannuation Fund	(2.6)	0.5
Ongoing Funding	-	1.2
Defined contribution schemes	3.7	3.8
	1.1	5.5

a) The Lloyd's Superannuation Fund funded defined benefit scheme

    The scheme is operated as part of the Lloyd's Superannuation Fund (the Fund). The Amlin Group is the employer in respect of two sections of the scheme, the Amlin section and now also the J E Mumford section, the latter as a result of a transfer during 2007 referred to above. The summary of liabilities at 31 December 2008 includes liabilities relating to the J E Mumford section. 

Historically the Fund has catered for a number of employers in the Lloyd's market. As a consequence of the consolidation in the market, employers closing final salary schemes and some companies failing there are now only around 3 (2007: 5) employers with active members in the Fund. A large proportion of the liability of the Fund relates to employers no longer participating in the Fund. The assets of the Fund are pooled and the current active employers are responsible collectively for the funding of the Fund as a whole.

For the purposes of determining contributions to be paid, the Trustee has split the Fund into a number of notional sections. This is a notional split and has no legal force. Previously this notional split allowed for separate sections in respect of each employer's active members and one combined section for non-employed members of all current and former employers.

With effect from 31 December 2002, the Trustee altered this notional split so that, from that date, the active employers contributing to the Fund, including the Amlin Group, have individual notional sections comprising the notionally allocated assets in respect of their active employees, deferred pensioners and pensioners, and their corresponding liabilities. A separate notional fund is maintained for members whose former employers no longer contribute to the Fund (Orphan Schemes). Amlin is also liable for a proportion of the Orphan Schemes' liabilities.

Since this alteration Amlin has been able to more clearly identify its expected contribution requirement to the Fund. During the year, one more employer who had a material share and a strong covenant, bought themselves out of the scheme and there now remain only three active employers. As a result of this, Amlin is now able to ascertain its share of the assets and liabilities with sufficient certainty to account for the pension as a defined benefit scheme and bring the assets and liabilities of the scheme onto the balance sheet of the Group. 

Prior to 2008, the scheme was accounted for as a multi-employer scheme and accounted for as a defined contribution scheme. Amlin had an agreed schedule of contributions with the Trustee for which, in accordance with IAS 19, the net present value of contractual obligations was recorded as a liability on the balance sheet. The value of these obligations at the end of 2007 was £2.8 million. 

In accordance with IAS8, Accounting Policies, Changes in Accounting Estimates and Errors, the effect of the change from accounting as a defined contribution to a defined benefit scheme represents a change in accounting estimate. As such no restatement of the prior year comparatives has been made. The effect of this change is to reverse in full of the provision held at the end of 2008 of £2.8 million during the current year. Of this provision £2.3 million has been recognised directly into equity. The remaining £0.5 million relating to anticipated additional costs for bringing in the JE Mumford section into the fund was taken through the income statement.

Fund contributions

In 2004 Amlin agreed with the Trustee that it would make six annual payments to the Fund of £1.2 million. This agreement was based on the formal valuation at 31 March 2004 and not the updated valuation at 31 December 2004. The first payment was made in December 2004 and five subsequent annual payments were agreed commencing on 31 March 2005.

In 2004 Amlin agreed to pay contributions to the notional orphans' section to rectify a share of the funding shortfall revealed in the actuarial valuation at 31 March 2004, when the Group and Syndicate's share of the shortfall was estimated to be £11.4 million and £12.8 million respectively. The first payment of £3.5 million was made on 31 December 2004. Three subsequent annual payments of £3.5 million were agreed commencing on 31 March 2005.  

Contributions will also be paid to provide for the cost of benefit accrual after the date of the valuation. The rate of contribution agreed with the Trustee is 19% (2007: 30%) paid by the employer plus 5% (2007: 5%) member contributions, in each case of pensionable earnings, and totalled £1.3 million (2007: £1.3 million). 

The expected contribution to the fund during the current financial year is £0.8 million by the Group and £0.2 million by plan participants.

Funding assessment

The funding position of the Fund is assessed every three years by an independent qualified actuary. Contributions are made at the funding rates recommended by the actuary, which vary across different sections of the Fund reflecting the notional sections then adopted, and typically include adjustments to amortise any funding surplus or shortfall over a period. Amounts borne under the scheme are charged to Syndicate 2001 or other Group companies. Actuarial amounts quoted below are for the Group's notional share of the scheme.

The last completed formal valuation of the Fund was as at 31 March 2007 and was carried out by Mr N Wharmby, Fellow of the Institute of Actuaries, and used the projected unit credit actuarial method. For the purpose of providing disclosure in accordance with IAS19, the Group has requested the actuary to update the 2007 valuation to 31 December 2008 using appropriate techniques and the following assumptions:

	2008  % pa	2007  % pa
Price inflation	2.8	3.4
Rate of increase in pay	-	-
Rate of increase in pensions payment
- LPI (maximum 5% pa)	2.8	3.4
- LPI (minimum 3% pa, maximum 5% pa)	3.5	3.6
- LPI (maximum 3% pa)	2.3	3.0
Rate of increase of statutory revaluation on deferred pension	2.8	3.4
Discount rate	6.3	5.7

During 2005 the Group reviewed its remaining defined benefit arrangements and made a number of changes to the schemes' operations, which were implemented during 2006. In particular in order to remove much of the risk associated with salary inflation, the scheme was changed to allow members to continue accruing additional years' service under the schemes, but these accruals would be generally based on March 2006 pensionable salaries. Future salary increases are pensionable through the defined contribution schemes. Therefore the salary inflation assumption used for the ongoing valuation is now nil%.

The mortality assumptions used in the latest valuation included the following life expectancies:

	31 December 2008		31 December 2007
Life expectancy (years) at age 60 for a member currently:	Male	Female	Male	Female
Aged 60	25.3	28.3	25.2	28.2
Aged 45	26.6	29.5	26.6	29.4

Amounts recognised in income in respect of the defined benefit scheme are as follows:

	2008 £m	2007 £m (comparative)
Current service cost	0.5	1.0
Interest cost	16.5	15.0
Expected return on scheme assets	(19.1)	(18.0)
Past service cost	-	6.0
Reversal of provision for additional pension payments	(0.5)	-
Total (credited) / debited to income (included in staff costs)	(2.6)	4.0

Amounts recognised in the Consolidated Statement of Changes in Equity are as follows:

	2008 £m	2007 £m (comparative)
Recognition of net loss / (gain)	31.2	(11.0)
Ceiling limit on asset gains	(23.0)	23.0
Reversal of contractual cash obligations	(2.3)	-
	5.9	12.0

The amount included in the balance sheet arising from the Group's obligations in respect of its defined benefit retirement benefit scheme is as follows:

	2008 £m	2007 £m (comparative)
Present value of defined benefit obligations	260.0	295.0
Fair value of scheme assets	256.0	318.0
(Deficit) / surplus in scheme	(4.0)	23.0
Restriction to defined benefit asset due to asset ceiling	-	(23.0)
Liability recognised in the balance sheet	(4.0)	-

The table below shows the impact on the defined benefit obligation that a change in certain key assumptions would have. 

Assumption change	Defined benefit obligation impact  £m
- (Increase) / decrease in discount rate by 0.25%	(9)/10
- Increase / (decrease) in inflation rate by 0.25%	5/(5)
- Increase in floor mortality improvements for males of 1.5% and females of 1.0% per annum	5

Movements in the present value of defined benefit obligations were as follows:

	2008 £m	2007 £m (comparative)
At 1 January	295.0	304.0
Employer service cost	0.5	1.0
Interest cost	16.5	15.0
Contributions from scheme members	0.2	-
Actuarial gains	(40.3)	(20.0)
Benefits paid from plan assets	(11.9)	(14.0)
Changes to plan	-	6.0
Settlements	-	3.0
At 31 December	260.0	295.0

The expected benefit total payments to plan participants during 2009 is £11.9 million. 

Movements in the fair value of scheme assets were as follows:

	2008 £m	2007 £m (comparative)
At 1 January	318.0	315.0
Actual return on scheme assets	(52.4)	9.0
Employer contributions	2.1	5.9
Plan participant contributions	0.2	-
Benefits paid	(11.9)	(13.9)
Settlements	-	2.0
At 31 December	256.0	318.0

The analysis of the Fund's assets and the expected rate of return at the balance sheet date are as follows: 

	Asset mix 31 December 2008		Asset mix 31 December 2007		Long term rate of return
	Amlin	Orphans	Amlin	Orphans	31 December	31 December
	Sections	Section	Sections	Section	2008	2007
Equities	31%	31%	32%	32%	7.5%	7.6%
Bonds	69%	69%	68%	68%	5.6%	5.4%

The long term rates of return are estimated by the Directors based upon current expectations of future investment performance. 

The five-year history of experience adjustments is as follows:

	2008 £m	2007 £m	2006 £m	2005 £m	2004 £m
Asset experience
Fair value of scheme assets	256.0	318.0	315.0	305.0	259.0
Asset (gain)/loss during period	71.5	9.0	-	(41.0)	(6.0)
Asset (gain)/loss as percentage of plan assets	28%	3%	0%	(14%)	(2%)
Liability experience
Defined benefit obligations	260.0	295.0	304.0	311.0	275.0
Liability (gain)/loss during period	6.7	(5.0)	-	9.0	-
Liability (gain)/loss as percentage of plan assets	3%	(2%)	0%	3%	0%
Liability assumptions
Liability (gain)/loss over period	(47.0)	(15.0)	2.0	27.0	6.0
Liability (gain)/loss as percentage of defined benefit obligations	(18%)	(5%)	1%	9%	2%

The total amounts paid in respect of the Fund are analysed in the table below.

	2008 £m	2007 £m
Contributions relating to:
2004 valuation deficit - Amlin scheme	1.2	1.2
2004 valuation deficit - Orphan scheme	-	3.5
Ongoing funding	0.9	1.2
	2.1	5.9
Group share of total payment	2.1	5.9

b) The stakeholder defined contribution scheme

The defined contribution scheme operated by the Group is a stakeholder arrangement. The total contributions for the year ended 31 December 2008 to the scheme were £3.7 million (2007: £3.8 million).

The estimated amounts of contributions to the Group's defined contribution pension scheme for the year ending 31 December 2009 are approximately £3.8 million.

c) Other arrangements

    Other pension arrangements include an occupational money purchase scheme which provides Death In Service protection for all employees. Regular contributions, expressed as a percentage of employees' earnings, are paid into this scheme and are allocated to accounts in the names of the individual members, which are independent of the Group's finances. There were no outstanding contributions at 31 December 2008 (2007: £nil).

 23     Earnings and net assets per share

Earnings per share are based on the profit attributable to shareholders and the weighted average number of shares in issue during the period. Shares held by the Employee Share Ownership Trust (ESOT) and treasury shares are excluded from the weighted average number of shares.

Basic and diluted earnings per share are as follows:	2008	As restated* 2007
Profit attributable to equity holders of the Parent Company	£80.3m	£352.7m
Weighted average number of shares in issue	471.2m	512.7m
Dilutive shares	5.6m	6.1m
Adjusted average number of shares in issue	476.8m	518.8m
Basic earnings per share	17.1p	68.8p
Diluted earnings per share	16.9p	68.0p

Basic and diluted tangible net assets per share are as follows:	2008	2007
Net assets	£1,216.1m	£1,052.3m
Adjustments for intangible assets	(£110.2m)	(£69.0m)
Tangible net assets	£1,105.9m	£983.3m
Number of shares in issue at end of period	478.6m	478.0m
Adjustment for ESOT shares and treasury shares	(10.0m)	(1.1m)
Basic number of shares after ESOT and treasury shares adjustment	468.6m	476.9m
Net assets per share	259.5p	220.7p
Tangible net assets per share	236.0p	206.2p

* The weighted average number of shares in issue has been restated to reflect those shares deemed to have been consolidated without a return of capital as part of the share consolidation which took place in December 2007.

 24     Dividends

The amounts recognised as distributions to equity holders are as follows:

Group	2008 £m	2007 £m
Final dividend for the year ended:
- 31 December 2007 of 10.0 pence per ordinary share	47.6	-
- 31 December 2006 of 7.8 pence per ordinary share	-	41.7
Interim dividend for the year ended:
- 31 December 2008 of 6.0 pence per ordinary share	28.0	-
- 31 December 2007 of 5.0 pence per ordinary share	-	26.7
Special dividend for the year ended:
- 31 December 2006 of 8.0 pence per ordinary share	-	42.7
	75.6	111.1

The final ordinary dividend of 11.0 pence per ordinary share for 2008, amounting to £51.5 million, payable in cash was approved by the Board on 27 February 2009 and has not been included as a liability as at 31 December 2008. 

25     Principal exchange rates

The principal exchange rates used in translating foreign currency assets, liabilities, income and expenditure in the production of these financial statements were:

	Average rate		Year end rate
	2008	2007	2008	2007
US dollar	1.85	2.00	1.46	1.99
Canadian dollar	1.96	2.15	1.78	1.96
Euro	1.26	1.46	1.05	1.36

 26     Contingent liabilities

The Group has no contingent liabilities at year end. During the year, the guarantees given by the Group under various deeds of covenant in respect of certain corporate member subsidiaries to meet each such subsidiary's obligations to Lloyd's were released (2007 guarantee: £16.7 million). 

 27     Commitments

There were no capital commitments at the end of the financial year except the commitments made to Leadenhall Capital Partners LLP as described in note 34 (2007: £nil). 

Throughout the year the Group leased certain land and buildings on short-term operating leases, under which the minimum annual commitments were £2.8 million (2007: £2.8 million). The leases relating to £0.5 million (2007: £nil) expire within one year, £2.3 million (2007: £nil) expire in between 2 and 5 years, the remainder expire in over 5 years (2007: £2.2 million).  

28     Cash generated from operations

	Notes		2008 £m		2007 £m
Profit on ordinary activities before taxation			121.6		445.0
Adjustments:
Depreciation charge			3.3		3.0
Amortisation charge	17		1.4		0.8
Finance costs	10		21.2		20.0
Interest received	6		(94.3)		(102.9)
Dividends received			(11.9)		(12.5)
Losses / (gains) on investments realised and unrealised			88.2		(41.6)
Movement in operating assets and liabilities:
Net sales / (purchases) of financial investments	14		155.4		(232.1)
Exchange (gains) / losses on investments	14		(547.5)		(2.5)
Decrease in loans and receivables			(157.4)		51.9
Decrease in reinsurance contract assets			(100.0)		69.2
Decrease in insurance contract liabilities			441.0		(136.4)
Increase in trade and other payables			37.2		16.2
Increase in retirement benefits			1.2		(4.7)
Exchange losses / (gains) on long term borrowings			18.1		(0.8)
Exchange losses on other non-operating assets and liabilities			250.2		-
Other non-cash movements			(5.3)		(2.1)
Cash generated from operations			222.4		70.5

29     Acquisition of subsidiary

On 25 November 2008, the Group acquired 96.53% of the share capital and voting rights in Financière Europe Assurances SAS (FEA), the holding company of Anglo French Underwriters SAS and Anglo French UK Ltd. The FEA group is a Lloyd's approved general insurance coverholder in France specialising in SME speciality business. The remaining 3.47% is owned by executive management, over which Amlin Group has an option to buy, the price being dependent on the performance of the business.  

The purpose of the acquisition was to strengthen the Group's market position in targeted continental European business segments and to acquire the skilled workforce to drive future profitability in those segments. 

Purchase consideration:	£ m
- Initial consideration	26.3
- Deferred cost consideration	3.8
- Direct cost relating to the acquisition	1.0
Total purchase consideration	31.1
Fair value of assets acquired (see below)	3.6
Goodwill	27.5

The assets and liabilities arising from the acquisition are as follows:

	Fair value	Acquiree's carrying amount
	£ m	£m
Cash and cash equivalents	4.3	4.3
Property, plant and equipment	0.1	0.1
Insurance receivables	3.0	3.0
Intangible assets	7.9	5.4
Financial liabilities	(4.8)	(4.8)
Insurance liabilities	(8.1)	(8.1)
Other assets and liabilities	1.3	1.3
Net tax liability	(0.1)	(0.1)
Net assets acquired	3.6	1.1

Intangible assets relate to the customer relationships held between FEA, its subsidiaries and its customers comprising renewal rights and customer lists. This was calculated based of past and forecast underwriting cash flows of the business principally from underwriting on existing business expected to be renewed using existing customer relationships. 

The goodwill shown above arose from the premium paid for strengthening the Group's market position in targeted business segments and acquiring the skilled workforce to drive future profitability in those segments. No provision for impairment of goodwill has been made at the balance sheet date.

The acquiree's carrying amount shown represents the balance sheet of FEA group as at 25 November 2008 prepared in accordance with French GAAP adjusted for material differences to IFRS. The FEA group contributed £0.3 million to the Group's profit before tax for the period between 25 November 2008 and 31 December 2008. If the acquisition of FEA group had been completed on the first day of the financial year the Group result for the period would have been a loss of £80.2 million. 

The Group's intention following the acquisition of the FEA group is to underwrite, through Syndicate 2001, much of the business that was previously introduced by the FEA group to other underwriters. If the Group had commenced underwriting the business managed by the FEA group on the first day of the financial year, the acquisition would have contributed an additional £28.6 million gross premium written to the Group's Income Statement.

            30     Group owned net assets

          

            The assets and liabilities attributable to Group owned companies, as opposed to the Group's syndicate participations,  are summarised below:

	In Syndicate 2001 2008 £m	In Amlin Bermuda Ltd 2008 £m	In Group owned companies 2008 £m	Total 2008 £m	In Syndicate 2001 2007 £m	In Amlin Bermuda Ltd 2007 £m	In Group owned companies 2007 £m	Total 2007 £m
Investments
Financial investments	1,573.1	1,196.1	100.4	2,869.6	1,577.2	854.7	207.0	2,638.9
Other assets
Intangible assets	-	-	110.2	110.2	-	-	69.0	69.0
Property and equipment	-	0.4	8.0	8.4	-	1.0	4.8	5.8
Cash and cash equivalents	0.3	0.1	13.7	14.1	3.9	0.7	7.0	11.6
Loans and receivables - insurance assets	186.3	163.0	(43.8)	305.5	113.5	98.5	(29.0)	183.0
Loans and receivables - other	57.8	5.7	5.2	68.7	37.5	3.2	(3.8)	36.9
Deferred income tax	-	-	11.1	11.1	-	-	13.4	13.4
Current income tax	6.9	-	6.4	13.3	3.5	-	0.5	4.0
Reinsurance assets	868.2	0.3	(151.6)	716.9	704.5	(0.1)	(87.5)	616.9
Total assets	2,692.6	1,365.6	59.6	4,117.8	2,440.1	958.0	181.4	3,579.5
Current liabilities
Trade and other payables	(44.9)	(12.0)	(53.1)	(110.0)	(19.5)	(10.4)	(172.1)	(202.0)
Current income tax liabilities	-	-	(6.9)	(6.9)	-	-	(25.7)	(25.7)
Borrowings	-	-	-	-	-	-	(0.1)	(0.1)
	(44.9)	(12.0)	(60.0)	(116.9)	(19.5)	(10.4)	(197.9)	(227.8)
Non-current liabilities
Trade and other payables	-	-	(13.2)	(13.2)	-	-	(5.1)	(5.1)
Borrowings	-	-	(295.9)	(295.9)	-	-	(277.4)	(277.4)
Retirement benefit obligations	-	-	(4.0)	(4.0)	-	-	(2.8)	(2.8)
Deferred tax liabilities	-		(144.6)	(144.6)	-	-	(128.1)	(128.1)
	-	-	(457.7)	(457.7)	-	-	(413.4)	(413.4)
Total liabilities	(44.9)	(12.0)	(517.7)	(574.6)	(19.5)	(10.4)	(611.3)	(641.2)
Insurance contracts	(2,129.3)	(403.4)	205.6	(2,327.1)	(1,801.1)	(205.3)	120.4	(1,886.0)
Consolidated shareholders' funds at 31 December	518.4	950.2	(252.5)	1,216.1	619.5	742.3	(309.5)	1,052.3

The assets of the Syndicate included above are held in regulated trust funds and are only available to pay syndicate related expenditure. Amlin Bermuda Ltd is also a regulated company. Other capital required for regulatory purposes by the Group companies which operate as a Lloyd's managing agency and Lloyd's service companies are shown as part of Group owned companies. 

31     Financial information and posting of accounts

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2007 or 2008, but is derived from those accounts. Statutory accounts for 2007 have been delivered to the Registrar of Companies and those for 2008 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under Section 237(2) or (3) of the Companies Act 1985. 

The audited Annual Report and Accounts for 2008 are expected to be posted to shareholders by no later than 31 March 2009. It will also be posted by that date on the Company's website.  Copies of the Report may be obtained, once it is published, by writing to the Company Secretary, Amlin plc, St Helen's, 1 Undershaft, London, EC3A 8ND. The Annual General Meeting of the Company will be held at the same address at noon on Wednesday 13 May 2009. 

The preliminary Results were approved by the Board on 27 February 2009.

---

 

END

 

 

FR UBOKRKORUUAR