Interim Results 2013

RNS Number : 9462L

Amlin PLC

19 August 2013

AMLIN PLC

PRESS RELEASE

For immediate release

19 August 2013

Interim Results for the

six months ended 30 June 2013

Solid performance demonstrates strength of Amlin's diversified franchise

Highlights

§ Profit before tax of £161.4 million (H1 2012: £184.4 million)

§ First half return on equity of 9.3% (H1 2012: 11.9%), 18.6% annualised

§ Gross written premium of £1,838.9 million (H1 2012: £1,814.7 million)

§ Combined ratio of 85% (H1 2012: 84%), generating an underwriting profit of £158.2 million
(H1 2012: £153.5 million)

§ Large catastrophe losses higher than last year but limited at £32.2 million (H1 2012: £nil)

§ Average overall rate movement flat (H1 2012: increase 4.2%), with renewal retention rate of 87% (H1 2012: 86%)

§ Positive rate movements for key insurance classes offset downward pressure on catastrophe reinsurance rates

§ Investment return of 1.4% (H1 2012: 2.0%), generating an investment contribution of £67.4 million (H1 2012: £84.7 million)

§ Earnings per share of 28.2 pence (H1 2012: 34.1 pence)

§ Interim dividend increased 4.0% to 7.8 pence per share (H1 2012: 7.5 pence per share)

§ Net tangible assets per share increased 8.2% to 281.2 pence (31 December 2012: 259.8 pence)

Charles Philipps, Chief Executive, commented as follows:

"These are a solid set of results which demonstrate a good level of underlying underwriting profitability. There are positive trends in a number of our businesses which will counteract downward pressure on catastrophe reinsurance rates and this reinforces the benefit of our diversification strategy. We are optimistic about the out-turn for the full year."

Enquiries:
Charles Philipps, Chief Executive, Amlin plc	0207 746 1000
Richard Hextall, Group Finance & Operations Director, Amlin plc	0207 746 1000
Analysts and Investors
Julianne Jessup, Head of Investor Relations, Amlin plc	0207 746 1961
Media
Ed Berry, FTI Consulting	0207 269 7297

Amlin plc

Registered office

St Helen's

1 Undershaft

Registered in England

No. 2854310

London EC3A 8ND

Financial highlights⁽¹⁾

	H1 2013 £m	H1 2012 £m	YE 2012 £m
Gross written premium	1,838.9	1,814.7	2,405.6
Net written premium	1,525.2	1,488.8	2,058.6
Net earned premium	1,058.8	987.7	1,970.5
Profit attributable to underwriting	158.2	153.5	207.1
Investment return	67.4	84.7	165.3
Other costs⁽²⁾	64.2	53.8	108.2
Profit before tax	161.4	184.4	264.2
Net assets	1,650.6	1,489.5	1,497.7
Net tangible assets	1,403.4	1,273.3	1,286.3
Per share amounts (in pence)
Earnings	28.2	34.1	50.1
Dividend under IFRS⁽³⁾	16.5	15.8	23.3
Dividends declared for the calendar period/year⁽³⁾	7.8	7.5	24.0
Net assets	330.7	301.0	302.5
Net tangible assets	281.2	257.3	259.8
Group operating ratios
Return on equity	9.3%	11.9%	17.4%
Claims ratio⁽⁴⁾	53%	53%	57%
Expense ratio⁽⁴⁾	32%	31%	32%
Combined ratio⁽⁴⁾	85%	84%	89%

Source: Amlin

(1) The financial highlights are presented on the basis of management information provided to the Group Management Committee. The reconciliation between this information and the International Financial Reporting Standards (IFRS) consolidated statement of profit or loss is included in note 6 to the condensed consolidated interim financial statements on page 26.

(2) Other costs comprise other non-underwriting expenses, finance costs, other operating income and share of profit or loss after tax of associates.

(3) All per share dividends are the actual dividends for each share in issue at the time.

(4) Claims ratio is net claims incurred divided by net earned premium for the period/year. Expense ratio is underwriting expense incurred divided by net earned premium for the period/year. The expense ratio does not include expenses that have not been attributed to underwriting, including employee incentive costs and finance costs. Combined ratio is the total of the claims and expense ratios.

Comparative data in the financial highlights above and the Interim Results Statement have been restated for changes in the Group's accounting policies following the adoption of new or revised IFRSs. These changes and the impact of their retrospective application on previously reported information are set out in note 2 to the condensed consolidated interim financial statements.

In August 2012, it was announced that, in line with the Group's growth strategy for Europe, Amlin France was being integrated with Amlin Corporate Insurance. In Amlin's 2012 Interim Report and Q3 2012 Interim Management Statement the combined results of Amlin France and Amlin Corporate Insurance were reported under the heading Amlin European Insurance. On 19 December 2012 Amlin Corporate Insurance N.V. officially changed its name to Amlin Europe N.V. In this report, the combined businesses formerly named Amlin France and Amlin Corporate Insurance are referred to throughout as Amlin Europe.

Interim Results Statement

Amlin delivered a healthy financial performance in the first half of 2013. The underwriting return was strong, supported by growth in premium across 2012 and 2013 and limited catastrophe activity. Investment markets remained difficult, but the six-month investment return was good at 1.4%.

Capital strength is fundamental to our business proposition. At 30 June 2013 available capital had increased to £576.5 million above management's assessed capital requirement (31 December 2012: £378.8 million).

We expect the overall trading environment to remain satisfactory for the remainder of 2013. Whilst reinsurance markets are under more pressure, margin potential remains and our market position is strong. Amlin is well positioned in an improving UK commercial market and will also benefit from the underlying improvements in its European businesses.

Overview of the results

The Group returned a profit before tax in the period of £161.4 million (H1 2012: £184.4 million). Profit after tax was £140.2 million, with an effective tax rate of 13.1% (H1 2012: £168.9 million and 8.4%). Our return on equity for the period was 9.3% (18.6% annualised).

Gross written premium was £1,838.9 million (H1 2012: £1,814.7 million). At constant rates of exchange gross written premium for the 2013 underwriting year was up 6.2%.

Reductions in income estimates on binding authorities were made to previously reported 2012 estimates. Notably for Amlin UK reductions of £23.0 million were made from the property and package accounts reducing the underwriting contribution by £2.4 million. This portfolio has expanded rapidly, with significant new business, making the income estimation process inherently more difficult.

Gross written premium has increased by more than 20% since the corresponding period in 2011. This, together with disciplined underwriting and changes in business mix, has provided healthy momentum to net earned premium, which increased by 7.2% to £1,058.8 million (H1 2012: £987.7 million).

Notably, catastrophe reinsurance income (before reinstatement premium) has increased by approximately 12% since 30 June 2011, with retentions remaining high. The majority of this income was written at strong or near peak margins, although the June US renewals witnessed significant competition from new entrants.

Overall, the average renewal rate for the period was flat, with renewal retention high at 87% (H1 2012: increase of 4.2% and 86%).

The underwriting contribution increased to £158.2 million (H1 2012: £153.5 million).

The Group combined ratio was 85% (H1 2012: 84%) with the claims ratio at 53% (H1 2012: 53%). Releases from reserves amounted to £61.4 million (H1 2012: £53.0 million), although the margin of carried reserves over the actuarial best estimate is now at least £175 million (31 December 2012: at least £160 million). Catastrophe activity in the first half of 2013 was higher than last year but relatively limited, with large catastrophe losses totalling £32.2 million across the Group (H1 2012: £nil). The most notable event was the European flooding in May and June. Excluding the impact of catastrophe losses and prior period releases, the underlying claims ratio improved to 56% (H1 2012: 58%) supported by recent growth in higher margin business.

The investment environment continued to prove challenging, but performance was solid, helped by short bond durations and our allocations to equities, non-government bonds and property. Investments contributed £67.4 million in the period (H1 2012: £84.7 million), with an investment return of 1.4% (H1 2012: 2.0%) on the average funds under management of £4.5 billion (H1 2012: £4.2 billion).

As described in more detail on page 8, strengthening in the US dollar supported a net foreign exchange gain of £13.7 million in the consolidated statement of profit or loss in the period (H1 2012: £5.2 million) and a net gain of £79.9 million (H1 2012: loss of £22.5 million) on translation of foreign operations, net of designated hedges, through other comprehensive income.

Earnings per share were 28.2 pence (H1 2012: 34.1 pence).

Dividend

The Board has declared an interim dividend of 7.8 pence per share (H1 2012: 7.5 pence per share), an increase of 4.0% over the 2012 interim dividend. The dividend will be paid on 3 October 2013 to shareholders on the register at the close of business on 6 September 2013.

A dividend reinvestment plan, details of which may be obtained from the Company's registrar or from the Company's website, is available to shareholders in respect of this dividend.

Underwriting conditions

For the January renewals US catastrophe rates responded positively to losses resulting from Hurricane Sandy in 2012, with an average rate increase of 4.2%. Almost half of Amlin's reinsurance book is written in the first quarter of the year.

However, there has since been increased capital market penetration of catastrophe reinsurance, an absence of major loss activity and a number of cedants deciding to carry higher retentions. As a consequence, there has been more intense competition with renewal rates for our June US catastrophe business down by an average of 14.9%. While the renewal rate reduction moderated for the July renewals, we

anticipate further downward pressure on catastrophe rates into 2014 unless there is significant loss activity in the second half of 2013. International catastrophe business, which is more than 40% of Amlin's catastrophe underwriting, is experiencing less pronounced competition. Overall, our catastrophe reinsurance renewal rates decreased by 2.7% in the period.

Rates for both US and international catastrophe business were at or close to peak levels at the start of the year, and we believe that, even with recent and anticipated rate reductions, the disciplined underwriting that is now a more constant feature of the market will help to ensure that catastrophe reinsurance business will remain attractive.

A number of our key insurance classes have experienced better trading conditions. In particular, our UK commercial book is improving, with an average renewal rate increase in the first half of 3.5%. Fleet motor rates have continued their upward trend of recent years with rate increases of 7.6%. Liability rates are moving in the right direction for the first time in a number of years and all classes are recording positive movement. Recent competitor results and statements suggest that this trend will continue.

Property and casualty rates improved by 1.4% in the period and £43.6 million (net of brokerage) of new business was added. Rates for our London Marine & Aviation business were flat, with variation across classes. For example, liability and yacht classes had average rate increases of 7.2% and 1.1% respectively, whilst energy and aviation saw respective rate decreases of 1.8% and 4.5%.

Elsewhere, Continental European insurance markets remain competitive, with rating levels holding steady.

Table 1: Average renewal and retention rates

	Gross written premium H1 2013 £m	Gross written premium H1 2012 £m	Average renewal rate change H1 2013 %	Average renewal rate change H1 2012 %	Average renewal retention ratio H1 2013 %	Average renewal retention ratio H1 2012 %
Amlin London⁽¹⁾	808.2	782.4	(0.4)	5.5	87	85
Reinsurance	368.5	379.3	(1.6)	9.3	88	87
Property & Casualty	218.7	178.8	1.4	3.9	86	85
Marine & Aviation	221.0	224.3	0.1	(0.1)	84	80
Amlin UK	212.6	227.0	3.5	5.5	88	84
Amlin Bermuda⁽¹⁾	281.6	256.0	(2.8)	8.6	85	91
Amlin Re Europe⁽¹⁾	171.8	155.8	2.6	2.1	90	89
Amlin Europe⁽¹⁾	364.7	393.5	0.1	(0.2)	90	85
Total/average	1,838.9	1,814.7	0.0	4.2	87	86

Source: Amlin

(1) Excludes the impact of intra-group transactions.

Our rating indices table below illustrates the pricing trends for a number of major classes.

Table 2: Rating indices for major classes (based on renewal)⁽¹⁾

Rating indices in key Group classes	2004	2005	2006	2007	2008	2009	2010	2011	2012	H1 2013
Reinsurance
US catastrophe reinsurance	143	144	185	188	167	185	175	176	190	182
International catastrophe reinsurance	145	131	138	131	119	124	123	131	149	148
Property reinsurance	170	146	170	144	126	127	115	109	110	104
International Property & Casualty
Property insurance	143	136	165	143	133	142	141	144	153	157
US casualty	234	239	237	223	203	199	197	197	201	201
Marine & Aviation
Marine hull	183	189	191	192	192	205	208	209	209	210
Amlin Europe Marine						100	104	104	104	105
Offshore energy	170	175	262	243	209	256	247	262	262	257
War	220	206	191	175	160	156	153	153	149	148
Airline hull and liabilities	216	201	158	122	127	141	132	124	107	95
Commercial & Domestic
Fleet motor	141	137	135	134	137	144	148	159	175	188
UK employers' liability	159	144	135	123	115	114	115	114	119	126
UK professional indemnity	181	165	154	140	129	128	127	127	128	129
Property and commercial combined	126	126	117	110	109	107	106	112	113	115
Amlin Europe property						100	97	95	95	95
Amlin Europe liability						100	95	95	95	95
Amlin Europe fleet motor						100	99	99	99	99
Source: Amlin
Index = 100% at 31 December 2000. Bold indicates peak levels.

(1) This table is completed by our underwriters and covers their assessment of rate movements from year to year, as recorded on Amlin's underwriting systems. Subjective judgement is used to account for subtle changes in exposure or terms and conditions. Claims inflation is not systematically taken into account in the calculation of these rate movements and therefore, particularly in relation to long tail business, some of the benefit of rate increases has been eroded. 2013 rate levels are for the six month period to 30 June 2013.

Outwards reinsurance

Reinsurance expenditure in the period was £313.7 million, representing 17.1% of gross written premium (H1 2012: £325.9 million and 18.0%). Having reduced our risk tolerances for major catastrophes during 2012, our strong performance in 2012 allowed us to increase tolerances for 2013. We therefore reduced outwards reinsurance expenditure for 2013 and this coincided with an opportunity to reduce retentions for catastrophe reinsurance events within our excess of loss accounts, resulting in a significantly better risk-reward equation for 2013 than has been possible in recent years.

Claims

The Group claims ratio was in line with the first half of 2012 at 53% (H1 2012: 53%). Excluding the impact of catastrophe losses and reserve releases the underlying claims ratio improved to 56% (H1 2012: 58%).

Catastrophe losses in the period were limited at £32.2 million (H1 2012: £nil). The only major catastrophe event to the Group in the period was the European floods in May and June. The market loss estimate for this event is between $3.5 billion and $4.5 billion^1.

Within Amlin Europe, Amlin France incurred a number of large property losses. However, claims experience for the old Amlin Corporate Insurance business was within expectation.

Releases from reserves in the period amounted to £61.4 million (H1 2012: £53.0 million), largely driven by favourable claims development in Amlin London and Amlin Europe. There have been no significant changes in our reserving methodology. We estimate that the Group as a whole holds reserves on an accident year basis of at least £175 million in excess of an actuarial best estimate (31 December 2012: at least £160 million).

¹Swiss Re, 8 July 2013.

Segmental commentary

Table 3: Divisional combined ratios

	Amlin London	Amlin UK	Amlin Bermuda	Amlin Re Europe	Amlin Europe	Intra Group/ Other	Total
Gross written premium (£m)	811.2	212.6	416.6	172.8	377.4	(151.7)	1,838.9
Net earned premium (£m)	362.5	144.6	271.7	83.7	203.3	(7.0)	1,058.8
Reserve releases (£m)	22.4	9.1	(1.0)	1.2	29.7	-	61.4
Profit attributable to underwriting (£m)	87.1	5.3	67.7	(1.9)	5.0	(5.0)	158.2
Combined ratio
Claims ratio	41%	58%	53%	74%	62%		53%
Expense ratio	35%	38%	22%	28%	36%		32%
Combined ratio H1 2013	76%	96%	75%	102%	98%		85%
Combined ratio H1 2012	83%	99%	58%	100%	98%		84%

Source: Amlin

Amlin London

Gross written premium increased by 3.7% to £811.2 million (H1 2012: £782.4 million). Growth was predominantly attributable to the Property and Casualty business, which benefitted from an average rate increase of 1.4% and the addition of £43.6 million (net of brokerage) of new business, £9.3 million (net of brokerage) of which was from the new international casualty class. Net earned premium was £362.5 million (H1 2012: £352.0 million).

The combined ratio improved to 76% (H1 2012: 83%).

The claims ratio of 41% (H1 2012: 47%) includes catastrophe losses of £8.0 million. Prior period reserve releases were £22.4 million (H1 2012: £21.9 million). The improvement in the underlying loss ratio reflects the benefit of recent growth in higher margin business.

The expense ratio has remained relatively constant at 35% (H1 2012: 36%).

Amlin UK

Gross written premium was £212.6 million (H1 2012: £227.0 million). The decrease results from a £23.0 million reduction to income estimates on binding authorities made for 2012 underwriting; income estimation is inherently more challenging for a growing book with material new business of this nature. Underlying income for the 2013 underwriting year was up 8.6% at £235.6 million (H1 2012: £216.9 million (2012 underwriting year)). The retention ratio was 88% with average rate increases of 3.5%.

The trading environment for this business continues to improve. In the six-month period, fleet motor income increased by 20.8%, with average renewal rate increases of 7.6%, and new business income of £19.4 million (net of brokerage). Elsewhere, property rates increased by 1.2% and rates for liability business are positive.

The combined ratio was 96% (H1 2012: 99%), with a claims ratio of 58% (H1 2012: 61%). Adjustments to prior year income estimates reduced the underwriting result by £2.4 million. Prior period reserve releases contributed £9.1 million (H1 2012: £5.9 million) reflecting positive claims experience on older years.

The expense ratio remained stable at 38% (H1 2012: 38%).

Amlin Bermuda

Amlin Bermuda wrote £281.6 million (H1 2012: £256.0 million) of direct business. Quota share and other reinsurances of other Group entities increased its overall written premium to £416.6 million (H1 2012: £397.4 million). Rates declined by an average of 2.8% across the period, but growth in direct business was achieved through the addition of new prorata reinsurance business, where average rate increases were 1.8%. The retention ratio was 85%. The business franchise is strong, supported by an excellent reputation for client service and a number of recent marketing initiatives.

Net earned premium increased by 16.6% to £271.7 million (H1 2012: £233.1 million), reflecting growth in written income in 2012 and 2013.

The combined ratio was 75% (H1 2012: 58%).

The claims ratio of 53% was impressive, with catastrophe losses of £16.2 million in the period (2012: 39% and £nil). Reserves were strengthened by £1.0 million (H1 2012: release of £7.7 million).

The growth in the expense ratio to 22% (H1 2012: 19%) reflects increased acquisition costs associated with a higher proportion of prorata business and foreign exchange losses in the period. Expenses remain low relative to London due to high operational gearing.

Amlin Re Europe

The business continues to develop positively and has achieved further growth in its client base. Gross written premium increased 10.2% to £172.8 million (H1 2012: £156.8 million). The retention ratio was 90% with an average rate increase of 2.6%. Net earned premium was up 42.8% at £83.7 million (H1 2012: £58.6 million).

The combined ratio was 102% (H1 2012: 100%) with a claims ratio of 74% (H1 2012: 75%). The result reflects net losses of £5.5 million attributable to the European floods, impacting the claims ratio by 7%. As more income is earned in the second half of the year the effect of this event on the claims ratio will naturally decline. The underlying claims ratio improved to 68% (H1 2012: 74%).

The increase in the expense ratio to 28% reflects relative growth in prorata reinsurance and motor business, which carry higher acquisition costs (H1 2012: 25%). The core expense ratio was static at 9%. As net earned premium grows we expect the underlying expense ratio to reduce and the business to make a positive contribution to the performance of the Group.

Amlin Europe

Gross written premium was £377.4 million (H1 2012: £398.3 million). The decrease reflects reductions in income estimates on binding authorities made for 2012 underwriting of £4.3 million together with a decision to materially reduce the line written on a significant marine contract which had experienced major losses over the last three years.

Average rate increases were flat, with the retention ratio at 90% (H1 2012: decrease of 0.2% and 85%). Net earned premium was £203.3 million (H1 2012: £208.9 million).

The contribution to the Group underwriting result for the period was a profit of £5.0 million, with a combined ratio of 98% (H1 2012: £4.5 million and 98%).

The claims ratio was 62% (H1 2012: 61%). Claims experience for the former Amlin Corporate Insurance was within expectation, with no large claims above €5 million in the period. However, the claims ratio was affected by a number of large property losses in Amlin France. Excluding Amlin France, the claims ratio was 53%. Prior period reserve releases amounted to £29.7 million (H1 2012: £18.2 million), reflecting favourable claims development. Reserve margins remained healthy and stable.

The expense ratio was 36% (H1 2012: 37%) reflecting the impact of re-underwriting over recent years on net written premium. The core expense ratio was 21% (H1 2012: 19%). This is too high and is being addressed through a business strategy aimed at expanding the business in its markets now that the core has stabilised and a cost reduction programme. Together these actions are expected to reduce the underlying expense ratio significantly over the next three years.

Investments

Table 4: H1 2013 investment mix and returns

	Average balance in H1 2013				Total assets at 31 Dec 2012 %	H1 2013 Actual return %	H1 2013 Benchmark return %
	Policyholder's assets £m	Capital assets £m	Total assets £m	%	Total assets at 31 Dec 2012 %	H1 2013 Actual return %	H1 2013 Benchmark return %
Bonds	2,237.4	1,077.5	3,314.9	74.1	62.7	0.5	0.5
Other liquid	535.4	112.8	648.2	14.5	27.0	0.2	0.2
Equities	4.9	326.4	331.3	7.4	6.7	13.1	10.1
Property	-	179.7	179.7	4.0	3.6	4.4	3.0
Total/average	2,777.7	1,696.4	4,474.1	100.0	100.0	1.4	1.2

The above table includes insurance-linked securities.

Source: Amlin

The investment return on the £4.5 billion average assets held during the first half of the year was 1.4%, producing an overall investment contribution of £67.4 million (H1 2012: £4.2 billion, 2.0% and £84.7 million).

Our cautious stance on interest rate risk and focus on global absolute return strategies cushioned us from the worst of the impact of rising bond yields during the reporting period. Our global equity holdings produced a strong return and active management of this exposure dampened volatility. Global property also produced a robust return.

Expenses

Total expenses were £403.9 million (H1 2012: £368.1 million). Underwriting expenses, excluding foreign exchange movements, amounted to £353.6 million (H1 2012: £315.8 million). Non-underwriting expenses, excluding foreign exchange movements, were £64.0 million (H1 2012: £57.5 million).

Underwriting costs include costs relating to the acquisition and administration of insurance business and claims payments. Non-underwriting expenses include employee incentives, investment management fees, finance costs, Amlin Europe integration costs in prior years and corporate expenses not directly attached to underwriting businesses.

Growth in acquisition costs accounted for the majority of the uplift in underwriting expenses, together with expense growth from the inclusion of RaetsMarine and general inflationary increases. Non-underwriting expenses increased largely due to growth in investment fees, higher incentive payments and general inflation, offset by the absence of Amlin Europe integration costs.

Taxation

The effective rate of tax for the period was 13.1% (H1 2012: 8.4%). It is below the UK rate of corporation tax primarily due to the good performance of Amlin Bermuda, which operates locally with no corporation tax.

Balance sheet strength

Net assets at 30 June 2013 were £1,650.6 million, an increase of 10.2% in the period (31 December 2012: £1,497.7 million). The increase was largely due to retained profit for the period of £140.2 million and £79.6 million of other reserve movements, offset by the 2012 dividend of £82.5 million. Other reserve movements include £79.9 million of foreign exchange gains on translation of foreign operations, net of designated hedges.

Goodwill and intangible assets have increased by £35.8 million to £247.2 million, being the net impact of goodwill and intangibles arising on the acquisition of RaetsMarine (£36.0 million), capitalisation of internally developed software (£1.2 million), foreign exchange gains (£3.9 million) and amortisation (£5.3 million) in the period.

Accordingly, net tangible assets have increased by 9.1% to £1,403.4 million at the period end, equivalent to 281.2 pence per share.

In the period to 30 June 2013, total borrowings reduced by 28.0% to £295.4 million (31 December 2012: £410.4 million) and at 30 June 2013, there was no draw down on the revolving credit facility for working capital purposes (31 December 2012: £120.0 million).

At 30 June 2013, the best estimate of the deficit on the Group's defined benefit schemes had decreased to £36.2 million (31 December 2012: £40.9 million). The Lloyd's Superannuation Fund accounted for £1.9 million of the reduction, with Amlin Europe's defined benefit scheme contributing a further £2.8 million. All actuarial gains and losses are recognised in the consolidated statement of other comprehensive income.

As demonstrated in table 5, the Group's balance sheet remains strong. The long term nature of our debt and the existence of meaningful bank facilities add to the robustness and flexibility of the balance sheet. We believe that the Group should retain a level of capital sufficient to allow material growth in the aftermath of a major insurance disaster and also to respond to other opportunities to enhance long term profitable growth. The quality of the Group's underwriting and capital assets are analysed in note 11 to the condensed consolidated interim financial statements.

Table 5: Amlin capital analysis

	At 30 Jun 2013 £m	At 31 Dec 2012 £m
Net tangible assets	1,403.4	1,286.3
Subordinated debt	294.7	290.4
Undrawn bank facilities⁽¹⁾	300.0	180.0
Available capital	1,998.1	1,756.7
Assessed capital⁽²⁾	1,421.6	1,377.9
	576.5	378.8

Source: Amlin

(1) Bank facilities are subject to a number of restrictive covenants. Facilities may be used to support repayment of intra-group loans.

(2) Assessed capital represents management's estimate of required capital for current trading purposes.

In August 2012, Amlin plc entered into an amended debt facility with its banks, which is available for five years from the date of signing. The new facility provides an unsecured £300 million multicurrency revolving credit facility available by way of cash advances or letter of credit.

Foreign exchange

Table 6: Net foreign exchange gains and losses in the consolidated statement of profit or loss

	H1 2013 £m	H1 2012 £m
Net gains on underwriting transactions and translation of underwriting assets and liabilities at closing rates	16.8	4.2
Underwriting exchange gains	16.8	4.2
Gains on long term US dollar borrowings	-	0.7
Net (losses)/gains on non-underwriting transactions and translation of non-underwriting assets and liabilities at closing rates	(3.1)	0.3
Non-underwriting exchange (losses)/gains	(3.1)	1.0
Total foreign exchange gain in consolidated statement of profit or loss	13.7	5.2

Source: Amlin

The Group's investment in foreign operations, principally Amlin Bermuda and Amlin Europe, generated a net foreign exchange gain, after hedging, of £79.9 million in the period (H1 2012: loss of £22.5 million). The net gain was recognised in the consolidated statement of other comprehensive income.

The consolidated statement of profit and loss includes a net foreign exchange gain of £13.7 million in the period (H1 2012: gain of £5.2 million). Supported by the strengthening of the US dollar, underwriting assets increased £16.8 million (H1 2012: gain of £4.2 million). Non-underwriting assets produced a loss of £3.1 million (H1 2012: gain of £1.0 million).

Principal risks and uncertainties

There are a number of risks and uncertainties which could impact upon the Group's performance over the remaining six months of the financial year and cause actual results to differ materially from expected and historical results. The Directors consider that the principal risks and uncertainties described on page 27 and explained in detail in the risk disclosures note on pages 110 to 140 of the 2012 Annual Report continue to reflect the principal risks and uncertainties of the Group over the remaining six months of the financial year, except where specifically mentioned in the Interim Report. Amlin categorises risks closely to those laid out by the FCA.

A summary of each of the Group's principal risks and uncertainties is provided below.

· The Group accepts underwriting risks through a range of classes of business. In underwriting insurance or reinsurance policies the Group's underwriters use their skill and knowledge to assess each risk and they use exposure information and data on past claims experience to evaluate the likely claims costs and therefore the premium that should be sufficient (across a portfolio of risks) to cover claims costs, expenses and to produce an acceptable profit. However, due to the nature of insurance risk there is no guarantee that the premium charged will be sufficient to cover claims costs. This shortfall may originate either from insufficient premium being calculated and charged or may result from an unexpected, or unprecedented, high level of claims.

From our standard set of realistic disaster scenarios the largest modelled loss at 1 July 2013 was a North-east US windstorm with an estimated net loss of £295 million, equivalent to 21.0% of net tangible assets at 30 June 2013. The Group's event risk tolerance, which determines the maximum net loss that the Group intends to limit its exposure to a major modelled catastrophe event, is currently set at a maximum of £350 million to the Group. The largest modelled loss at 1 January 2013 was also a North-east US windstorm with an estimated net loss of £268 million (20.8% of net tangible assets at 31 December 2012).

· Market risk is the risk that fluctuations in the fair value or future cash flows of the Group's financial instruments have an adverse financial impact. Market risk results from valuation risk, interest rate risk and foreign exchange risk. The Group is exposed to market risk in its investment portfolio.

· Credit risk is the risk that the Group becomes exposed to loss if a specific counterparty fails to perform its contractual obligations in a timely manner, impacting the Group's ability to meet its claims as they fall due. Credit risk can also arise from underlying causes that have an impact upon the creditworthiness of all counterparties of a particular description or geographical location. The Group is exposed to credit risk in its investment portfolio and with its premium and reinsurance receivables. An analysis of the Group's investments in bonds by credit quality is included in note 11.

· Liquidity risk is the risk arising from insufficient financial resources being available to meet liabilities as they fall due. This includes the risk of being forced sellers of any of the Group's assets, which may result in realising prices below fair value, especially in periods of below normal investment market liquidity.

· Operational risk results from inadequate or failed internal processes, people and systems, or from external events, including regulatory control failures.

· Strategic risk is the risk of the current and prospective impact on earnings or capital arising from adverse business decisions, improper implementation of decisions or lack of responsiveness to industry changes.

Related parties

Related party transactions are disclosed in note 21 to the condensed consolidated interim financial statements.

Business development

Amlin continues to develop its business with a view to sustaining its long-term return on equity target of at least 15%. The Practice Boards, which were created in 2012 to bring together Amlin's underwriting strategy across its regulated entities in areas such as reinsurance and marine, are working well, with increased cohesiveness of marketing and business practices, and the identification of areas in which to target future growth.

On 4 March 2013, Amlin announced that it had entered into an agreement to acquire RaetsMarine Insurance B.V. and subsidiaries ('RaetsMarine'), a managing general agent ranked in the top three global providers of fixed premium marine liability protection and indemnity (P&I) business. Amlin previously wrote the majority of RaetsMarine's business. Integration is progressing to plan.

The acquisition is a part of Amlin's strategy to grow its marine business and provide its clients with a comprehensive range of marine insurance products. As an acknowledged leader in the fixed premium P&I market, RaetsMarine is well placed to seek further growth. There continues to be an increase in the number of ship owners moving away from traditional sources of cover provided by P&I mutuals to seek fixed premium programmes. In addition, Amlin will be able to leverage its existing presence in London and Singapore to attract new business to RaetsMarine.

A major focus of the last three years has been to correct the former Amlin Corporate Insurance's marine underwriting so that it is capable of meeting the Group's return requirements. Amlin Europe's performance is on an upward trend with a significantly increased focus on profitability. With the corrective action taken, it is now embarking on a growth strategy which involves increasing its penetration of mid-tier brokers in the Benelux who source SME business. Following a material downsizing of its unprofitable commodities cargo account, it is refocusing its Belgian marine account away from worldwide commodity traders, to local business sourced from local producers. A new leading class underwriter, with a strong track record in this area, has been appointed and the Antwerp office has been downsized.

Amlin Europe has also started to take action to reduce its cost base now that its systems are operating satisfactorily and it has implemented the majority of Amlin's risk and control processes. It is intended that this, with income growth through strategic initiatives, and more efficient reinsurance purchasing will reduce the underlying core expense ratio significantly across the next three years.

Amlin continues to develop its core reinsurance franchise so that it remains a strong leader in the market despite increased competition from the capital markets. Leadenhall Capital, which has achieved a strong track record since its formation in 2008, and now has over $1.4 billion of third party funds under management, is becoming more and more relevant to Amlin's reinsurance strategy, with increasing synergies being realised between Amlin's traditional reinsurance underwriting and Leadenhall's involvement in the market. Leadenhall strengthens Amlin's overall offering to clients, while Amlin provides Leadenhall with a competitive advantage in sourcing attractive business.

In June, Amlin took advantage of especially attractive rates offered by the capital markets to acquire collateralised protection over a four year period from 1 July 2013 for US and Canadian earthquake perils. $75 million of cover has been provided through a bond issued by Tramline Re II Ltd, which attaches at a loss of $325 million, based on market share factors applied to industry losses as reported by Property Claims Services. The lower frequency of earthquakes, compared to windstorms, makes the modeling of such perils more prone to error and this bond will provide an additional source of protection to Amlin's traditional outwards reinsurance should there be a very major earthquake, for example in California.

On 10 May, in recognition of the improvements in performance and operating practices, Fitch Ratings upgraded Amlin Europe N.V.'s Insurer Financial Strength (IFS) rating to 'A+' with a Stable Outlook. Fitch also affirmed Amlin AG's IFS rating at 'A+' and Amlin plc's Long-term Issuer Default Rating (IDR) at 'A-'. Amlin plc's subordinated notes were affirmed at 'BBB-'. The Outlooks on the IFS ratings and IDR remain Stable.

On 23 May, Standard and Poor's, under their new ratings criteria, affirmed the financial strength rating of Amlin AG (A (stable)) and the counterparty credit rating of Amlin plc (BBB+(stable)). The financial strength rating for Amlin Europe (A-(stable)) was affirmed under the new criteria on 19 June. The rating for Syndicate 2001 was not reviewed under the criteria and thus remains at 4 (stable).

At the conclusion of the Annual General Meeting on 16 May 2013, Amlin's Senior Independent Director, Nigel Buchanan, stepped down from the Board. Shonaid Jemmett-Page was appointed Chairman of the Audit Committee in place of Nigel Buchanan at that date. Marty Feinstein was appointed the Group's Senior Independent Director.

Outlook

During the first six months of 2013, market conditions were mixed. We continued to benefit from positive price movements in key areas of Amlin's insurance portfolio, notably UK commercial and property and casualty. We anticipate further strengthening in the UK commercial market as competitors react to poor results with withdrawal of capacity and re-pricing. The upward trend, which begun in fleet motor in 2010 is now more evident in its UK commercial property and liability classes. Amlin UK is well positioned to generate increasing levels of profitability in this trading environment, following substantial investment in distribution and underwriting in recent years, and having grown its gross written premium by £80.8 million (gross of brokerage) over the two years to December 2012. Amlin London has also invested in its property and casualty underwriting capabilities which are now being deployed to take advantage of the gradual firming in the US and international property and casualty markets. This includes the addition of international casualty and on shore US casualty reinsurance expertise. Berkshire Hathaway's announcement of a US carrier and the development in the London Market of broker whole portfolio packages will increase competition. However, we believe Amlin is well positioned due to the spread of its business across geographic markets and the breadth of its relationships with brokers.

As expected, catastrophe reinsurance rates have begun to weaken from the peak levels attained at the start of 2013, partly as a result of the influx of capital markets capacity. We anticipate some further weakening of catastrophe pricing, particularly for the US, in the absence of a major catastrophe event. However catastrophe margins and our overall risk/reward equation remain attractive and with the strength of our market-leading reinsurance franchise and balance of international and US exposures, Amlin is in a strong position to continue to generate good reinsurance returns. Retention levels remain high despite strong competition. In addition, our investment in Leadenhall Capital in 2008, provides Amlin with the scope to develop its position in the 'convergence capital' space and enhances our overall reinsurance franchise.

Our global marine business also benefits from a strong franchise in London and in local markets such as Singapore and the Benelux region. Recent acquisitions such as Lead Yacht and RaetsMarine, together with investment in additional underwriters, have opened up further new business opportunities in international niche markets. Margins in the London marine portfolio remain good and are improving satisfactorily in the Benelux. With re-underwriting of the Benelux marine portfolio now complete and a modest easing of competitive pressures on rates, Amlin Europe's marine team can now focus on targeting opportunities for profitable local growth in their market.

Overall, Amlin Europe is making progress towards a sustainable improvement in performance. Its claims ratio is now down to an acceptable level and it is focused on reducing its expense ratio as discussed earlier. This will be achieved through a combination of growth, more efficient reinsurance purchasing and a reduction in expenses. With a strong management team, Amlin Europe is now able to look forward, targeting opportunities for selective expansion where market conditions allow.

As anticipated, the pace of growth at Amlin Re Europe has slowed as it consolidates early expansion. The team continues to build a well-diversified and quality portfolio supported by excellent client and broker relationships, and we expect it to make a meaningful contribution to future earnings.

Our investment allocations have produced good returns over the last few years. Our short duration bond positions and focus on absolute return bond funds protected us from turbulence in government markets in the first half of the year, and this positioning combined with allocations to equity and property provides reasonable prospects for our returns with improving economic fundamentals.

The capital position of the Group remains strong and able to support meaningful growth in favourable market conditions. We expect the overall trading environment to remain satisfactory for the remainder of 2013. Reinsurance markets are under more pressure but margin potential remains and our market position and breadth of product offered supports good retention of our client base. Amlin is well placed to benefit from improving insurance market conditions in the UK commercial market, and is benefitting from improving underlying positions in its European businesses.

Consolidated statement of profit or loss

For the six months ended 30 June 2013

			Restated	Restated
	Note	6 months 2013 (Unaudited) £m	6 months 2012 (Unaudited) £m	12 months 2012 (Audited) £m
Gross earned premium	6	1,227.9	1,172.1	2,319.0
Reinsurance premium ceded	6	(166.4)	(181.8)	(332.6)
Net earned premium	6	1,061.5	990.3	1,986.4

Investment return	7	64.7	82.1	149.4
Other operating income		1.9	2.3	5.6
Total income		1,128.1	1,074.7	2,141.4

Insurance claims and claims settlement expenses	8	(607.5)	(540.9)	(1,197.3)
Insurance claims and claims settlement expenses recoverable from reinsurers	8	43.7	18.3	72.7
Net insurance claims	8	(563.8)	(522.6)	(1,124.6)

Expenses for the acquisition of insurance contracts		(233.2)	(211.7)	(422.5)
Other operating expenses	9	(156.0)	(143.2)	(303.0)
Total expenses		(389.2)	(354.9)	(725.5)

Results of operating activities		175.1	197.2	291.3
Finance costs		(14.7)	(13.2)	(27.6)
Share of profit or loss after tax of associates		1.0	0.4	0.5
Profit before tax		161.4	184.4	264.2
Tax	10	(21.2)	(15.5)	(16.4)
Profit for the period/year		140.2	168.9	247.8

Attributable to:
Equity holders of the Parent Company		140.2	168.8	247.8
Non-controlling interests		-	0.1	-
		140.2	168.9	247.8

Earnings per share from continuing operations attributable to equity holders of the Parent Company
Basic	14	28.2p	34.1p	50.1p
Diluted	14	27.7p	33.7p	49.5p

The attached notes form an integral part of these condensed consolidated interim financial statements.

Consolidated statement of other comprehensive income

For the six months ended 30 June 2013

		Restated	Restated
	6 months 2013 (Unaudited) £m	6 months 2012 (Unaudited) £m	12 months 2012 (Audited) £m
Profit for the period/year	140.2	168.9	247.8

Items that will not be reclassified to profit or loss
Defined benefit pension fund gains/(losses)	4.1	(1.2)	(9.5)
Income tax relating to items not reclassified	(0.9)	0.3	1.6
	3.2	(0.9)	(7.9)
Items that may be reclassified subsequently to profit or loss
Foreign exchange gains/(losses) on translation of foreign operations, net of designated hedges	79.9	(22.5)	(53.4)
Unrealised gains on investments designated as available-for-sale	-	-	0.5
Income tax relating to items that may be reclassified	0.8	(0.4)	0.3
	80.7	(22.9)	(52.6)

Other comprehensive income/(expense) for the period/year, net of tax	83.9	(23.8)	(60.5)

Total comprehensive income for the period/year	224.1	145.1	187.3

Attributable to:
Equity holders of the Parent Company	224.1	145.0	187.3
Non-controlling interests	-	0.1	-
	224.1	145.1	187.3

The attached notes form an integral part of these condensed consolidated interim financial statements.

Consolidated statement of changes in equity

For the six months ended 30 June 2013

		Attributable to owners of the Parent Company
	Note	Share capital £m	Share premium £m	Other reserves £m	Treasury shares £m	Retained earnings £m	Total £m	Non-controlling interests £m	Total £m
At 1 January 2013		141.2	300.4	121.6	(20.8)	954.7	1,497.1	0.6	1,497.7
Total comprehensive income for the period		-	-	83.9	-	140.2	224.1	-	224.1
Employee share option schemes:
- share-based payment reserve		-	-	(3.0)	3.7	-	0.7	-	0.7
- proceeds from shares issued	13	-	-	-	1.0	(0.7)	0.3	-	0.3
Dividends paid	16	-	-	-	-	(82.4)	(82.4)	(0.1)	(82.5)
Tax relating to share option schemes		-	-	(1.3)	-	-	(1.3)	-	(1.3)
Issue of new shares	13	0.8	10.8	-	-	-	11.6	-	11.6
Transactions with the owners of the Group for the period		0.8	10.8	(4.3)	4.7	(83.1)	(71.1)	(0.1)	(71.2)
At 30 June 2013		142.0	311.2	201.2	(16.1)	1,011.8	1,650.1	0.5	1,650.6

For the six months ended 30 June 2012

		Attributable to owners of the Parent Company
Restated	Note	Share capital £m	Share premium £m	Other reserves £m	Treasury shares £m	Retained earnings £m	Total £m	Non-controlling interests £m	Total £m
At 1 January 2012 - as reported		141.2	300.3	174.5	(22.5)	826.2	1,419.7	0.7	1,420.4
Impact of retrospective application	2	-	-	2.5	-	(2.5)	-	-	-
At 1 January 2012 - restated		141.2	300.3	177.0	(22.5)	823.7	1,419.7	0.7	1,420.4
Total comprehensive (expense)/income for the period		-	-	(23.8)	-	168.8	145.0	0.1	145.1
Employee share option schemes:
- share-based payment reserve		-	-	1.7	0.5	-	2.2	-	2.2
- proceeds from shares issued	13	-	-	-	0.3	(0.1)	0.2	-	0.2
Dividends paid	16	-	-	-	-	(78.2)	(78.2)	(0.1)	(78.3)
Tax relating to share option schemes		-	-	(0.1)	-	-	(0.1)	-	(0.1)
Transactions with the owners of the Group for the period		-	-	1.6	0.8	(78.3)	(75.9)	(0.1)	(76.0)
At 30 June 2012		141.2	300.3	154.8	(21.7)	914.2	1,488.8	0.7	1,489.5

For the twelve months ended 31 December 2012

		Attributable to owners of the Parent Company
Restated	Note	Share capital £m	Share premium £m	Other reserves £m	Treasury shares £m	Retained earnings £m	Total £m	Non-controlling interests £m	Total £m
At 1 January 2012 - as reported		141.2	300.3	174.5	(22.5)	826.2	1,419.7	0.7	1,420.4
Impact of retrospective application	2	-	-	2.5	-	(2.5)	-	-	-
At 1 January 2012 - restated		141.2	300.3	177.0	(22.5)	823.7	1,419.7	0.7	1,420.4
Total comprehensive (expense)/income for the year		-	-	(60.5)	-	247.8	187.3	-	187.3
Employee share option schemes:
- share-based payment reserve		-	-	3.8	0.6	-	4.4	-	4.4
- proceeds from shares issued	13	-	0.1	-	1.1	(0.3)	0.9	-	0.9
Dividends paid	16	-	-	-	-	(115.3)	(115.3)	(0.1)	(115.4)
Acquisition of non-controlling interests		-	-	1.2	-	(1.2)	-	-	-
Tax relating to share option schemes		-	-	0.1	-	-	0.1	-	0.1
Transactions with the owners of the Group for the year		-	0.1	5.1	1.7	(116.8)	(109.9)	(0.1)	(110.0)
At 31 December 2012		141.2	300.4	121.6	(20.8)	954.7	1,497.1	0.6	1,497.7

The attached notes form an integral part of these condensed consolidated interim financial statements

Consolidated statement of financial position

At 30 June 2013

			Restated	Restated
Assets	Note	30 June 2013 (Unaudited) £m	30 June 2012 (Unaudited) £m	31 December 2012 (Audited) £m
Cash and cash equivalents		196.1	243.0	190.6
Financial assets	11	4,282.0	3,997.6	4,205.0
Reinsurance assets
- reinsurers' share of outstanding claims		466.3	532.6	478.6
- reinsurers' share of unearned premium		179.7	170.3	46.8
Loans and receivables, including insurance and reinsurance receivables
- insurance and reinsurance receivables		1,497.1	1,381.0	1,003.2
- other loans and receivables		94.0	162.2	82.2
Deferred acquisition costs		365.6	328.4	239.3
Current income tax assets		11.3	1.0	12.3
Deferred tax assets		15.4	21.6	15.8
Property and equipment		20.6	18.1	20.4
Goodwill and intangible assets	12	247.2	216.2	211.4
Investment in associates		10.5	8.7	9.3
Total assets		7,385.8	7,080.7	6,514.9
Equity and reserves
Share capital	13	142.0	141.2	141.2
Share premium		311.2	300.3	300.4
Other reserves	15	201.2	154.8	121.6
Treasury shares		(16.1)	(21.7)	(20.8)
Retained earnings		1,011.8	914.2	954.7
Equity attributable to equity holders of the Parent Company		1,650.1	1,488.8	1,497.1
Non-controlling interests		0.5	0.7	0.6
Total equity and reserves		1,650.6	1,489.5	1,497.7
Liabilities
Insurance liabilities
- outstanding claims		3,183.5	3,117.1	3,083.5
- unearned premium		1,693.6	1,623.6	1,054.8
Other payables, including insurance and reinsurance payables
- insurance and reinsurance payables		324.0	193.0	275.0
- other payables		133.0	212.8	118.6
Financial liabilities	11	13.1	7.8	5.7
Current income tax liabilities		1.6	5.3	0.4
Borrowings	17	295.4	363.8	410.4
Retirement benefit obligations		36.2	31.2	40.9
Deferred tax liabilities		54.8	36.6	27.9
Total liabilities		5,735.2	5,591.2	5,017.2
Total equity, reserves and liabilities		7,385.8	7,080.7	6,514.9

The attached notes form an integral part of these condensed consolidated interim financial statements.

The financial statements were approved by the Board of Directors and authorised for issue on 16 August 2013. They were signed on its behalf by:

Simon Beale Richard Hextall

Group Chief Underwriting Officer Group Finance & Operations Director

Consolidated statement of cash flows

For the six months ended 30 June 2013

			Restated
	Note	6 months 2013 (Unaudited) £m	6 months 2012 (Unaudited) £m	12 months 2012 (Audited) £m
Cash flows from operating activities
Cash generated from/(utilised in) operations	20	196.0	(26.0)	(74.2)
Interest received		17.2	21.8	37.2
Dividends received		8.4	5.7	11.3
Income taxes received/(paid)		0.1	2.3	(12.1)
Net cash inflows/(outflows) from operating activities		221.7	3.8	(37.8)
Cash flows from investing activities
Acquisition through business combination, net of cash acquired		(8.8)	-	-
Deferred payment for acquired subsidiary		(0.2)	-	(0.1)
Investment in associates		-	-	(0.5)
Purchase of property and equipment		(1.3)	(1.1)	(6.5)
Purchase and development of intangible assets		(1.2)	(2.9)	(2.2)
Net cash outflows from investing activities		(11.5)	(4.0)	(9.3)
Cash flows from financing activities
Net proceeds from issue of ordinary shares, including treasury shares		11.9	0.2	0.9
Dividends paid to shareholders	16	(82.4)	(78.2)	(115.3)
Dividends paid to non-controlling interests	16	(0.1)	(0.1)	(0.1)
Interest paid		(4.5)	(3.1)	(21.9)
Purchase of ESOT and treasury shares		(1.8)	-	-
Net (repayment)/drawdown of revolving credit facility		(128.3)	71.2	122.8
Net cash outflows from financing activities		(205.2)	(10.0)	(13.6)
Net increase/(decrease) in cash and cash equivalents		5.0	(10.2)	(60.7)
Cash and cash equivalents at beginning of year		190.6	256.3	256.3
Effect of exchange rate changes on cash and cash equivalents		0.5	(3.1)	(5.0)
Cash and cash equivalents at end of period/year		196.1	243.0	190.6

The attached notes form an integral part of these condensed consolidated interim financial statements.

Notes to the interim financial statements

1. Basis of preparation of interim financial statements

The condensed consolidated interim financial information included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim financial reporting' (IAS 34), as adopted by the European Union, and with the Disclosure and Transparency Rules issued by the Financial Conduct Authority. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2012, which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2012 were approved by the Board of Directors on 1 March 2013 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498(2) or section 498(3) of the Companies Act 2006.

After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Therefore the Group continues to adopt the going concern basis in preparing its condensed consolidated interim financial statements.

This condensed consolidated interim financial information was approved for issue on 16 August 2013.

2. Accounting policies

i. Accounting policies applied in condensed consolidated interim financial statements

The same accounting policies, presentation and methods of computation are followed in the condensed consolidated interim financial statements as applied in the Group's latest annual audited financial statements except for the adoption of the following standards and amendments with effect from 1 January 2013:

a) IAS 19 (revised), 'Employee benefits'

The amendments to IAS 19 principally affect the accounting for and disclosure of defined benefit plans. The amendments eliminate the option to defer the recognition of actuarial gains and losses under the 'corridor' approach, require a single rate to be applied to the net defined benefit asset or liability to calculate the net interest income or expense, remove the options for presentation of gains and losses and enhance the disclosure requirements in respect of defined benefit plans and the risks arising on those plans. The amendments have been applied retrospectively with comparative information restated accordingly. The impact of the restatement is presented in note 2(iii) below.

b) IFRS 13, 'Fair value measurement'

IFRS 13 is a new standard which establishes a single source of guidance under IFRS for fair value measurement and introduces new disclosures to help users to better assess the valuation techniques and inputs used to measure fair value. The standard has been applied prospectively. Adoption of the standard has had no impact on the Group's measurement of assets and liabilities measured at fair value. Additional disclosures about the Group's fair value measurements have been provided in note 11, reflecting consequential amendments made to IAS 34.

c) IFRS 7 (amended), 'Financial instruments: Disclosures - Offsetting financial assets and financial liabilities'

The amendments to IFRS 7 introduce new disclosure requirements intended to better compare the different offsetting of financial assets and financial liabilities under IFRS and US GAAP. Additional disclosures arising from the amendments will be provided in the annual financial statements.

d) IAS 32 (amended), 'Financial instruments: Presentation - Offsetting financial assets and financial liabilities'

The Group has early adopted the amendments to IAS 32, which clarify the requirements for offsetting financial instruments. The amendments have had no impact on the financial statements of the Group.

e) IAS 1 (amended), 'Presentation of financial statements - Presentation of items of other comprehensive income'

The amendments to IAS 1 require items of other comprehensive income to be grouped into those that will not be reclassified subsequently to profit or loss and those that will be reclassified subsequently to profit or loss when specific conditions are met. The aggregate amount of income tax relating to items of other comprehensive income is also allocated to these two categories. These amendments have been reflected in the consolidated statement of other comprehensive income, with comparative information reclassified accordingly.

f) IAS 12 (amended), 'Income taxes - Deferred taxes: Recovery of underlying assets'

The amendments to IAS 12 relate to the measurement of deferred tax on investment properties and have had no impact on the financial statements of the Group on adoption.

g) Annual improvements to IFRSs - 2009-2011 cycle

The IASB uses the annual improvements process to make necessary, but non-urgent, amendments to IFRSs that will not be included as part of a major project. The amendments primarily remove inconsistencies and clarify wording. Adoption of the amendments has not had a material impact on the financial statements of the Group.

2. Accounting policies continued

ii. Early adoption of IFRS 10, 'Consolidated financial statements', IFRS 11, 'Joint arrangements', IFRS 12, 'Disclosure of interests in other entities', IAS 27 (revised), 'Separate financial statements' and IAS 28 (revised), 'Investments in associates and joint ventures'

The Group early adopted the requirements of the above standards in its Annual Report for the year ended 31 December 2012. However the Group was unable to present its 2012 condensed consolidated interim financial statements on the same basis as the standards had not been endorsed by the European Union at the date of the 2012 Interim Report. The comparative information for the period ended 30 June 2012 has therefore been presented to reflect the adoption of these standards from 1 January 2012. The impact of this change in presentation is presented in note 2(iii) below.

iii. Impact of retrospective application of new or revised standards on previously reported financial information

The amount of the restatement for each financial statement line item affected by retrospective application of new or revised standards is provided below:

a) Six months ended 30 June 2012

Consolidated statement of profit or loss	As reported 6 months 2012 £m	IAS 19 (revised)	IFRS 10	Restated 6 months 2012 £m
Other operating expenses	(142.9)	(0.1)	(0.2)	(143.2)
Total expenses	(354.6)	(0.1)	(0.2)	(354.9)
Results of operating activities	197.5	(0.1)	(0.2)	197.2
Finance costs	(13.4)	-	0.2	(13.2)
Profit before tax	184.5	(0.1)	-	184.4
Profit for the period	169.0	(0.1)	-	168.9

Attributable to:
Equity holders of the Parent Company	168.9	(0.1)	-	168.8
Non-controlling interests	0.1	-	-	0.1
	169.0	(0.1)	-	168.9
Earnings per share from continuing operations attributable to equity holders of the Parent Company
Basic	34.1p	-	-	34.1p
Diluted	33.7p	-	-	33.7p

Consolidated statement of other comprehensive income	As reported 6 months 2012 £m	IAS 19 (revised)	Restated 6 months 2012 £m
Profit for the period	169.0	(0.1)	168.9

Items that will not be reclassified to profit or loss
Defined benefit pension fund losses	(1.1)	(0.1)	(1.2)
Income tax relating to items not reclassified	0.3	-	0.3
	(0.8)	(0.1)	(0.9)
Other comprehensive expense for the period, net of tax	(23.7)	(0.1)	(23.8)
Total comprehensive income for the period	145.3	(0.2)	145.1

Attributable to:
Equity holders of the Parent Company	145.2	(0.2)	145.0
Non-controlling interests	0.1	-	0.1
	145.3	(0.2)	145.1

2. Accounting policies continued

Consolidated statement of financial position	As reported 30 June 2012 £m	IAS 19 (revised)	IFRS 10	Restated 30 June 2012 £m
Cash and cash equivalents	247.0	-	(4.0)	243.0
Financial investments	4,089.1	-	(91.5)	3,997.6
Loans and receivables, including insurance and reinsurance receivables
- insurance and reinsurance receivables	1,381.2	-	(0.2)	1,381.0
- other loans and receivables	161.0	-	1.2	162.2
Total assets	7,175.2	-	(94.5)	7,080.7
Other reserves	152.4	2.4	-	154.8
Retained earnings	916.8	(2.6)	-	914.2
Equity attributable to equity holders of the Parent Company	1,489.0	(0.2)	-	1,488.8
Total equity and reserves	1,489.7	(0.2)	-	1,489.5
Other payables, including insurance and reinsurance payables
- other payables	212.9	-	(0.1)	212.8
Borrowings	458.2	-	(94.4)	363.8
Retirement benefit obligations	31.0	0.2	-	31.2
Total liabilities	5,685.5	0.2	(94.5)	5,591.2
Total equity, reserves and liabilities	7,175.2	-	(94.5)	7,080.7

Consequential amendments have also been made to the consolidated statement of cash flows and the notes to the interim financial statements. The impact of retrospective application on each component of equity is shown in the consolidated statement of changes in equity, as required by IAS 1.

b) Year ended 31 December 2012

Consolidated statement of profit or loss	As reported 12 months 2012 £m		IAS 19 (revised)	Restated 12 months 2012 £m
Profit before tax	264.2		-	264.2
Tax	(16.5)		0.1	(16.4)
Profit for the year	247.7		0.1	247.8

Attributable to:
Equity holders of the Parent Company	247.7		0.1	247.8
Non-controlling interests	-		-	-
	247.7		0.1	247.8
Earnings per share from continuing operations attributable to equity holders of the Parent Company
Basic		50.0p	0.1p	50.1p
Diluted		49.4p	0.1p	49.5p
Consolidated statement of other comprehensive income	As reported 12 months 2012 £m		IAS 19 (revised)	Restated 12 months 2012 £m
Profit for the year	247.7		0.1	247.8

Items that will not be reclassified to profit or loss
Defined benefit pension fund losses	(17.5)		8.0	(9.5)
Income tax relating to items not reclassified	3.4		(1.8)	1.6
	(14.1)		6.2	(7.9)
Other comprehensive expense for the year, net of tax	(66.7)		6.2	(60.5)
Total comprehensive income for the year	181.0		6.3	187.3

Attributable to:
Equity holders of the Parent Company	181.0		6.3	187.3
Non-controlling interests	-		-	-
	181.0		6.3	187.3

2. Accounting policies continued

Consolidated statement of financial position	As reported 31 December 2012 £m	IAS 19 (revised)	Restated 31 December 2012 £m
Deferred tax assets	17.5	(1.7)	15.8
Total assets	6,516.6	(1.7)	6,514.9
Other reserves	112.9	8.7	121.6
Retained earnings	957.1	(2.4)	954.7
Equity attributable to equity holders of the Parent Company	1,490.8	6.3	1,497.1
Total equity and reserves	1,491.4	6.3	1,497.7
Retirement benefit obligations	48.9	(8.0)	40.9
Total liabilities	5,025.2	(8.0)	5,017.2
Total equity, reserves and liabilities	6,516.6	(1.7)	6,514.9

Consequential amendments have also been made to the notes to the interim financial statements. The impact of retrospective application on each component of equity is shown in the consolidated statement of changes in equity, as required by IAS 1.

c) Opening statement of financial position as at 1 January 2012

The Group has not presented a statement of financial position for the beginning of the earliest comparative period as the impact is not material.

3. Estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2012. These can be found on pages 104 to 105 of the 2012 Annual Report.

4. Significant events and transactions in the period

i. Acquisition of subsidiary - RaetsMarine Insurance B.V.

On 1 March 2013, the Group acquired 100% of the share capital and voting rights in RaetsMarine Insurance B.V. and its subsidiaries ('RaetsMarine') for US$49.8 million (£33.1 million). RaetsMarine is an insurance underwriting agency, specialising in protection and indemnity (P&I) and marine insurance.

The acquisition is a key part of the Group's strategy to grow its marine business and provide its clients with a comprehensive range of marine insurance products.

The provisional acquisition date fair value of the total consideration transferred, identifiable assets acquired and resulting goodwill is as follows:

	£m
Initial cash consideration	28.3
Deferred cash consideration	4.8
Fair value of contingent consideration	-
Total purchase consideration	33.1
Fair value of assets acquired (see below)	19.5
Goodwill	13.6

The goodwill shown above arose from the premium paid for the opportunities to exploit further growth and dislocation opportunities in the market, and the ability of the Group to leverage its existing presence in London and Singapore to attract new business to RaetsMarine. No provision for impairment of goodwill has been made at the reporting date.

As part of the acquisition agreement, the Group has a contractual obligation for a contingent consideration relating to an earn out arrangement. The final amount is payable by 1 April 2015 and is based on RaetsMarine's hull and cargo claims ratios for the 2010, 2011 and 2012 underwriting years. The undiscounted range of outcomes of the final amount payable is US$nil (£nil) to US$15.0 million (£9.9 million). At the reporting date, no liability was recognised as the fair value of the contingent consideration was US$nil (£nil).

4. Significant events and transactions in the period continued

The assets acquired and liabilities assumed as of the acquisition date are as follows:

	Acquiree's carrying amount £m	Fair value and accounting policy adjustments £m	Fair value £m
Cash and cash equivalents	19.5	-	19.5
Financial assets	0.1	-	0.1
Loans and receivables, including insurance and reinsurance receivables
- insurance and reinsurance receivables	18.5	-	18.5
- other loans and receivables	3.8	-	3.8
Property and equipment	2.1	0.3	2.4
Goodwill and intangible assets	0.1	22.3	22.4
Total assets	44.1	22.6	66.7
Other payables, including insurance and reinsurance payables
- insurance and reinsurance payables	28.3	0.1	28.4
- other payables	11.7	0.5	12.2
Borrowings	0.7	-	0.7
Deferred tax liabilities	0.2	5.7	5.9
Total liabilities	40.9	6.3	47.2
Net assets acquired	3.2	16.3	19.5

The gross contractual amount of receivables is £18.7 million. The best estimate of the contractual cash flows not expected to be received as of the acquisition date is £0.2 million.

The assets and liabilities as of the acquisition date are stated at their provisional fair values and may be amended during 2013 when further evidence of the appropriate fair values is expected to be received, in accordance with paragraph 45 of IFRS 3, 'Business combinations'.

Total acquisition related costs were £0.6 million. Of these costs £0.3 million have been recognised as an expense within other operating expenses for the period ended 30 June 2013. The remainder of the acquisition related costs were incurred in prior periods.

The Group also entered into a management incentive plan arrangement with the management of RaetsMarine which has been recognised separately from the acquisition. The transaction comprises an initial payment totalling US$4.0 million

(£2.6 million) and a management incentive pool of up to US$12.0 million (£7.9 million), with the final amount payable based on the net written premium growth and claims ratio performance of RaetsMarine's P&I business. In the period to 30 June 2013, £2.0 million has been recognised in other operating expenses in the consolidated statement of profit or loss, and £0.3 million has been recognised in other payables in the consolidated statement of financial position at 30 June 2013.

ii. Operating leases - 122 Leadenhall Street

On 16 May 2013, the Group signed an agreement to lease 111,000 square feet of The Leadenhall Building, currently under construction at 122 Leadenhall Street. The Group has options to take up further space or to choose not to take up existing space. The lease will be accounted for as an operating lease from the date of commencement of the lease term, which is currently expected to be mid-2014.

iii. Retirement benefit obligations - Lloyd's Superannuation Fund

The Group participates in the Lloyd's Superannuation Fund defined benefit plan (the Fund), details of which can be found in note 32 to the 2012 Annual Report. In the first half of 2013, the Group became the sole employer with active members in the Fund.

5. Seasonality of interim operations

The Group derives insurance premium from a diverse range of underwriting classes and geographical locations. Depending on the class and location of the risk, there may be a seasonal pattern to incidence of claims. The US hurricane and West Pacific typhoon seasons run from May to November and the level of windstorm activity arising during this period may materially impact on the Group's claims experience during the second half of 2013.

The table below shows the Group's historical claims ratios for the six month periods to 30 June and 31 December. Claims ratio is defined as net insurance claims divided by net earned premium.

	Claims ratio
	H1 %	H2 %	Full year %
2009	39	45	43
2010⁽¹⁾	63	58	60
2011⁽¹⁾	92	65	78
2012	53	61	57
2013	53	n/a	n/a

· Note:

· (1) The Group incurred large losses from natural catastrophe claims during the first six months of 2010 and 2011 respectively. The 2010 losses included exposure to the Chile earthquake and the 2011 losses included claims on the New Zealand and Japanese earthquakes, Australian floods and US tornadoes.

Gross written premium comprises premium on insurance contracts incepting during the period. Inception dates are historically weighted more heavily towards the first half of the year. The table below shows the Group's gross written premium for the six month periods to 30 June and 31 December.

	Gross written premium
	H1 £m	H1 %	H2 £m	H2 %	Full year £m	Full year %
2009⁽²⁾	950.1	72.0	368.6	28.0	1,318.7	100.0
2010	1,486.2	68.4	686.3	31.6	2,172.5	100.0
2011	1,514.6	65.7	789.5	34.3	2,304.1	100.0
2012	1,814.7	75.4	590.9	24.6	2,405.6	100.0
2013	1,838.9	n/a	n/a	n/a	n/a	n/a

· Note:

· (2) The impact of the Amlin Europe N.V. acquisition is excluded for 2009. This acquisition added £225.2 million to both the H2 and full year amounts. Including Amlin Europe N.V. the 2009 figures would be H1: £950.1 million (61.5%), H2: £593.8 million (38.5%), full year: £1,543.9 million (100.0%).

6. Segmental reporting

a) Basis of segmentation

Management has determined the Group's operating segments based on the management information reviewed by the chief operating decision maker that is used to make strategic decisions. All operating segments used by management meet the definition of a reportable segment under IFRS 8, 'Operating segments'.

The Group is organised into six operating segments. Segments represent the distinct units through which the Group is organised and managed. These segments are as follows:

Amlin London, consisting of the Reinsurance, Property & Casualty, and Marine & Aviation business units, underwritten via Syndicate 2001;

Amlin UK, underwriting commercial insurance in the UK domestic market, via Syndicate 2001 and Amlin Insurance (UK) Limited;

Amlin Bermuda, which writes predominantly property reinsurance business, via Amlin AG, including reinsurance ceded by Syndicate 2001;

Amlin Re Europe, which writes continental European non-life reinsurance business, via Amlin AG;

Amlin Europe, including Amlin Europe N.V., a leading provider of marine, corporate property and casualty insurance in the Netherlands and Belgium and specialty business in France; and

Other corporate companies, comprising all other entities of the Group including holding companies.

6. Segmental reporting continued

Included within the intra-group items column are consolidation adjustments.

Transactions between segments are carried out at arm's length. The revenue from external parties reported to the chief operating decision maker is measured in a manner consistent with that in the consolidated statement of profit or loss and revenues are allocated based on the country in which the insurance risk is located. Management considers its external customers to be the individual policyholders, and as such the Group is not reliant on any individual customer.

b) Segmental information

Segmental information for the reportable segments of the Group is provided below. A reconciliation between this information and the consolidated statement of profit or loss is provided in note 6(c).

Income and expenses by business segment Six months ended 30 June 2013	Amlin London £m	Amlin UK £m	Amlin Bermuda £m	Amlin Re Europe £m	Amlin Europe £m	Other corporate companies £m	Intra group items £m	Total £m
Analysed by geographic segment
UK	165.3	145.6	165.1	15.2	12.6	-	(150.0)	353.8
North America	446.5	10.8	160.2	0.8	-	-	-	618.3
Europe	59.4	17.0	35.1	146.7	230.2	-	(1.7)	486.7
Worldwide	7.4	34.0	1.4	-	134.6	-	-	177.4
Other	132.6	5.2	54.8	10.1	-	-	-	202.7
Gross written premium	811.2	212.6	416.6	172.8	377.4	-	(151.7)	1,838.9
Net written premium	531.5	171.5	368.6	138.7	320.1	-	(5.2)	1,525.2

Gross earned premium	538.9	173.5	289.8	104.4	235.3	-	(114.0)	1,227.9
Reinsurance premium ceded	(176.4)	(28.9)	(18.1)	(20.7)	(32.0)	-	107.0	(169.1)
Net earned premium	362.5	144.6	271.7	83.7	203.3	-	(7.0)	1,058.8
Insurance claims and claims settlement expenses	(226.3)	(105.1)	(144.5)	(72.6)	(138.4)	-	79.4	(607.5)
Insurance claims and claims settlement expenses recoverable from reinsurers	76.5	21.4	1.4	10.7	13.5	-	(79.8)	43.7
Expenses for the acquisition of insurance contracts	(107.5)	(38.5)	(43.6)	(16.4)	(30.3)	-	3.1	(233.2)
Underwriting expenses	(18.1)	(17.1)	(17.3)	(7.3)	(43.1)	(0.1)	(0.6)	(103.6)
Profit attributable to underwriting	87.1	5.3	67.7	(1.9)	5.0	(0.1)	(4.9)	158.2
Investment return	1.8	2.5	23.1	0.1	15.5	26.8	(2.4)	67.4
Other operating income⁽¹⁾	14.2	5.2	0.6	-	0.3	2.9	(21.3)	1.9
Agency expenses⁽²⁾	(12.9)	(4.7)	-	-	(0.1)	-	17.7	-
Other non-underwriting expenses	(1.2)	(0.7)	(6.3)	(1.9)	(5.8)	(38.1)	1.6	(52.4)
Result of operating activities	89.0	7.6	85.1	(3.7)	14.9	(8.5)	(9.3)	175.1
Finance costs⁽³⁾								(14.7)
Share of profit or loss after tax of associates								1.0
Profit before tax								161.4
Claims ratio	41%	58%	53%	74%	62%			53%
Expense ratio	35%	38%	22%	28%	36%			32%
Combined ratio	76%	96%	75%	102%	98%			85%

· Notes:

· (1) Other operating income is mainly agency fees payable by Syndicate 2001 to Amlin Underwriting Limited and external commission income earned by service companies;

· (2) Agency expenses allocated to segments represent fees and commission payable to Amlin Underwriting Limited;

· (3) Finance costs are incurred in support of the entire business of the Group and have not been allocated to particular segments.

Included within the gross written premium of Amlin Bermuda is premium ceded from Amlin London, Amlin UK and Amlin Europe amounting to £135.0 million on reinsurance contracts undertaken at commercial rates (30 June 2012: £141.4 million; 31 December 2012: £207.4 million).

Investment return in other corporate companies includes £20.2 million (30 June 2012: £10.3 million; 31 December 2012: £14.2 million) generated from investments in Funds at Lloyd's that support the business reported in the Amlin London, Amlin UK and Amlin Europe segments.

6. Segmental reporting continued

Restated Income and expenses by business segment Six months ended 30 June 2012	Amlin London £m	Amlin UK £m	Amlin Bermuda £m	Amlin Re Europe £m	Amlin Europe £m	Other corporate companies £m	Intra group items £m	Total £m
Analysed by geographic segment
UK	127.5	196.8	167.7	12.0	9.4	-	(144.3)	369.1
North America	457.9	3.9	148.2	0.5	-	-	-	610.5
Europe	53.2	11.8	26.2	134.4	223.2	-	(2.9)	445.9
Worldwide	7.8	12.6	0.3	-	165.7	-	-	186.4
Other	136.0	1.9	55.0	9.9	-	-	-	202.8
Gross written premium	782.4	227.0	397.4	156.8	398.3	-	(147.2)	1,814.7
Net written premium	519.1	180.0	342.8	125.6	328.6	-	(7.3)	1,488.8

Gross earned premium	516.3	171.6	261.0	71.1	248.1	-	(96.0)	1,172.1
Reinsurance premium ceded	(164.3)	(30.8)	(27.9)	(12.5)	(39.2)	-	90.3	(184.4)
Net earned premium	352.0	140.8	233.1	58.6	208.9	-	(5.7)	987.7
Insurance claims and claims settlement expenses	(216.0)	(109.7)	(91.4)	(49.4)	(130.5)	-	56.1	(540.9)
Insurance claims and claims settlement expenses recoverable from reinsurers	48.3	23.8	(0.2)	5.6	1.8	-	(61.0)	18.3
Expenses for the acquisition of insurance contracts	(97.0)	(37.1)	(35.5)	(9.1)	(35.6)	-	2.6	(211.7)
Underwriting expenses	(29.6)	(16.5)	(9.1)	(5.5)	(40.1)	(0.1)	1.0	(99.9)
Profit attributable to underwriting	57.7	1.3	96.9	0.2	4.5	(0.1)	(7.0)	153.5
Investment return	11.2	3.2	28.9	0.2	31.8	14.3	(4.9)	84.7
Other operating income⁽¹⁾	12.8	4.4	0.7	-	0.8	4.9	(21.3)	2.3
Agency expenses⁽²⁾	(11.1)	(3.8)	-	-	(0.5)	-	15.4	-
Other non-underwriting expenses	(0.4)	(0.1)	(2.8)	(1.1)	(13.2)	(37.7)	12.0	(43.3)
Result of operating activities	70.2	5.0	123.7	(0.7)	23.4	(18.6)	(5.8)	197.2
Finance costs⁽³⁾								(13.2)
Share of profit or loss after tax of associates								0.4
Profit before tax								184.4
Claims ratio	47%	61%	39%	75%	61%			53%
Expense ratio	36%	38%	19%	25%	37%			31%
Combined ratio	83%	99%	58%	100%	98%			84%

· Notes:

· (1) Other operating income is mainly agency fees payable by Syndicate 2001 to Amlin Underwriting Limited and external commission income earned by service companies;

· (2) Agency expenses allocated to segments represent fees and commission payable to Amlin Underwriting Limited;

· (3) Finance costs are incurred in support of the entire business of the Group and have not been allocated to particular segments.

6. Segmental reporting continued

Restated Income and expenses by business segment Year ended 31 December 2012	Amlin London £m	Amlin UK £m	Amlin Bermuda £m	Amlin Re Europe £m	Amlin Europe £m	Other corporate companies £m	Intra group items £m	Total £m
Analysed by geographic segment
UK	170.3	316.7	244.2	17.6	24.2	-	(223.0)	550.0
North America	589.4	10.3	184.3	1.9	-	-	-	785.9
Europe	85.6	22.2	30.9	141.7	282.1	-	(2.0)	560.5
Worldwide	15.9	17.0	-	-	169.9	-	-	202.8
Other	204.9	6.4	84.6	10.5	-	-	-	306.4
Gross written premium	1,066.1	372.6	544.0	171.7	476.2	-	(225.0)	2,405.6
Net written premium	739.4	303.3	488.3	138.5	394.0	-	(4.9)	2,058.6

Gross earned premium	1,037.7	323.6	537.2	154.9	471.4	-	(205.8)	2,319.0
Reinsurance premium ceded	(321.3)	(57.6)	(61.5)	(28.5)	(80.6)	-	201.0	(348.5)
Net earned premium	716.4	266.0	475.7	126.4	390.8	-	(4.8)	1,970.5
Insurance claims and claims settlement expenses	(508.0)	(185.7)	(259.8)	(103.1)	(273.9)	-	133.2	(1,197.3)
Insurance claims and claims settlement expenses recoverable from reinsurers	129.6	35.6	(5.0)	11.0	42.7	-	(141.2)	72.7
Expenses for the acquisition of insurance contracts	(193.5)	(72.8)	(71.8)	(20.2)	(74.3)	-	10.1	(422.5)
Underwriting expenses	(81.0)	(29.0)	(16.7)	(12.6)	(77.4)	-	0.4	(216.3)
Profit/(loss) attributable to underwriting	63.5	14.1	122.4	1.5	7.9	-	(2.3)	207.1
Investment return	22.0	6.6	60.9	2.3	60.5	20.2	(7.2)	165.3
Other operating income⁽¹⁾	23.5	7.7	1.4	-	1.9	8.4	(37.3)	5.6
Agency expenses⁽²⁾	(20.1)	(6.5)	-	-	(0.7)	-	27.3	-
Other non-underwriting expenses	(0.8)	(0.1)	(4.4)	(2.5)	(24.8)	(61.7)	7.6	(86.7)
Result of operating activities	88.1	21.8	180.3	1.3	44.8	(33.1)	(11.9)	291.3
Finance costs⁽³⁾								(27.6)
Share of profit or loss after tax of associates								0.5
Profit before tax								264.2
Claims ratio	53%	57%	56%	73%	59%			57%
Expense ratio	38%	38%	18%	26%	39%			32%
Combined ratio	91%	95%	74%	99%	98%			89%

· Notes:

· (1) Other operating income is mainly agency fees payable by Syndicate 2001 to Amlin Underwriting Limited and external commission income earned by service companies;

· (2) Agency expenses allocated to segments represent fees and commission payable to Amlin Underwriting Limited;

· (3) Finance costs are incurred in support of the entire business of the Group and have not been allocated to particular segments.

6. Segmental reporting continued

c) Reconciliation between management information and the consolidated statement of profit or loss

The table below shows the reconciliation between the management information provided to the chief operating decision maker and the consolidated statement of profit or loss.

The reconciling items relate to items of income and expense under the Group's risk transfer contract with Tramline Re Ltd, the risk period of which incepted on 1 January 2012. From a management information perspective, the instrument is insurance linked and therefore these balances are included within the Group's profit attributable to underwriting in the segmental information provided to the chief operating decision maker. Under IAS 39, the instrument is classified as a derivative and therefore such items of income and expense are reported through investment return in the Group's consolidated statement of profit or loss.

	Six months ended 30 June 2013
Consolidated statement of profit or loss	Management information £m	Reconciling items £m	IFRS Consolidated statement of profit or loss £m
Gross written premium	1,838.9	-	1,838.9
Net written premium	1,525.2	15.6	1,540.8

Gross earned premium	1,227.9	-	1,227.9
Reinsurance premium ceded	(169.1)	2.7	(166.4)
Net earned premium	1,058.8	2.7	1,061.5
Insurance claims and claims settlement expenses	(607.5)	-	(607.5)
Insurance claims and claims settlement expenses recoverable from reinsurers	43.7	-	43.7
Expenses for the acquisition of insurance contracts	(233.2)	-	(233.2)
Underwriting expenses	(103.6)	-	(103.6)
Profit attributable to underwriting	158.2	2.7	160.9
Investment return	67.4	(2.7)	64.7
Other operating income	1.9	-	1.9
Other non-underwriting expenses	(52.4)	-	(52.4)
Result of operating activities	175.1	-	175.1
Finance costs	(14.7)	-	(14.7)
Share of profit or loss after tax of associates	1.0	-	1.0
Profit before tax	161.4	-	161.4

6. Segmental reporting continued

	Restated
	Six months ended 30 June 2012			Year ended 31 December 2012
	Management information £m	Reconciling items £m	IFRS Consolidated statement of profit or loss £m	Management information £m	Reconciling items £m	IFRS Consolidated statement of profit or loss £m
Gross written premium	1,814.7	-	1,814.7	2,405.6	-	2,405.6
Net written premium	1,488.8	16.7	1,505.5	2,058.6	15.9	2,074.5

Gross earned premium	1,172.1	-	1,172.1	2,319.0	-	2,319.0
Reinsurance premium ceded	(184.4)	2.6	(181.8)	(348.5)	15.9	(332.6)
Net earned premium	987.7	2.6	990.3	1,970.5	15.9	1,986.4
Insurance claims and claims settlement expenses	(540.9)	-	(540.9)	(1,197.3)	-	(1,197.3)
Insurance claims and claims settlement expenses recoverable from reinsurers	18.3	-	18.3	72.7	-	72.7
Expenses for the acquisition of insurance contracts	(211.7)	-	(211.7)	(422.5)	-	(422.5)
Underwriting expenses	(99.9)	-	(99.9)	(216.3)	-	(216.3)
Profit attributable to underwriting	153.5	2.6	156.1	207.1	15.9	223.0
Investment return	84.7	(2.6)	82.1	165.3	(15.9)	149.4
Other operating income	2.3	-	2.3	5.6	-	5.6
Other non-underwriting expenses	(43.3)	-	(43.3)	(86.7)	-	(86.7)
Result of operating activities	197.2	-	197.2	291.3	-	291.3
Finance costs	(13.2)	-	(13.2)	(27.6)	-	(27.6)
Share of profit or loss after tax of associates	0.4	-	0.4	0.5	-	0.5
Profit before tax	184.4	-	184.4	264.2	-	264.2

7. Investment return

	6 months 2013 £m	6 months 2012 £m	12 months 2012 £m
Investment income
- dividend income	8.4	5.7	11.3
- interest income	14.2	16.4	31.1
- cash and cash equivalents interest income	1.2	2.8	5.6
	23.8	24.9	48.0
Net realised gains/(losses)
on assets held for trading
- equity securities	14.6	4.2	7.0
- debt securities⁽¹⁾	29.1	11.2	28.4
- property funds	3.9	0.7	(0.1)
- derivative instruments⁽³⁾	1.9	1.2	(22.8)
on assets classified as other than trading
- participation in investment pools	1.1	1.7	3.3
	50.6	19.0	15.8
Net unrealised gains/(losses)
on assets held for trading
- equity securities	21.7	4.7	11.5
- debt securities⁽²⁾	(33.0)	36.8	77.7
- property funds	(1.7)	3.2	(2.7)
- derivative instruments⁽⁴⁾	1.6	(6.5)	(0.9)
on assets classified as other than trading
- other	1.7	-	-
	(9.7)	38.2	85.6
	64.7	82.1	149.4

Notes:

· (1) Included within net realised gains/(losses) on debt securities held for trading are realised gains of £0.2 million relating to the investment in the funds managed by Leadenhall Capital Partners LLP (30 June 2012: £nil; 31 December 2012: £1.8 million).

· (2) Included within net unrealised gains/(losses) on debt securities held for trading are unrealised gains of £1.2 million relating to the investment in the funds managed by Leadenhall Capital Partners LLP (30 June 2012: £2.4 million; 31 December 2012: £2.6 million).

· (3) Included within net realised gains/(losses) on derivative instruments held for trading are realised losses of £nil relating to the Group's risk transfer contract with Tramline Re Ltd (30 June 2012: £nil; 31 December 2012: £15.9 million).

· (4) Included within net unrealised gains/(losses) on derivative instruments held for trading are unrealised losses of £2.7 million relating to the Group's risk transfer contract with Tramline Re Ltd (30 June 2012: £2.6 million; 31 December 2012: £nil).

8. Net insurance claims

	6 months 2013 £m	6 months 2012 £m	12 months 2012 £m
Insurance claims and claims settlement expenses
Current year insurance claims and claims settlement expenses	670.0	604.0	1,291.6
Reduced costs for prior period insurance claims	(62.5)	(63.1)	(94.3)
	607.5	540.9	1,197.3
Insurance claims and claims settlement expenses recoverable from reinsurers
Current year insurance claims and claims settlement expenses recoverable from reinsurers	(44.8)	(28.4)	(72.8)
Reduced income from prior period insurance claims recoverable from reinsurers	1.1	10.1	0.1
	(43.7)	(18.3)	(72.7)
	563.8	522.6	1,124.6

9. Other operating expenses

		Restated
	6 months 2013 £m	6 months 2012 £m	12 months 2012 £m
Expenses relating to underwriting
Employee expenses, excluding employee incentives	67.2	58.3	115.3
Lloyd's expenses	11.4	11.2	19.3
Other administrative expenses	41.8	34.6	71.2
Underwriting exchange (gains)/losses	(16.8)	(4.2)	10.5
	103.6	99.9	216.3
Other expenses
Employee expenses, excluding employee incentives	9.8	7.6	13.9
Employee incentive and related social security costs	21.6	14.1	34.8
Asset management fees	8.8	2.7	6.4
Other administrative expenses	9.1	7.1	18.8
Amlin Europe N.V. disentanglement and integration costs	-	12.8	20.6
Non-underwriting exchange losses/(gains)	3.1	(1.0)	(7.8)
	52.4	43.3	86.7
	156.0	143.2	303.0

Employee and other administrative expenses not relating to underwriting represent costs associated with the corporate activities of the Group.

Amlin Europe N.V. disentanglement and integration costs include expenditure incurred on the systems replacement programme which completed in 2012.

10. Tax

			Restated
	6 months 2013 £m	6 months 2012 £m	12 months 2012 £m
Current tax - current period/year
Corporate income tax	0.7	14.3	23.3
Foreign tax	2.0	2.7	6.4
Double tax relief	(0.7)	(1.9)	(3.8)
	2.0	15.1	25.9
Current tax - adjustment in respect of previous periods/years
Corporate income tax	(0.5)	1.0	(7.2)
Deferred tax - current period/year
Origination and reversal of temporary differences	17.7	(1.2)	(1.3)
Deferred tax - adjustment in respect of previous periods/years
Movement for the period/year	2.1	1.6	1.5
Impact of change in UK tax rate	(0.1)	(1.0)	(2.5)
	2.0	0.6	(1.0)
Taxes on income	21.2	15.5	16.4

Recent UK budgets have announced changes in the main rate of UK corporation tax. The new rate of 23.0% was enacted on 3 July 2012 and applied from 1 April 2013. Details of future rate reductions are provided in note 22.

11. Financial assets and financial liabilities

Where possible Group assets are marked to market at bid price. Prices are supplied by the Group's custodians whose pricing processes are covered by their published annual controls reports. In accordance with their pricing policies, prices are sourced from market recognised vendor pricing sources. These pricing sources use closing trades or, where more appropriate in illiquid markets, pricing models. These models typically use broker quotes or other independent valuation techniques such as discounted cash flow models based on observable or unobservable market inputs. These prices are reconciled to the fund managers' records to check for reasonableness. As an additional level of governance over pricing, the Group validates the prices provided by vendor pricing sources against information obtained from Bloomberg where available.

In the six months to 30 June 2013 there have been no significant changes in the business or economic circumstances that have affected the fair value of the Group's financial assets and financial liabilities.

The tables below present the Group's financial assets and financial liabilities that are measured at fair value at 30 June 2013, excluding cash and cash equivalents.

		Restated
Net financial investments	30 June 2013 £m	30 June 2012 £m	31 December 2012 £m
Assets
Financial assets held for trading at fair value through profit or loss
Shares and other variable yield securities	325.4	213.9	279.3
Debt and other fixed income securities	3,077.8	2,645.1	2,717.4
Property funds	179.8	133.6	153.6
Derivative instruments	23.0	12.7	6.8
Other financial assets at fair value through profit or loss
Participation in investment pools	618.8	872.1	997.1
Deposits with credit institutions	43.7	110.6	42.9
Other	2.9	2.1	1.2
Available-for-sale financial assets
Unlisted equities	6.7	4.2	4.7
Other
Derivative instruments in designated hedge accounting relationships	3.9	3.3	2.0
Total financial assets	4,282.0	3,997.6	4,205.0

Liabilities
Financial liabilities held for trading at fair value through profit or loss
Derivative instruments	(7.1)	(4.2)	(5.0)
Other
Derivative instruments in designated hedge accounting relationships	(6.0)	(3.6)	(0.7)
Total financial liabilities	(13.1)	(7.8)	(5.7)
Net financial assets	4,268.9	3,989.8	4,199.3

Debt and other fixed income securities include pooled funds, investing in bonds and other fixed income securities. The valuation of these funds is £1,737.8 million (30 June 2012: £1,356.8 million; 31 December 2012: £1,364.8 million).

Participation in investment pools includes units held in money market funds.

The Group holds hedging and non-hedging derivatives. Hedging derivatives are designated at inception and qualify for hedge accounting under IAS 39. Non-hedging derivatives either do not qualify for hedge accounting or the option to hedge account has not been taken.

11. Financial assets and financial liabilities continued

						Restated
	30 June 2013					30 June 2012			31 December 2012
Asset allocation	Underwriting assets £m	Capital assets £m	Total assets £m	%	Total assets £m		%	Total assets £m		%
Type of asset
Bonds	2,008.8	854.6	2,863.4	66.5	2,653.2		64.8	2,663.6		62.7
Other liquid investments	605.2	327.5	932.7	21.7	1,091.5		26.6	1,148.8		27.0
Global equities	6.0	326.1	332.1	7.7	218.7		5.3	283.6		6.7
Property funds	-	179.8	179.8	4.1	133.6		3.3	153.6		3.6
	2,620.0	1,688.0	4,308.0	100.0	4,097.0		100.0	4,249.6		100.0
Type of bond
Government securities	384.2	198.3	582.5	20.3	646.9		24.4	703.5		26.4
Government agencies/guaranteed⁽¹⁾	56.2	2.6	58.8	2.1	99.4		3.7	94.8		3.6
Supranational	2.8	0.7	3.5	0.1	18.2		0.7	11.7		0.4
Asset backed securities	53.4	13.6	67.0	2.3	46.1		1.8	55.1		2.1
Mortgage backed securities	88.1	60.8	148.9	5.2	213.0		8.0	178.3		6.7
Corporate bonds	171.0	88.6	259.6	9.1	268.6		10.1	250.8		9.4
Pooled vehicles⁽²⁾	1,247.8	490.0	1,737.8	60.7	1,356.8		51.1	1,364.8		51.2
Insurance linked securities	5.3	-	5.3	0.2	4.2		0.2	4.6		0.2
	2,008.8	854.6	2,863.4	100.0	2,653.2		100.0	2,663.6		100.0
Assets by region (excluding pooled vehicles)
UK	174.3	162.2	336.5	13.1	370.8		13.5	379.5		13.1
US and Canada	584.5	513.4	1,097.9	42.7	1,125.5		41.1	1,326.4		46.0
Europe (excluding UK)	449.0	404.4	853.4	33.2	976.6		35.6	749.2		26.0
Far East	145.5	93.7	239.2	9.3	226.8		8.3	386.4		13.4
Emerging markets	13.8	23.2	37.0	1.4	40.5		1.5	37.6		1.3
South America	5.1	1.1	6.2	0.3	-		-	5.7		0.2
	1,372.2	1,198.0	2,570.2	100.0	2,740.2		100.0	2,884.8		100.0

· Notes:

· (1) £2.8 million of government agencies/guaranteed assets are government guaranteed corporate bonds (30 June 2012: £26.2 million; 31 December 2012: £11.2 million). Pooled vehicles are excluded.

· (2) Pooled vehicles held are funds investing in debt and other fixed income securities. Of these 29.2% are government/agency bonds (30 June 2012: 33.6%; 31 December 2012: 16.3%), 37.0% are corporate bonds (30 June 2012: 21.8%; 31 December 2012: 28.4%), 19.9% are mortgage backed and asset backed securities (30 June 2012: 33.2%; 31 December 2012: 31.7%), 3.7% are insurance linked securities (30 June 2012: 5.7%; 31 December 2012: 4.3%) and the remaining 10.2% is held in other liquid investments (30 June 2012: 5.7%; 31 December 2012: 19.3%).

11. Financial assets and financial liabilities continued

The total value of investments in the asset allocation table reconciles to the net financial assets table as follows:

		Restated
	30 June 2013 £m	30 June 2012 £m	31 December 2012 £m
Net financial assets	4,268.9	3,989.8	4,199.3

Assets/(liabilities) shown separately in the financial statements:
Accrued income	5.7	9.1	7.6
Net unsettled payables for investments purchased	(2.2)	(30.6)	(15.9)
Cash funds held by financial institutions	52.0	135.3	59.7

Assets not analysed in the investment asset allocation table:
Liquid investments	(1.4)	(6.2)	(0.8)
Unlisted equities	(0.7)	(0.2)	(0.7)
Derivative instruments and related margin and collaterals	(14.3)	(0.2)	0.4
Total investments in asset allocation tables above	4,308.0	4,097.0	4,249.6

The credit ratings of the Group's investments in bonds are set out below:

Credit rating⁽³⁾	30 June 2013 £m	30 June 2012 £m	31 December 2012 £m
AAA	828.8	982.8	950.1
AA	1,636.2	1,231.0	927.6
A	197.3	293.0	494.9
BBB	118.3	49.2	153.0
Other (below BBB and non-rated)	82.8	97.2	138.0
Total	2,863.4	2,653.2	2,663.6

· Notes:

(3) Credit ratings on bonds are State Street composite ratings based on Standard & Poor's, Moody's and Fitch, depending on which agency/agencies rate each bond.

Fair value methodology

For financial instruments measured at fair value the Group has categorised the measurement basis into a fair value hierarchy as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. An active market is one in which transactions for the asset occurs with sufficient frequency and volume to provide readily and regularly available quoted prices.

Level 2 - Inputs to a valuation model other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 2 debt and other fixed income securities are valued by asset managers using proprietary cash flow models and incorporate observable market inputs, such as credit spreads, benchmark quotes and other trade data. If such methods do not provide coverage of the asset, then fair value is determined manually using indicative broker quotes, which are corroborated by recent market transactions in similar or identical assets.

Level 2 derivatives comprise over the counter options that are valued using quantitative models with multiple market inputs such as currency exchange rates. The market inputs are observable and the valuation can be validated through external sources.

Level 3 - Inputs to a valuation model for the asset or liability that are not based on observable market data (unobservable inputs) and are significant to the overall fair value measurement. Unobservable inputs may have been used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date (or market information for the inputs to any valuation models).

Level 3 assets are valued using significant observable inputs and include property funds, debt and other fixed income securities, catastrophe linked derivatives and unlisted equities. Property funds are valued by independent valuation specialists using discounted cash flow techniques. Debt and other fixed income securities and catastrophe linked derivatives are also valued using discounted cash flow techniques. These valuation models use significant unobservable inputs such as probability of default and loss severity where appropriate. Unlisted equities included in Level 3 are valued using adjusted net asset valuation techniques where adjustments are made to the net asset position based on management's assessment of future profitability.

Further details of the Group's valuation techniques can be found on pages 138 to 140 of the 2012 Annual Report. There have been no changes in valuation techniques since 31 December 2012.

11. Financial assets and financial liabilities continued

	Fair value hierarchy
	Level 1 £m	Level 2 £m	Level 3 £m	Total 30 June 2013 £m
Assets
Financial assets held for trading at fair value through profit or loss
Shares and other variable yield securities	326.1	-	-	326.1
Debt and other fixed income securities	2,487.1	591.3	4.4	3,082.8
Property funds	-	-	179.8	179.8
Derivative instruments	-	17.5	5.5	23.0
Other financial assets at fair value through profit or loss
Participation in investment pools	618.8	-	-	618.8
Deposits with credit institutions	43.7	-	-	43.7
Other	0.8	-	2.1	2.9
Available-for-sale financial assets
Unlisted equities	-	-	6.7	6.7
Other
Derivative instruments in designated hedge accounting relationships	-	3.9	-	3.9
Total assets	3,476.5	612.7	198.5	4,287.7

Liabilities
Financial liabilities held for trading at fair value through profit or loss
Derivative instruments	-	(7.1)	-	(7.1)
Other
Derivative instruments in designated hedge accounting relationships	-	(6.0)	-	(6.0)
Total liabilities	-	(13.1)	-	(13.1)

Net financial assets	3,476.5	599.6	198.5	4,274.6

Assets shown separately in the notes to the accounts
Accrued Income				(5.7)
Net financial investments				4,268.9

The table above excludes the Group's holdings of cash and cash equivalents. These are categorised as Level 1 in the fair value hierarchy.

The Group's policy is to recognise transfers into and transfers out of fair value hierarchy levels at the end of the relevant reporting period during which the transfers are deemed to have occurred.

During the period, debt and other fixed income securities of £0.6 million were transferred into Level 3 due to a lack of observable inputs in determining a fair value for these assets. Conversely, debt and other fixed income securities of £5 million were transferred out of Level 3 as a result of sufficient market data becoming available for these assets.

11. Financial assets and financial liabilities continued

The table below analyses the movements in assets and liabilities classified as Level 3 investments during the period ending 30 June 2013:

	Debt and other fixed income securities £m	Property funds £m	Derivative instruments £m	Other £m	Unlisted equities £m	Total £m
At 1 January 2013	12.2	153.6	-	0.6	4.7	171.1
Total net gains/(losses) recognised in investment return in profit or loss	0.2	2.5	(2.7)	1.7	-	1.7
Sales	(3.1)	(17.2)	-	-	-	(20.3)
Purchases	-	35.5	-	-	2.0	37.5
Settlements	(0.5)	(1.6)	8.2	(0.2)	-	5.9
Transfer into Level 3	0.6	-	-	-	-	0.6
Transfer out of Level 3	(5.0)	-	-	-	-	(5.0)
Foreign exchange gains	-	7.0	-	-	-	7.0
At 30 June 2013	4.4	179.8	5.5	2.1	6.7	198.5
Total unrealised gains or losses for the period recognised in investment return in profit or loss for assets and liabilities held at the end of the reporting period						1.1

12. Goodwill and intangible assets

	Goodwill £m	Syndicate participations £m	Broker and customer relationships £m	Computer software £m	Other intangibles £m	Total £m
Net book value
At 1 January 2012	76.6	63.2	35.7	42.6	0.8	218.9
Additions	-	-	-	2.9	-	2.9
Amortisation	-	-	(2.1)	(0.4)	(0.3)	(2.8)
Foreign exchange losses	(1.6)	-	(0.8)	(0.4)	-	(2.8)
At 30 June 2012	75.0	63.2	32.8	44.7	0.5	216.2
(Disposals)/additions	-	-	-	(1.0)	0.4	(0.6)
Adjustments to prior acquisitions	(0.2)	-	-	-	-	(0.2)
Amortisation	-	-	(2.1)	(2.2)	(0.2)	(4.5)
Foreign exchange gains	0.3	-	0.1	0.1	-	0.5
At 31 December 2012	75.1	63.2	30.8	41.6	0.7	211.4
Additions	-	-	-	1.2	-	1.2
Acquisition through business combinations	13.6	-	22.4	-	-	36.0
Amortisation	-	-	(2.7)	(2.2)	(0.4)	(5.3)
Foreign exchange gains	2.3	-	0.9	0.7	-	3.9
At 30 June 2013	91.0	63.2	51.4	41.3	0.3	247.2

Additions to goodwill and broker and customer relationships during the six months to 30 June 2013 relate to the acquisition of RaetsMarine Insurance B.V. and subsidiaries, which is described in note 4(i).

13. Share capital

	Number	£m
Allotted, called up and fully paid ordinary shares
At 1 January 2012 issued ordinary shares of 28.125 pence each	502,076,006	141.2
At 30 June 2012 and 31 December 2012 issued ordinary shares of 28.125 pence each	502,076,006	141.2
Ordinary shares of 28.125 pence each issued in the period	2,723,353	0.8
At 30 June 2013 issued ordinary shares of 28.125 pence each	504,799,359	142.0

During the period the Company transferred 362,234 shares out of treasury at a cost of £1.0 million (30 June 2012: 117,833 shares at a cost of £0.3 million; 31 December 2012: 418,721 shares at a cost of £1.1 million). The shares have been transferred to meet exercises of employee share options, leaving 4,606,437 shares in treasury at 30 June 2013 (30 June 2012: 5,269,559 shares; 31 December 2012: 4,968,671 shares).

The Group issued 2,723,353 ordinary shares on 1 March 2013 in conjunction with the purchase of RaetsMarine Insurance B.V. The shares issued have the same rights as all other shares in issue. The fair value of the shares issued amounted to £11.6 million (£4.24 per share).

14. Earnings and net assets per share

Basic and diluted earnings per share are as follows:

		Restated	Restated
	6 months 2013	6 months 2012	12 months 2012
Profit attributable to equity holders of the Parent Company	£140.2m	£168.8m	£247.8m
Weighted average number of shares in issue	497.5m	494.7m	494.8m
Dilutive shares	7.8m	6.7m	6.0m
Adjusted average number of shares in issue	505.3m	501.4m	500.8m
Basic earnings per share	28.2p	34.1p	50.1p
Diluted earnings per share	27.7p	33.7p	49.5p

		Restated	Restated
Net assets and tangible net assets per share are as follows:	30 June 2013	30 June 2012	31 December 2012
Net assets	£1,650.6m	£1,489.5m	£1,497.7m
Adjustments for goodwill and intangible assets	(£247.2m)	(£216.2m)	(£211.4m)
Tangible net assets	£1,403.4m	£1,273.3m	£1,286.3m

Number of shares in issue at end of period/year	504.8m	502.1m	502.1m
Adjustment for ESOT and treasury shares	(5.7m)	(7.3m)	(7.0m)
Basic number of shares after ESOT and treasury shares adjustment	499.1m	494.8m	495.1m

Basic net assets per share	330.7p	301.0p	302.5p
Basic tangible net assets per share	281.2p	257.3p	259.8p

15. Other comprehensive income

All items of other comprehensive income in 2013 and 2012 are charged or credited to 'Other reserves'.

Other reserves comprise a merger reserve of £87.7 million (30 June 2012: £86.5 million; 31 December 2012: £87.7 million), a capital redemption reserve of £123.1 million (30 June 2012: £123.1 million; 31 December 2012: £123.1 million), gains on the issue of employee share option schemes of £6.8 million (30 June 2012: £7.7 million; 31 December 2012: £9.8 million), tax relating to components of other reserves of £30.1 million (30 June 2012 restated: £29.0 million; 31 December 2012 restated: £31.2 million), foreign exchange gains on translation of investments in foreign operations of £102.7 million (30 June 2012: £39.7 million; 31 December 2012: £6.9 million) and other items of £0.3 million (30 June 2012: £0.5 million; 31 December 2012: £1.0 million).

This is offset by a charge for goodwill written off to reserves on acquisitions prior to 1 January 1999 of £45.7 million (30 June 2012: £45.7 million; 31 December 2012: £45.7 million), losses on revaluation of financial instruments in designated hedge accounting relationships of £58.7 million (30 June 2012: £45.4 million; 31 December 2012: £43.5million) and defined benefit pension fund balances of £45.1 million (30 June 2012 restated: £40.6 million; 31 December 2012 restated: £48.9 million).

16. Dividends

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

Group	6 months 2013 £m	6 months 2012 £m	12 months 2012 £m
Final dividend for the year ended:
- 31 December 2012 of 16.5 pence per ordinary share	82.4	-	-
- 31 December 2011 of 15.8 pence per ordinary share	-	78.2	78.2
- 31 December 2011 of Amlin Plus Limited to non-controlling interests	-	0.1	0.1
Interim dividend for the year ended:
- 31 December 2012 of Amlin Plus Limited to non-controlling interests	0.1	-	-
- 31 December 2012 of 7.5 pence per ordinary share	-	-	37.1
	82.5	78.3	115.4

The interim dividend of 7.8 pence per ordinary share for 2013, amounting to £38.9 million, payable in cash, was agreed by the Board on 16 August 2013, and has not been included as a liability as at 30 June 2013.

17. Borrowings

		Restated
	30 June 2013 £m	30 June 2012 £m	31 December 2012 £m
Subordinated debt	294.7	292.3	290.4
Revolving credit facility	-	71.5	120.0
Other	0.7	-	-
	295.4	363.8	410.4

18. Principal exchange rates

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

	6 months 2013 Average rate	At 30 June 2013	6 months 2012 Average rate	At 30 June 2012	12 months 2012 Average rate	At 31 December 2012
US dollar	1.54	1.52	1.58	1.57	1.59	1.62
Canadian dollar	1.57	1.60	1.59	1.60	1.58	1.61
Euro	1.18	1.17	1.22	1.24	1.23	1.23
New Zealand dollar	1.86	1.97	1.96	1.96	1.96	1.97
Japanese yen	147.40	150.83	125.74	125.32	126.55	140.78

19. Contingent liabilities

Aside from the escrow account entered into with the Trustee of the Lloyd's Superannuation Fund defined benefit plan, as described below, and the contingent consideration relating to the acquisition of RaetsMarine Insurance B.V. and subsidiaries as described in note 4(i), the Group has no material contingent liabilities at 30 June 2013 (30 June 2012 and 31 December 2012: £nil).

Escrow account relating to defined benefit funding

In 2011 the Group entered into an agreement with the Trustee of the Lloyd's Superannuation Fund defined benefit pension scheme to hold certain funds within an escrow account. These funds would be transferred to the Trustee in full for the purpose of defined benefit funding if any one of a number of enforcement events within the agreement were to occur. The Group made two payments of £5.0 million each to the escrow account in July 2011 and June 2012. A final payment to the escrow account of £4.0 million was made in May 2013. The Group considers it unlikely that any one of the enforcement events defined within the agreement will occur.

20. Cash flows from operations

			Restated
	Note	6 months 2013 £m	6 months 2012 £m	12 months 2012 £m
Profit on ordinary activities before taxation		161.4	184.4	264.2
Adjustments:
Depreciation charge		3.8	2.9	6.2
Amortisation charge	12	5.3	2.8	7.3
Finance costs		14.7	13.2	27.6
Interest income	7	(15.4)	(19.2)	(36.7)
Dividend income	7	(8.4)	(5.7)	(11.3)
Net gains on investments realised and unrealised	7	(40.9)	(57.2)	(101.4)
Other non-cash movements		(2.3)	2.2	4.5
Movement in operating assets and liabilities:
Net sales/(purchases) of financial investments		156.6	(18.7)	(234.1)
Exchange (gains)/losses on investments		(183.8)	61.8	109.6
Increase in loans and receivables		(136.2)	(215.6)	(45.3)
(Increase)/decrease in insurance and reinsurance contract assets		(620.5)	(483.0)	72.2
Increase/(decrease) in insurance contract liabilities		784.0	443.2	(77.1)
(Decrease)/increase in other payables		(12.0)	83.6	(8.8)
(Decrease)/increase in retirement benefit obligations		(0.5)	(0.9)	0.6
Exchange gains on borrowings		(0.2)	(1.4)	(1.9)
Exchange losses/(gains) on other non-operating assets and liabilities		90.4	(18.4)	(49.8)
Cash generated from/(utilised in) operations		196.0	(26.0)	(74.2)

21. Related party transactions

Transactions with related parties during the period are consistent in nature and scope with those disclosed in note 37 to the 2012 Annual Report.

22. Events after the reporting period

No significant events have been identified between the reporting date and the date on which the condensed consolidated interim financial statements were authorised other than stated below:

Catastrophe bond - Tramline Re II Ltd

During the period, the Group acquired coverage for US and Canadian earthquake perils of up to US$75 million from a Bermudian special purpose reinsurer, Tramline Re II Ltd, which in turn has placed a catastrophe bond into the capital markets. The transaction provides the Group with fully collateralised protection over a four year period with effect from 1 July 2013.

UK Corporation tax rate

A reduction to the rate of corporation tax to 20.0% applying from 1 April 2015 was announced in the March 2013 budget and was substantively enacted on 2 July 2013. The impact of this change from 23.0% to 20.0% is a reduction in the net deferred tax liability of £4.0 million.

Responsibility statement

The directors confirm that this consolidated interim financial information has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

a) an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

b) material related-party transactions in the first six months and any material changes in the related-party transactions described in the last Annual Report.

By order of the Board

Simon Beale Richard Hextall

Group Chief Underwriting Officer Group Finance & Operations Director
16 August 2013 16 August 2013

Independent review report to Amlin plc

For the six months ended 30 June 2013

Introduction

We have been engaged by the company to review the condensed consolidated interim financial information in the half-yearly financial report for the six months ended 30 June 2013, which comprises the consolidated statement of profit or loss, the consolidated statement of other comprehensive income, the consolidated statement of changes in equity, the consolidated statement of financial position, the consolidated statement of cash flows and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial information.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed consolidated interim financial information included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim financial reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed consolidated interim financial information in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of interim financial information performed by the independent auditor of the entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial information in the half-yearly financial report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

PricewaterhouseCoopers LLP

Chartered Accountants
16 August 2013

7 More London Riverside

London

SE1 2RT

· Notes:

a) The maintenance and integrity of the Amlin plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Information for shareholders

The additional information consisting of the shareholder information and directors and advisers has been prepared from the records of the Company. Whilst it does not form part of the interim statement, it should be read in conjunction with it and with the responsibilities section of the independent review report thereon.

Financial calendar

2013

6 September Record date for payment of 2013 interim dividend

3 October Payment of 2013 interim dividend

2014

3 March Expected announcement date of results for the year ending 31 December 2013

May Annual General Meeting

May Expected payment of 2013 final dividend, subject to shareholder approval

Shareholder enquiries, register and website

Please call our Shareholder Enquiries line on 020 7746 1111, or, for enquiries concerning share registration, call our Registrar, Computershare Investor Services PLC, on 0870 703 6165.

Amlin's website is at www.amlin.com

Directors and advisers

as at 16 August 2013

Directors

Richard Davey (Chairman)*

Simon Beale (Group Chief Underwriting Officer)

Brian Carpenter

Julie Chakraverty*

Sir Alan Collins*

Marty Feinstein*+

Richard Hextall (Group Finance & Operations Director)

Shonaid Jemmett-Page*

Charles Philipps (Chief Executive)

Sir Mark Wrightson Bt*

* Non-executive

+ Senior independent director

Audit Committee

Shonaid Jemmett-Page (Chairman)

Sir Alan Collins

Marty Feinstein

Risk and Solvency Committee

Marty Feinstein (Chairman)

Julie Chakraverty

Sir Alan Collins

Richard Davey

Shonaid Jemmett-Page

Remuneration Committee

Sir Mark Wrightson Bt (Chairman)

Julie Chakraverty

Shonaid Jemmett-Page

Nomination Committee

Richard Davey (Chairman)

Julie Chakraverty

Sir Alan Collins

Marty Feinstein

Shonaid Jemmett-Page

Charles Philipps

Sir Mark Wrightson Bt

Secretary

Mark Stevens

Registered Office

St Helen's

1 Undershaft

London EC3A 8ND

Independent Auditors

PricewaterhouseCoopers LLP

7 More London Riverside

London SE1 2RT

Investment Bankers

Evercore Partners Limited

15 Stanhope Gate

London W1K 1LN

Joint Stockbrokers

Morgan Stanley

25 Cabot Square

Canary Wharf

London E14 4QA

Numis Securities

The London Stock Exchange Building

10 Paternoster Square

London EC4M 7LT

Corporate Lawyers

Linklaters LLP

One Silk Street

London EC2Y 7HQ

Principal Bankers

Lloyds TSB Bank plc

25 Gresham Street

London EC2V 7HN

Registrar

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol BS13 8AE

This information is provided by RNS

The company news service from the London Stock Exchange

END

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