Interim Results

RNS Number : 8151W

Amlin PLC

24 August 2015

 

AMLIN PLC

PRESS RELEASE

For immediate release

24 August 2015

Interim Results for the

six months ended 30 June 2015

Solid performance in challenging markets

Highlights

§ Profit before tax of £143.3million (H1 2014: £148.5 million)

§ First half return on equity of 7.4% (H1 2014: 8.1%), 14.8% annualised

§ Return on net tangible assets of 8.7% (H1 2014: 9.5%), 17.4% annualised

§ Gross written premium has increased by 6.2% to £2,007.6 million (H1 2014: £1,891.2 million)

§ Average overall rate decrease of 4.0% (H1 2014: 3.3%), with renewal retention rate healthy at 88% (H1 2014: 86%)

§ Net earned premium decreased by 7.5% to £1,031.3 million (H1 2014: £1,114.8 million), reflecting seasonal risk profiling of windstorm premium, changes in mix in the Reinsurance account and multi-year contracts

§ Combined ratio of 91% (H1 2014: 87%) due to higher expense ratio on lower net earned premium (combined ratio of 89% before seasonality adjustment)

§ Strong investment return of 2.2% (H1 2014: 1.3%)

§ Interim dividend increased 3.7% to 8.4 pence per share (H1 2014: 8.1 pence per share)

§ Leadenhall Capital Partners increased funds under management by 6.7% to $2.0 billion, supported by initiatives with the Reinsurance SBU

§ Organisational changes introduced in 2014 embedded, with focus now on implementation of new Strategic Business Unit strategies

Charles Philipps, Chief Executive, commented as follows:

"This is a solid set of results in the more challenging market which prevails. Were it not for our change in accounting for the seasonality of catastrophe reinsurance earned premium, profit before tax would have been considerably ahead of the first half of last year. This will unwind in the second half. I am also pleased with the substantial progress which has been made following our reorganisation last year.  New opportunities exist and efficiency gains are being realised."

Enquiries:
Charles Philipps, Chief Executive, Amlin plc	0207 746 1000
Richard Hextall, Group Finance & Operations Director, Amlin plc	0207 746 1000
Media
Ed Berry, FTI Consulting	0203 727 1046

Financial highlights

Financial highlights(1)	H1 2015 £m	H1 2014 £m	YE 2014 £m
Gross written premium	2,007.6	1,891.2	2,564.0
Net written premium(1)	1,670.3	1,637.2	2,278.9
Net earned premium(1)	1,031.3	1,114.8	2,183.4
Profit attributable to underwriting	93.9	141.6	246.0
Investment return(1)	95.9	54.9	118.5
Other costs(2)	(46.5)	(48.0)	(105.8)
Profit before tax	143.3	148.5	258.7
Return on equity	7.4%	8.1%	14.1%
Net assets(3)	1,680.1	1,670.4	1,782.8
Net tangible assets(3)	1,424.6	1,435.7	1,519.2
Per share amounts (in pence)
Earnings	26.5	27.3	47.4
Net assets(3)	335.3	334.7	356.8
Net tangible assets(3)	284.4	287.7	304.1
Dividend under IFRS(4)	33.9	18.2	26.3
Dividends declared for the calendar period/year(4)	8.4	8.1	27.0
Special dividend(4)	-	-	15.0
Operating ratios(5)
Claims ratio	55%	54%	56%
Expense ratio	36%	33%	33%
Combined ratio	91%	87%	89%

Source: Amlin

(1)    The financial highlights are presented on the basis of management information provided to the Amlin Management Committee. The reconciliation between this information and the International Financial Reporting Standards (IFRS) consolidated statement of profit or loss is included in note 5(c) to the condensed consolidated interim financial statements on page 21.

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

(3)    For reporting dates following the increase in the Group's interest in Leadenhall Capital Partners LLP to 75% in October 2014, net assets, net tangible assets and related per share amounts exclude non-controlling interests.

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

(5)    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.

Interim Results Statement

Amlin delivered a good financial performance in the first half of 2015 despite challenging market conditions that saw continued pressure on pricing in certain market segments, notably reinsurance and energy and a continued low interest rate environment.

Gross written premium grew by 6.2% and the underwriting return was healthy, albeit lower than H1 2014. This was due to lower net earned premium resulting in particular from:

•      accounting for US windstorm income to match the seasonal nature of the business, which led to a reduction of £38.0 million relative to H1 2014. This increased the combined ratio by 2%. The reduction in income will be reversed in H2 2015; and,

•       a change in business mix in our Reinsurance business with an increase in proportional treaties written.

Despite the mixed conditions facing investment markets, Amlin's asset allocation strategy delivered an impressive six month investment return of 2.2%.

Following the special dividend of £75.1 million announced at the time of the 2014 results and the repayment of a further $50.0 million of subordinated debt, at 30 June 2015, available capital was £474.0 million (31 December 2014: £684.6 million) above management's assessed capital⁽¹⁾ requirement. 

Amlin remains well positioned despite the challenging trading environment. Reinsurance markets remain under pressure but our strong client proposition, enhanced by Leadenhall Capital Partners which now has funds under management of $2,007.7 million (31 December 2014: $1,880.8 million), continues to differentiate Amlin. There are opportunities for selective growth, as evidenced by the increased written premium in the period. 

Our Marine & Aviation and Property & Casualty insurance businesses have developed exciting strategies for long term growth involving further diversification by product, distribution channel and geography. The combination of talent in each of these businesses, achieved through our 2014 reorganisation, together with our increasing focus on client intimacy, has enhanced business development opportunities.

Overview of the results

The Group generated a profit before tax of £143.3 million in the period (H1 2014: £148.5 million). Profit after tax was £132.8 million, with an effective tax rate of 7.3% (H1 2014: £136.0 million and 8.4%). Our return on equity for the period was 7.4% (14.8% annualised).

Gross written premium was up 6.2% at £2,007.6 million for the six months ended 30 June 2015 (H1 2014: £1,891.2 million).  Growth includes gross written premium of £99.9 million (H1 2014: £71.8 million) attributable to multi-year reinsurance contracts, typically with two or three year policy periods that are fully recognised on inception of the contract. The first half gross written premium therefore included £58.4 million (H1 2014: £41.3 million) of premium which will be earned in and after 2016.

At constant rates of exchange and excluding the £58.4 million related to multi-year contracts, gross written premium increased by 2.4%. 

Renewal rates in the period decreased by an average of 4.0% (H1 2014: decrease of 3.3%), with reinsurance rates 6.4% lower in the period, although there are recent signs that the rate of decrease may be slowing. Renewal retention remained high at 88% (H1 2014: 86%).

Table 1: Average renewal and retention rates

	Gross written premium H1 2015 £m	Gross written premium H1 2014 £m	Average renewal rate change H1 2015 %	Average renewal rate change H1 2014 %	Average renewal retention ratio H1 2015 %	Average renewal retention ratio H1 2014 %
Reinsurance	1,032.2	900.5	(6.4)	(6.0)	89	87
Property & Casualty	660.2	676.7	-	0.4	88	86
Marine & Aviation	315.2	314.0	(4.7)	(2.7)	84	86
Total/average	2,007.6	1,891.2	(4.0)	(3.3)	88	86

Source: Amlin

Note: Gross written premium by SBU is shown on a direct basis, excluding the impact of any intra-group transactions.

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

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

Rating indices in key Group classes	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	H1 2015
Reinsurance
US catastrophe reinsurance	144	185	188	167	185	175	176	190	182	160	147
International catastrophe reinsurance	131	138	131	119	124	123	131	149	147	133	120
Other property reinsurance	146	170	144	126	127	115	109	110	104	99	96
Property & Casualty
Property insurance	136	165	143	133	142	141	144	153	156	151	145
US casualty	239	237	223	203	199	197	197	201	201	198	196
Fleet motor	137	135	134	137	144	148	159	175	192	202	212
UK employers' liability	144	135	123	115	114	115	114	119	126	131	131
UK professional indemnity	165	154	140	129	128	127	127	128	130	131	130
UK property and commercial combined	126	117	110	109	107	106	112	113	114	115	116
Europe property					100	97	95	95	95	95	95
Europe liability					100	95	95	95	95	95	95
Europe fleet motor					100	99	99	99	99	99	99
Marine & Aviation
Marine hull	189	191	192	192	205	208	209	209	209	201	191
Cargo	133	131	124	118	119	116	112	112	111	109	107
Europe marine					100	104	104	104	104	102	100
Offshore energy	175	262	243	209	256	247	262	262	254	229	190
War	206	191	175	160	156	153	153	149	146	140	134
Airline hull and liabilities	201	158	122	127	141	132	124	107	96	92	88
Source: Amlin
Index = 100% at 31 December 2000. Bold indicates peak levels. Certain classes experienced peak levels pre 2005.

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. 2015 rate levels are for the six month period to 30 June 2015.

Net written premium increased modestly by 2.0% to £1,670.3 million (H1 2014: £1,637.2 million).

Outwards reinsurance expenditure on our principal programmes represented 13.6% of gross written premium (H1 2014: 12.8%), with deeper and more effective cover being purchased. The £52.7 million cost of our catastrophe bond, Tramline II, which provides cover over a four year period from 1 January 2015, has been recognised as reinsurance written premium in the first half year. Also, with the growing synergies between Leadenhall Capital Partners and our Reinsurance business, the amount of premium ceded to investment funds managed by Leadenhall is increasing and amounted to £29.4 million in the period (H1 2014: £13.9 million). 

Net earned premium reduced by 7.5% to £1,031.3 million (H1 2014: £1,114.8 million).  This reflects the slower earning of multi-year contracts written during the period, a change in the business mix within our Reinsurance business which has resulted in the lengthening of the earnings profile and the impact of transitioning North American windstorm premiums to a seasonally adjusted earnings pattern as disclosed at year end 2014. This transition has reduced H1 gross earned premium by £61.7 million and reinsurance premium ceded by £23.7 million. This will now be largely earned in the third quarter. 

The underwriting contribution for the six month period was £93.9 million (H1 2014: £141.6 million).

The Group claims ratio was 55% (H1 2014: 54%). While there were no large catastrophe losses in the period (H1 2014: £48.9 million) smaller catastrophes and large risk losses increased modestly to £39.3 million (H1 2014: £28.5 million).

Continued favourable run-off of prior years, and positive developments which reduced a number of specific reserving risks, resulted in reserve releases of £48.3 million (H1 2014: £40.1 million), and a modest reduction in the margin of carried reserves over the actuarial best estimate to approximately £140 million (31 December 2014: £150 million). This risk margin provides consistent reserving strength when measured as a percentile of distribution of modelled outcomes.

The investment return was ahead of expectations, with strong contributions from equities and property. Investments contributed £95.9 million in the period (H1 2014: £54.9 million), a return of 2.2% (H1 2014: 1.3%) on average funds under management of £4.4 billion (H1 2014: £4.4 billion).

Weakening of the US dollar and Euro during the period was largely responsible for a net foreign exchange loss of £2.5 million in the consolidated statement of profit or loss in the period (H1 2014: £10.9 million). A loss of £60.9 million (H1 2014: loss of £49.7 million) on translation of foreign operations, net of designated hedges, was taken through other comprehensive income.

Earnings per share were 26.5 pence (H1 2014: 27.3 pence).

Dividend

The Board has declared an interim dividend of 8.4 pence per share (H1 2014: 8.1 pence per share), an increase of 3.7% over the 2014 interim dividend. The dividend will be paid on 1 October 2015 to shareholders on the register at the close of business on 4 September 2015. 

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.

Segmental commentary

Table 3: SBU combined ratios

H1 2015	Reinsurance	Marine & Aviation	Property & Casualty	Intra Group/ Other	Total
Gross written premium (£m)	1,056.3	315.2	660.2	(24.1)	2,007.6
Net earned premium (£m)	409.1	197.0	432.0	(6.8)	1,031.3
Reserve releases (£m)	8.1	21.2	19.0	-	48.3
Profit attributable to underwriting (£m)	67.7	8.7	21.7	(4.2)	93.9
Combined ratio
Claims ratio	52%	54%	58%	-	55%
Expense ratio	31%	42%	37%	-	36%
Combined ratio	83%	96%	95%	-	91%
Combined ratio (excluding FX)	84%	95%	95%	-	91%

H1 2014	Reinsurance	Marine & Aviation	Property & Casualty	Intra Group/ Other	Total
Gross written premium (£m)	935.2	314.0	676.7	(34.7)	1,891.2
Net earned premium (£m)	456.5	212.7	436.9	8.7	1,114.8
Reserve (strengthening)/releases (£m)	(6.0)	8.9	37.2	-	40.1
Profit attributable to underwriting (£m)	98.0	7.2	30.4	6.0	141.6
Combined ratio
Claims ratio	51%	54%	57%	-	54%
Expense ratio	28%	43%	36%	-	33%
Combined ratio	79%	97%	93%	-	87%
Combined ratio (excluding FX)	78%	94%	92%	-	86%

Source: Amlin

Reinsurance

Gross written premium was £1,056.3 million (H1 2014: £935.2 million), an increase of 12.9% on the prior period, with income benefitting from new business growth and the strength of the US dollar. At constant rates of exchange income increased by 7.0%. 

Competition within Reinsurance lines remains challenging. Amlin has continued to be selective, focusing on areas where pricing meets acceptable rates of return and reducing lines where we believe prices to be marginal or inadequate. Overall, reinsurance renewal rates decreased by 6.4% (2014: 6.0% decrease). US and international catastrophe renewal rates reduced by an average of 8.5% and 10.0% respectively. The retention ratio improved to 89% (H1 2014: 87%).

Growth included multi-year contracts which increased by £28.1 million to £99.9 million (H1 2014: £71.8 million) and £31.0 million (H1 2014: £16.0 million) of business written for investment funds managed by Leadenhall Capital Partners. Our strong franchise in reinsurance continues to be a differentiating factor in these markets allowing us to retain business where desired and to attract new opportunities in areas of the market where rating pressure is lower and margins more attractive.

Amlin Reinsurance Managers Inc, established in 2012 to write US casualty reinsurance, has successfully developed a number of attractive business opportunities with income increasing to £18.0 million in the first half (H1 2014: £10.0 million). Our Miami business, launched in October 2014 to access Latin American business, has also had a successful start, writing income of £4.6 million in the first six months of 2015.

With this growth, non-catastrophe business as a proportion of Reinsurance gross written premium, has increased to 65% (H1 2014: 52%), helping to reduce overall volatility of earnings.

Retrocessional reinsurance costs, excluding catastrophe bonds and premium ceded to the investment funds managed by Leadenhall Capital Partners, were £135.0 million (H1 2014: £130.8 million) with improved coverage acquired, reflecting the operation as one business unit across all locations.

Net earned premium was £47.4 million lower at £409.1 million (H1 2014: £456.5 million), of which £38.0 million was due to transitioning of the North American windstorm exposed business to a seasonally adjusted earnings pattern. The increase in multi-year contracts and the change in business mix which results in slower earnings patterns, has also affected net earned premium.

The combined ratio increased to 83% (H1 2014: 79%; FY 2014: 81%). The claims ratio was 52% (H1 2014: 51%), reflecting an absence of large catastrophe losses during the period (H1 2014: £42.1 million) and prior period reserve releases of £8.1 million (H1 2014: strengthening of £6.0 million), offset by smaller catastrophe and large risk losses of £17.7 million (H1 2014: £9.8 million). Pleasingly, good performance was achieved in our Zurich business.

The seasonal earnings adjustment to North American windstorm exposed business aligns the earning of premiums with the seasonal recognition of claims; therefore the impact of this adjustment on the underlying claims ratios is amplified in this period. The seasonal adjustment has created a temporary increase of 5% to the combined ratio that should unwind through the second half of the year.

The expense ratio increased to 31% (H1 2014: 28%). Acquisition costs represented 22% (H1 2014: 20%) of net earned premium, impacted by higher brokerage on some new contracts.

Marine & Aviation

Gross written premium was flat at £315.2 million (H1 2014: £314.0 million). Gross written premium in our European business was impacted by the weaker Euro in 2015, but this was offset by growth in the underlying portfolio.

Renewal rates reduced by 4.7% (H1 2014: 2.7% decrease). The most significant reductions were in the energy and liability classes, with rate decreases of 17.0% and 5.9% respectively, the former reflecting falling oil prices which impacted construction and drilling activity. The retention ratio was 84% (H1 2014: 86%). 

Net earned premium decreased to £197.0 million (H1 2014: £212.7 million). The reduction in net earned premium was impacted by the strength of sterling relative to the Euro for our European based business.

The combined ratio decreased to 96% (H1 2014: 97%; FY 2014: 92%). The claims ratio of 54% (H1 2014: 54%) reflected increased large loss activity in the energy and aviation classes of £10.9 million (H1 2014: £8.8 million), offset by increased prior period reserve releases which improved the result by £21.2 million (H1 2014: £8.9 million). 

Reinsurance expenditure amounted to £34.5 million (H1 2014: £43.5 million). Increased cover has been acquired with lower retentions.

Excluding the impact of foreign exchange, the expense ratio was 41% (H1 2014: 40%). Acquisition costs represented 24% (H1 2014: 24%) of net earned premium. The core expense ratio is 17%.

Property & Casualty 

Gross written premium was £660.2 million (H1 2014: £676.7 million). Renewal rates were flat during the period, and the retention ratio improved to 88% (H1 2014: 0.4% increase and 86%). The Continental European business has been impacted by weakness in the Euro, income in the UK business reduced, with poorly performing parts of its account being re-underwritten or curtailed, and the London business saw a modest reduction in income in the face of increased rating pressure.

On average, renewal rates were flat. In our UK commercial business, fleet motor rates continued to rise, with an average increase of 5.0% in the first half of the year. New business of £65.9 million was added in the period across our London and European Property & Casualty classes.

Net earned premium was £432.0 million (H1 2014: £436.9 million), with our European business negatively impacted by the weak Euro.

Property & Casualty generated an underwriting profit of £21.7 million (H1 2014: £30.4 million), with a combined ratio of 95% (H1 2014: 93%; FY 2014: 97%). The claims ratio was 58% (H1 2014: 57%).

Performance in the UK business improved markedly with the underlying claims ratio improving to 63% (H1 2014: 74%). The European business benefitted from the absence of catastrophe losses in the period (H1 2014: £6.8 million) but was impacted by large risk losses of £10.7 million (H1 2014: £nil). Performance for the London unit was solid. Prior period reserve releases amounted to £19.0 million (H1 2014: £37.2 million), reflecting favourable claims development within the London and UK businesses.

The expense ratio has increased to 37% (H1 2014: 36%). Acquisition costs represented 24% (H1 2014: 23%) of net earned premium, with the increase driven by the UK business.

Investments

Table 4: H1 2015 investment mix and returns

	Average balance in H1 2015				Total assets at 31 Dec 2014 %	H1 2015 Actual return %
	Policyholder's assets £m	Capital assets £m	Total assets £m	%
Bonds	2,446.1	694.7	3,140.8	71.2	61.7	0.6
Other liquid investments	193.1	76.6	269.7	6.1	17.8	0.2
Global equities	4.0	717.4	721.4	16.4	14.8	5.3
Property funds	-	280.0	280.0	6.3	5.7	4.8
Total/average	2,643.2	1,768.7	4,411.9	100.0	100.0	2.2

Source: Amlin

Note: Group total investment return includes the impact of removing currency hedges in the Solo Absolute Bonds and Currency Fund as described below.

The investment return on the £4.4 billion average assets held during the first half of the year was 2.2%, producing an overall investment contribution of £95.9 million (H1 2014: £4.4 billion, 1.3% and £54.9 million). The core investment return on underlying invested assets at subsidiary level was 1.6%. However the Group result was improved by significant weakening of the Euro as currency hedges not required at Group level are removed. This is due to the requirement to consolidate the Solo Absolute Bonds and Currency Fund as a Euro denominated subsidiary under IFRS.

The return benefited from strong contributions from equities and property. Our bond holdings also produced a solid performance in a rising yield environment as we held a defensive stance towards interest rate risk.

 

 

Expenses 

Total expenses were £428.9 million (H1 2014: £425.7 million). Underwriting expenses, excluding foreign exchange movements, amounted to £370.0 million (H1 2014: £360.6 million). Non-underwriting expenses, excluding foreign exchange movements, were £56.4 million (H1 2014: £54.2 million).

Expenses are uplifted by almost £10 million as a result of new business ventures such as our Hamburg, Miami and Dubai offices, marketing initiatives and investment relating to our new UK premises. Additionally, the consolidation of Leadenhall Capital Partners as part of the Group following the increased investment in October 2014 increased expenses in the period by £5.2 million. These additions have been largely offset by savings and efficiencies achieved following our 2014 reorganisation.

Taxation

The effective rate of tax for the period is 7.3% (H1 2014: 8.4%). It is below the UK rate of corporation tax primarily due to the relatively good performance of business written in Bermuda, which operates locally with no corporation tax.

Balance sheet strength

Net assets at 30 June 2015 were £1,680.1 million (31 December 2014: £1,782.8 million). The movement reflects retained profit for the period, excluding non-controlling interests' share, of £133.0 million, offset by the 2014 ordinary and special dividends of £169.7 million and £65.8 million of other reserve losses, which include £60.9 million of foreign exchange losses on retranslation of subsidiaries, net of designated hedges, due to the strengthening of sterling against the dollar and euro.

Net tangible assets were £1,424.6 million at the period end, equivalent to 284.4 pence per share (31 December 2014: £1,519.2 million and 304.1 pence per share).  

In the period to 30 June 2015, total borrowings increased by 13.5% to £297.5 million (31 December 2014: £262.1 million).  During March, the outstanding $50.0 million sub-ordinated debt tranche was repaid. At the period end, £67.4 million was drawn down on the revolving credit facility (31 December 2014: £nil).

Table 5: Amlin capital analysis

	At 30 Jun  2015 £m	At 31 Dec 2014 £m
Net tangible assets	1,424.6	1,519.2
Subordinated debt	229.6	261.5
Undrawn bank facilities(1)	232.6	300.0
Available capital	1,886.8	2,080.7
Assessed capital(2)	1,412.8	1,396.1
	474.0	684.6

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.

Solvency II, the new regulatory regime for (re)insurers in the European Economic Area, will introduce a new basis for assessing capital. This assessment includes a market-consistent economic balance sheet and a Solvency Capital Requirement, using either an internal model or the standard formula. It will impact the Group, Amlin Corporate Member Ltd (as part of Lloyd's) and, at a solo level, Amlin Insurance (UK) Ltd and Amlin Europe N.V. The Group is currently implementing the new requirements and, as part of the preparatory phase, providing interim information on this basis to regulators during 2015. We are on track to be compliant when the regime is fully effective on 1 January 2016 and believe that our available capital will be sufficient to satisfy Solvency II solvency requirements.

Foreign exchange

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

	H1 2015 £m	H1 2014 £m
Net losses on underwriting transactions and translation of underwriting assets and liabilities at closing rates	(1.4)	(12.2)
Underwriting exchange losses	(1.4)	(12.2)
Net (losses)/gains on non-underwriting transactions and translation of non-underwriting assets and liabilities at closing rates	(1.1)	1.3
Non-underwriting exchange (losses)/gains	(1.1)	1.3
Total foreign exchange loss in consolidated statement of profit or loss	(2.5)	(10.9)

Source: Amlin

The consolidated statement of profit or loss includes a net foreign exchange loss of £2.5 million in the period (H1 2014: loss of £10.9 million). With weakening of the Euro and US dollar during the period, underwriting assets decreased modestly by £1.4 million (H1 2014: loss of £12.2 million). Non-underwriting assets incurred a loss of £1.1 million (H1 2014: gain of £1.3 million).

In addition to the above, the Group's investment in foreign operations, principally Amlin AG and Amlin Europe N.V., generated a net foreign exchange loss, after hedging, of £60.9million in the period (H1 2014: loss of £49.7 million), reflecting sterling strength against the Euro and US dollar. The net loss was recognised in the consolidated statement of other comprehensive income.

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 pages 34 to 37, and explained in detail in notes 9(c), 12(g), 12(h) and 13(g), of the 2014 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 losses at 1 July 2015 was a North-East US Windstorm with an estimated net loss of £262 million, equivalent to 18.4% of net tangible assets at 30 June 2015 (1 January 2015: £271 million for a San Francisco Earthquake; 31 December 2014: 17.9%). The Group's event risk tolerance, which determines the maximum net loss that the Group intends to limit its exposure to this set of realistic disaster scenarios, is currently set at a maximum of £300 million to the Group. Realistic disaster scenarios are selected losses.  There could be events leading to insured losses which exceed these figures.

•       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.

•       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 17 to the condensed consolidated interim financial statements.

Business development

Each of our combined Reinsurance, Marine & Aviation and Property & Casualty businesses have, following our 2014 reorganisation, developed compelling strategies which we expect will materially enhance long term organic growth potential. These strategies involve reinforcing our leadership capabilities and increasing our penetration in classes of business which we believe have attractive long term prospects and where we are underweight today.  They also involve investment in continuing to selectively broaden our geographic footprint and access to business.

Our decision to focus on client intimacy as a competitive differentiator is already resulting in increased new business opportunities. Our investment in Client Relationship Management (CRM), which is in the process of being implemented, is expected to yield further insights and enhance our ability to target high quality business. 

In 2015, we have also introduced net promoter methodology as the headline metric to measure progress in this area.  Inaugural results and clients' willingness to participate, benchmark favourably with global financial services companies. Feedback reaffirms Amlin's strong client relationships, while highlighting areas where we can drive client loyalty yet further.

On 1 August, James Few joined Amlin as the Global Managing Director of our Reinsurance SBU, following Kevin Allchorne's decision to step down from the role. James brings with him a wealth of experience in executing a global strategy and growing a successful reinsurance business over a number of international platforms.

The UK Property & Casualty business has been strengthened through the hire of Richard Coxon, formerly of Liberty Mutual UK, to head a new property department within its Corporate Client Division. Richard is highly respected in the market and his appointment underlines our determination to grow our presence in the UK corporate retail market space.

In January, Amlin received regulatory authority from the Dubai Financial Services Authority (DFSA) to open Amlin (Dubai) Limited to operate through the Lloyd's platform in Dubai. . Its initial focus is in marine hull, P&I and terrorism, and we expect to expand the classes of business serviced in due course. Dubai is an emerging hub for business from the MENASA region (Middle East, North Africa and South Asia) and our presence there is part of our strategy for continued international development.

During June, our teams in Chelmsford completed the move to their new office, Amlin House. We are building a functional centre of excellence in our Chelmsford hub, with teams from Claims, Finance, Facilities, IT and Business Change, HR, and Compliance now successfully moved into their new modern working environment. As Amlin continues to grow, operating functions outside of London is expected to be more economical.

June also saw the official 'handover' of Amlin's space in The Leadenhall Building, a milestone step after more than three years of planning and eight months of hard work fitting out our new head office. The office will provide an excellent working environment and outstanding facilities for brokers visiting Amlin. The move into the new building has commenced, and will be completed in early September.

Outlook

The markets in which Amlin operates are undergoing significant transformation. Capital is abundant, regulation is changing and technology is increasingly influencing how business is conducted. The strength of Amlin's franchise, the diversity of its business model and the skill and experience of our people are critical ingredients for success in this environment.

Diversification of our business has been a key feature of our strategy in recent times.  We have actively sought opportunities to adapt the balance of our portfolio, new product offerings have been developed and new markets and regions have been accessed.  This increased diversification allows us to respond to changing markets, take advantage of opportunities for growth and to deliver returns.

In Reinsurance, rating pressure has been significant but profitability has remained good.  While average renewal rates for catastrophe reinsurance decreased by 6.4% in the period, broadly in line with budget expectations, we have reduced lines or come off business where we consider pricing to be below acceptable levels but have successfully increased exposure to those layers of programmes which we believe offer better rates and risk adjusted margin potential. The recent Florida renewals provided a glimmer of hope that the rate of decrease may be slowing.  However, in the absence of material catastrophe activity in the second half, catastrophe reinsurance markets are expected to remain challenging for the foreseeable future.

Our broad-based Reinsurance offering, and our capability to lead terms and handle claims professionally continues to prove attractive to brokers and clients. This strength of franchise has provided the opportunity to continue to grow our non-catastrophe reinsurance accounts, with this business now representing 65% of our overall Reinsurance portfolio.  Non-catastrophe reinsurance business has not been subject to the same downward pressure on rates as catastrophe reinsurance and, with selective underwriting, acceptable margins exist.

Looking forward, changes to the mix of business and shape of the account, with multi-year contracts and business with a longer earning profile earning through, net earned premium should benefit.  In addition net earned premium in the second half of the year will benefit from the unwinding of the seasonality adjustment for North-Atlantic windstorm business.

Rating pressure in our insurance business has been less marked than for Reinsurance, but more pronounced in classes where larger increases have been achieved in previous years, such as marine energy and liability insurance. Income is broadly in line with expectation and whilst we expect rating pressure to persist into the second half of the year, there remain opportunities for profitable growth through diversification of product, distribution channel and geography.

We will continue to focus attention on managing investment risk. Our bond portfolios remain at very low durations in anticipation of US and UK interest rates starting to rise either late this year or early next year. This may result in an increase in market volatility requiring some caution. While we do not expect to repeat our investment return for the period in the second half, economic growth in developed economies and continued stimulative monetary policy in Europe and Japan offer prospects for satisfactory returns.

Having consolidated the management of our claims and support functions in 2014 as part of our reorganisation, significant work is in progress to enhance the services they offer and to increase efficiency and scalability. While this involves some investment, it will enable us to build on the expense savings already achieved.

Inevitably, returns on equity will be impacted by a lower margin environment. However, with our recent reorganisation, our diversified business model, both by class of business and geography and a proven strategy and strong underwriting discipline, we remain confident that Amlin is well positioned to navigate the more challenging underwriting environment and deliver attractive returns to shareholders.

Consolidated statement of profit or loss

For the six months ended 30 June 2015

	Note	6 months 2015 (Unaudited) £m	6 months 2014 (Unaudited) £m	12 months 2014 (Audited) £m
Gross earned premium	5(c)	1,160.0	1,240.6	2,476.4
Reinsurance premium ceded	5(c)	(122.7)	(122.6)	(275.8)
Net earned premium	5(c)	1,037.3	1,118.0	2,200.6
Investment return	7	89.9	51.7	101.3
Other operating income	8	10.5	3.0	8.0
Total income		1,137.7	1,172.7	2,309.9
Insurance claims and claims settlement expenses	6	(624.2)	(617.2)	(1,306.8)
Insurance claims and claims settlement expenses recoverable from reinsurers	6	58.2	16.8	83.6
Net insurance claims	6	(566.0)	(600.4)	(1,223.2)
Expenses for the acquisition of insurance contracts		(238.5)	(240.2)	(473.0)
Other operating expenses	9	(178.4)	(171.9)	(343.1)
Total expenses		(416.9)	(412.1)	(816.1)
Results of operating activities		154.8	160.2	270.6
Finance costs		(12.0)	(13.6)	(27.0)
Share of profit after tax of associates		0.5	1.9	3.7
Gain on revaluation of existing investment		-	-	11.4
Profit before tax		143.3	148.5	258.7
Tax	10	(10.5)	(12.5)	(22.3)
Profit for the period/year		132.8	136.0	236.4
Attributable to:
Owners of the Parent Company		133.0	136.1	236.5
Non-controlling interests		(0.2)	(0.1)	(0.1)
		132.8	136.0	236.4
Earnings per share attributable to owners of the Parent Company
Basic	12	26.5p	27.3p	47.4p
Diluted	12	26.1p	26.8p	46.6p

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 2015

		6 months 2015 (Unaudited) £m	6 months 2014 (Unaudited) £m	12 months 2014 (Audited) £m
Profit for the period/year		132.8	136.0	236.4
Items that will not be reclassified to profit or loss
Defined benefit pension fund losses		(4.3)	(1.1)	(9.8)
Tax relating to items that will not be reclassified		(0.5)	0.2	2.4
		(4.8)	(0.9)	(7.4)
Items that may be reclassified subsequently to profit or loss
Foreign exchange (losses)/gains on translation of foreign operations, net of designated hedges		(60.9)	(49.7)	3.4
Net unrealised losses on assets designated as available-for-sale		-	-	(0.1)
Tax relating to items that may be reclassified		(4.4)	(1.0)	(0.5)
		(65.3)	(50.7)	2.8
Other comprehensive expenses for the period/year, net of tax		(70.1)	(51.6)	(4.6)
Total comprehensive income for the period/year		62.7	84.4	231.8
Attributable to:
Owners of the Parent Company		62.9	84.5	231.9
Non-controlling interests		(0.2)	(0.1)	(0.1)
		62.7	84.4	231.8

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 2015

		Attributable to owners of the Parent Company
For the six months ended 30 June 2015 (Unaudited)	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 2015		142.0	311.7	109.1	(16.1)	1,236.1	1,782.8	3.1	1,785.9
Total comprehensive (expense)/income for the period		-	-	(70.1)	-	133.0	62.9	(0.2)	62.7
Employee share option schemes:
- share-based payment reserve		-	-	0.7	3.1	-	3.8	-	3.8
- proceeds from shares issued	14	-	0.1	-	1.2	(0.2)	1.1	-	1.1
Dividends paid	11	-	-	-	-	(169.7)	(169.7)	-	(169.7)
Deferred tax relating to share option schemes		-	-	(1.4)	-	-	(1.4)	-	(1.4)
Issue of new shares	14	-	0.6	-	-	-	0.6	-	0.6
Transactions with the owners of the Group for the period		-	0.7	(0.7)	4.3	(169.9)	(165.6)	-	(165.6)
At 30 June 2015		142.0	312.4	38.3	(11.8)	1,199.2	1,680.1	2.9	1,683.0

		Attributable to owners of the Parent Company
For the six months ended 30 June 2014 (Unaudited)	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 2014		142.0	311.3	112.4	(18.8)	1,131.2	1,678.1	0.5	1,678.6
Total comprehensive (expense)/income for the period		-	-	(51.6)	-	136.1	84.5	(0.1)	84.4
Employee share option schemes:
- share-based payment reserve		-	-	(1.6)	0.6	-	(1.0)	-	(1.0)
- proceeds from shares issued	14	-	-	-	0.5	(0.3)	0.2	-	0.2
Dividends paid	11	-	-	-	-	(90.8)	(90.8)	-	(90.8)
Deferred tax relating to share option schemes		-	-	(0.6)	-	-	(0.6)	-	(0.6)
Changes in non-controlling interests in subsidiaries		-	-	(0.1)	-	-	(0.1)	(0.3)	(0.4)
Transactions with the owners of the Group for the period		-	-	(2.3)	1.1	(91.1)	(92.3)	(0.3)	(92.6)
At 30 June 2014		142.0	311.3	58.5	(17.7)	1,176.2	1,670.3	0.1	1,670.4

		Attributable to owners of the Parent Company
For the year ended 31 December 2014 (Audited)	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 2014		142.0	311.3	112.4	(18.8)	1,131.2	1,678.1	0.5	1,678.6
Total comprehensive (expense)/income for the year		-	-	(4.6)	-	236.5	231.9	(0.1)	231.8
Employee share option schemes:
- share-based payment reserve		-	-	2.0	0.7	-	2.7	-	2.7
- proceeds from shares issued	14	-	0.1	-	2.0	(0.4)	1.7	-	1.7
Dividends paid	11	-	-	-	-	(131.2)	(131.2)	-	(131.2)
Deferred tax relating to share option schemes		-	-	(0.6)	-	-	(0.6)	-	(0.6)
Issue of new shares	14	-	0.3	-	-	-	0.3	-	0.3
Changes in non-controlling interests in subsidiaries		-	-	(0.1)	-	-	(0.1)	2.7	2.6
Transactions with the owners of the Group for the year		-	0.4	1.3	2.7	(131.6)	(127.2)	2.7	(124.5)
At 31 December 2014		142.0	311.7	109.1	(16.1)	1,236.1	1,782.8	3.1	1,785.9

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

Consolidated statement of financial position

At 30 June 2015

Assets	Note	30 June 2015 (Unaudited)  £m	30 June 2014  (Unaudited) £m	31 December 2014 (Audited) £m
Cash and cash equivalents		196.0	222.6	204.8
Financial assets	13(a)	4,099.3	4,185.7	4,390.3
Reinsurance assets
- reinsurers' share of outstanding claims	6	316.2	337.8	305.9
- reinsurers' share of unearned premium		199.8	161.2	44.0
Loans and receivables, including insurance and reinsurance receivables
- insurance and reinsurance receivables		1,589.0	1,465.4	1,046.9
- other loans and receivables		83.4	94.6	85.5
Deferred acquisition costs		444.7	370.0	270.7
Current income tax assets		55.5	10.2	11.6
Deferred tax assets		5.6	6.8	5.7
Property and equipment		58.3	25.4	35.9
Goodwill and intangible assets		259.1	234.7	267.4
Investments in associates		7.4	14.4	7.0
Total assets		7,314.3	7,128.8	6,675.7
Equity and reserves
Share capital	14	142.0	142.0	142.0
Share premium		312.4	311.3	311.7
Other reserves		38.3	58.5	109.1
Treasury shares		(11.8)	(17.7)	(16.1)
Retained earnings		1,199.2	1,176.2	1,236.1
Equity attributable to owners of the Parent Company		1,680.1	1,670.3	1,782.8
Non-controlling interests		2.9	0.1	3.1
Total equity and reserves		1,683.0	1,670.4	1,785.9
Liabilities
Insurance liabilities
- outstanding claims	6	2,810.3	2,898.6	2,928.2
- unearned premium		1,961.6	1,721.3	1,168.4
Other payables, including insurance and reinsurance payables
- insurance and reinsurance payables		272.8	287.6	196.2
- other payables		139.8	153.5	178.6
Financial liabilities	13(a)	8.9	8.7	28.6
Current income tax liabilities		9.3	1.2	0.6
Borrowings	13(b)	297.5	288.4	262.1
Retirement benefit obligations		42.8	31.4	41.4
Deferred tax liabilities		88.3	67.7	85.7
Total liabilities		5,631.3	5,458.4	4,889.8
Total equity, reserves and liabilities		7,314.3	7,128.8	6,675.7

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

The interim financial statements were approved by the Board of Directors and authorised for issue on 21 August 2015. They were signed on its behalf by:

Charles Philipps	Richard Hextall
Chief Executive	Chief Finance & Operations Officer

Consolidated statement of cash flows

For the six months ended 30 June 2014

	Note	6 months 2015 (Unaudited) £m	6 months 2014 (Unaudited) £m	12 months 2014 (Audited) £m
Profit before tax		143.3	148.5	258.7
Adjustments:
Depreciation charge		2.1	2.8	5.4
Amortisation charge		5.2	5.4	10.7
Finance costs		12.0	13.6	27.0
Interest income	7	(9.0)	(11.9)	(22.0)
Dividend income	7	(14.5)	(12.7)	(22.9)
Gains on investments realised and unrealised	7	(66.4)	(27.1)	(56.4)
Gain on revaluation of existing investment		-	-	(11.4)
Other non-cash movements		3.3	4.8	3.0
Movement in operating assets and liabilities:
Net sales of financial investments		198.3	84.2	71.5
Foreign exchange losses/(gains) on investments		156.6	130.8	(8.9)
Increase in loans and receivables		(175.4)	(129.6)	(14.6)
(Decrease)/increase in insurance and reinsurance contract assets		(708.2)	(562.5)	5.2
Increase in insurance and reinsurance contract liabilities		751.9	643.2	28.5
(Decrease)/increase in other payables		(108.5)	1.0	11.4
Decrease in retirement benefit obligations		(3.0)	(2.2)	(1.0)
Foreign exchange (gains)/losses on other non-operating assets and liabilities		(55.3)	(49.2)	9.6
Cash generated from operations		132.4	239.1	293.8
Interest received		11.7	11.6	20.1
Dividends received		14.5	12.7	22.9
Income taxes received		5.9	4.7	13.2
Net cash inflows from operating activities		164.5	268.1	350.0
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired		-	-	2.0
Deferred payment for acquired subsidiary		(0.3)	(0.4)	(0.4)
Investment in associates		0.9	-	4.8
Purchase of property and equipment		(19.4)	(5.4)	(16.5)
Purchase and development of intangible assets		(5.7)	(1.7)	(9.9)
Net cash outflows from investing activities		(24.5)	(7.5)	(20.0)
Cash flows from financing activities
Net proceeds from issue of ordinary shares, including treasury shares		1.0	0.2	1.7
Dividends paid to owners of the Parent Company	11	(169.7)	(90.8)	(131.2)
Purchase of non-controlling interest		-	(0.4)	(0.4)
Interest paid		(1.7)	(3.8)	(22.1)
Purchase of ESOT and treasury shares		-	(4.0)	(4.0)
Net drawdown/(repayment) of borrowings		35.0	(99.9)	(131.8)
Net cash outflows from financing activities		(135.4)	(198.7)	(287.8)
Net increase in cash and cash equivalents		4.6	61.9	42.2
Cash and cash equivalents at beginning of year		204.8	164.5	164.5
Effect of exchange rate changes on cash and cash equivalents		(13.4)	(3.8)	(1.9)
Cash and cash equivalents at end of period/year		196.0	222.6	204.8

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

Notes to the interim financial statements

For the six months ended 30 June 2015

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 consolidated financial statements for the year ended 31 December 2014, 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 2014 were approved by the Board of Directors on 27 February 2015 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. These condensed consolidated interim financial statements have been reviewed, not audited.

Having reassessed the principal risks, the directors considered it appropriate to adopt the going concern basis of accounting in preparing the condensed consolidated interim financial statements.

This condensed consolidated interim financial information was approved for issue on 21 August 2015.

2. Accounting policies

Accounting policies applied in condensed consolidated interim financial statements

The accounting policies, presentation and methods of computation adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2014, except for the adoption of amendments to existing standards and interpretations as set out below:

a) Amendments to published standards and interpretations effective on or after 1 January 2015

The Group has adopted the following amended IFRSs effective as of 1 January 2015:

Annual Improvements 2011-2013 Cycle

These improvements have been endorsed by the EU for annual periods beginning on or after 1 January 2015. The changes identified in these improvements are not applicable to the Group.

b) Amendments to published standards and interpretations early adopted by the Group

The Group has early adopted the following amended IFRSs effective as of 1 January 2015:

i) Amendments to IAS 19 'Employee Benefits', 'Defined Benefit Plans: Employee Contributions'

The amendment has been endorsed by the EU for annual periods beginning on or after 1 February 2015. This has been early adopted by the Group from 1 January 2015 and has been applied retrospectively. IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the contributions are linked to service, they should be attributed to periods of service as a negative benefit. These amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. This amendment has not had a significant impact on the financial statements of the Group.
ii) Annual Improvements 2010-2012 Cycle

These improvements have been endorsed by the EU for annual periods beginning on or after 1 February 2015 and have been early adopted by the Group from 1 January 2015. The following changes are applicable to the Group:

IFRS 2 'Share-based Payment'

This improvement is applied prospectively and clarifies various issues relating to the definitions of performance and service conditions which are vesting conditions.

The definitions are consistent with how the Group has identified any performance and service conditions which are vesting conditions in previous periods, therefore the amendment does not impact the Group's accounting policy.

IFRS 3 Business Combinations

The amendment is applied prospectively and clarifies that all contingent consideration arrangements classified as liabilities (or assets) arising from a business combination should be subsequently measured at fair value through profit or loss whether or not they fall within the scope of IFRS 9 'Financial Instruments' (or IAS 39 'Financial Instruments: Recognition and Measurement', as applicable). This is consistent with the Group's current accounting practice; therefore the amendment does not impact the Group's accounting policy.

3. Significant 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. These estimates are based on management's best knowledge of current events and actions and accordingly actual results may ultimately 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 2014, unless otherwise noted below. These can be found on pages 118 to 124 of the 2014 Annual Report.

Insurance contract liabilities

The change in claims costs for prior period insurance claims represents the claims development of earlier reported years incurred in the current accounting period. The carrying value of the Group's net outstanding insurance claim liabilities at 30 June 2015 is £2,494.1million (30 June 2014: £2,560.8 million; 31 December 2014: £2,622.3 million). For the period to 30 June 2015, there has been a net positive development of £48.3 million (30 June 2014: £40.1 million; 31 December 2014: £89.6 million) for the Group. Further details are included in note 6.

Following the transition in our 2014 results to a seasonally adjusted earnings profile for North American windstorm exposed business, there has been a reduction in gross earned premium of £61.7 million and reinsurance premium ceded of £23.7 million in the first half of this year, compared to the 2014 period. The profile change has resulted in the majority of premium being earned in the third quarter reflecting the risk profile of the business.

4. 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 the 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 2015. However, in recent years windstorm activity has been more benign than might be expected which has resulted in less seasonal variation in loss ratios.

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 claims and claims settlement expenses divided by net earned premium.

	Claims ratio
	H1 %	H2 %	Full year %
2011	92	65	78
2012	53	61	57
2013	53	52	52
2014	54	58	56
2015	55	n/a	n/a

Note:    The Group incurred large losses from natural catastrophe claims during the first six months of 2011. 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 %
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	74.5	628.5	25.5	2,467.4	100.0
2014	1,891.2	73.8	672.8	26.2	2,564.0	100.0
2015	2,007.6	n/a	n/a	n/a	n/a	n/a

Note:    The significant uplift in H1 Gross written premium from 2012 onwards is a result of the establishment of Amlin Re Europe, which has a significant proportion of policies incepting at the start of the year.

5. Segmental reporting

a) Basis of segmentation

Management has determined the Group's operating segments based on the management information reviewed during the year 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'.

Segments represent the distinct units through which the Group is organised and managed. From 1 September 2014, management reorganised the Group operating structure, from an entity/divisional basis, to three Strategic Business Units (SBUs): Reinsurance, Marine & Aviation and Property & Casualty. From 1 January 2015, reporting to the chief operating decision maker reflects the change in organisation and segmental analyses for the comparative periods have been restated accordingly. Segments are as follows:

·      Reinsurance - Offering coverage of catastrophe, property and casualty risks through treaty and facultative reinsurance, and providing clients with Insurance Linked Securities (ILS) solutions. Operates through offices in Hamilton, London, Miami, Singapore and Zurich.

·      Marine & Aviation - Primarily focusing on cargo, energy, hull, liability and aviation portfolios, and some other specialist areas such as specie and fine art risks. Operates through offices in Antwerp, London, Paris and Rotterdam.

·      Property & Casualty - Providing insurance coverage in five main areas - property, casualty, accident and health, motor and bloodstock. Operates through offices in Amstelveen, Brussels, Hamburg, London and Paris.

·      Other, comprising all other entities of the Group including holding companies, and certain adjustments unrelated to the performance of the SBUs.

Included within the intra group column are consolidation adjustments, eliminating transactions between segments that are outside of the following arrangements:

·      Consolidation adjustments eliminating the whole account quota share (WAQS) intra group reinsurance arrangement have been allocated to the segments based on the segmental analyses of the counterparties to the arrangement. Thus each segment is presented excluding the WAQS arrangement.

·      Consolidation adjustments relating to transactions within segments are reported through the segment to which the adjustment relates. The most significant impact is in respect of service company commission income recognised as acquisition expenses in Syndicate 2001, Amlin Insurance (UK) plc and Amlin Europe N.V.

Investment return generated from centrally managed investments and managing agency expenses are reported through segments to which these relate.

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 insured is located.

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 5(c).

Income and expenses by business segment Six months ended 30 June 2015	Reinsurance £m	Marine & Aviation £m	Property & Casualty £m	Other £m	Intra group  items £m	Total £m
Analysed by geographic segment:
UK	174.5	87.1	214.4	-	(24.1)	451.9
North America	464.3	68.0	163.6	-	-	695.9
Europe	257.5	93.1	243.0	-	-	593.6
Other	160.0	67.0	39.2	-	-	266.2
Gross written premium	1,056.3	315.2	660.2	-	(24.1)	2,007.6
Net written premium	839.2	280.7	556.8	(7.2)	0.8	1,670.3
Gross earned premium	471.9	219.5	489.7	-	(21.1)	1,160.0
Reinsurance premium ceded	(62.8)	(22.5)	(57.7)	(7.2)	21.5	(128.7)
Net earned premium	409.1	197.0	432.0	(7.2)	0.4	1,031.3
Insurance claims and claims settlement expenses	(225.8)	(118.9)	(289.8)	-	10.3	(624.2)
Insurance claims and claims settlement expenses recoverable from reinsurers	15.1	12.9	41.0	-	(10.8)	58.2
Expenses for the acquisition of insurance contracts	(91.7)	(47.8)	(102.1)	-	3.1	(238.5)
Underwriting expenses	(39.0)	(34.5)	(59.4)	-	-	(132.9)
Profit attributable to underwriting	67.7	8.7	21.7	(7.2)	3.0	93.9
Investment return	60.3	10.4	27.5	(2.3)	-	95.9
Other operating income	9.0	1.5	1.3	-	(1.3)	10.5
Other non-underwriting expenses	(11.8)	(3.8)	(5.6)	(25.6)	1.3	(45.5)
Result of operating activities	125.2	16.8	44.9	(35.1)	3.0	154.8
Finance costs						(12.0)
Share of profit after tax of associates						0.5
Profit before tax						143.3
Claims ratio	52%	54%	58%			55%
Expense ratio	31%	42%	37%			36%
Combined ratio	83%	96%	95%			91%

Notes:

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

2.  The Other segment includes an adjustment of £7.2 million for the understatement of reinsurance premium ceded in prior periods. This adjustment does not relate to the performance of the SBUs and the comparative periods have accordingly been restated to present a consistent view by SBU.

Restated Income and expenses by business segment Six months ended 30 June 2014	Reinsurance £m	Marine & Aviation £m	Property & Casualty £m	Other £m	Intra group  items £m	Total £m
Analysed by geographic segment:
UK	183.7	60.0	137.9	-	(31.8)	349.8
North America	397.8	67.7	187.2	-	-	652.7
Europe	229.1	138.9	265.1	-	(2.9)	630.2
Other	124.6	47.4	86.5	-	-	258.5
Gross written premium	935.2	314.0	676.7	-	(34.7)	1,891.2
Net written premium	775.6	270.5	585.4	6.8	(1.1)	1,637.2
Gross earned premium	524.3	242.8	489.8	-	(16.3)	1,240.6
Reinsurance premium ceded	(67.8)	(30.1)	(52.9)	6.8	18.2	(125.8)
Net earned premium	456.5	212.7	436.9	6.8	1.9	1,114.8
Insurance claims and claims settlement expenses	(249.4)	(111.4)	(264.5)	-	8.1	(617.2)
Insurance claims and claims settlement expenses recoverable from reinsurers	16.4	(2.7)	14.8	-	(11.7)	16.8
Expenses for the acquisition of insurance contracts	(91.3)	(51.9)	(98.6)	-	1.6	(240.2)
Underwriting expenses	(34.2)	(39.5)	(58.2)	-	(0.7)	(132.6)
Profit attributable to underwriting	98.0	7.2	30.4	6.8	(0.8)	141.6
Investment return	29.8	8.5	19.0	(2.4)	-	54.9
Other operating income	0.9	1.8	1.1	0.1	(0.9)	3.0
Other non-underwriting expenses	(7.3)	(6.8)	(6.5)	(19.6)	0.9	(39.3)
Result of operating activities	121.4	10.7	44.0	(15.1)	(0.8)	160.2
Finance costs						(13.6)
Share of profit after tax of associates						1.9
Profit before tax						148.5
Claims ratio	51%	54%	57%			54%
Expense ratio	28%	43%	36%			33%
Combined ratio	79%	97%	93%			87%

 

Restated Income and expenses by business segment Year ended 31 December 2014	Reinsurance £m	Marine & Aviation £m	Property & Casualty £m	Other £m	Intra group  items £m	Total £m
Analysed by geographic segment:
UK	185.1	89.0	361.4	-	(43.5)	592.0
North America	502.4	102.5	252.6	-	-	857.5
Europe	267.6	153.8	308.6	-	(2.9)	727.1
Other	181.1	109.7	96.6	-	-	387.4
Gross written premium	1,136.2	455.0	1,019.2	-	(46.4)	2,564.0
Net written premium	965.7	397.0	910.7	7.2	(1.7)	2,278.9
Gross earned premium	1,095.0	460.1	968.4	-	(47.1)	2,476.4
Reinsurance premium ceded	(175.8)	(60.8)	(104.0)	7.2	40.4	(293.0)
Net earned premium	919.2	399.3	864.4	7.2	(6.7)	2,183.4
Insurance claims and claims settlement expenses	(534.0)	(242.5)	(557.8)	-	27.5	(1,306.8)
Insurance claims and claims settlement expenses recoverable from reinsurers	32.8	40.0	38.2	-	(27.4)	83.6
Expenses for the acquisition of insurance contracts	(187.9)	(95.4)	(197.0)	-	7.3	(473.0)
Underwriting expenses	(51.4)	(72.0)	(118.0)	-	0.2	(241.2)
Profit attributable to underwriting	178.7	29.4	29.8	7.2	0.9	246.0
Investment return	68.2	21.1	42.2	(13.0)	-	118.5
Other operating income	4.7	3.0	2.2	0.2	(2.1)	8.0
Other non-underwriting expenses	(18.5)	(13.4)	(14.4)	(57.7)	2.1	(101.9)
Result of operating activities	233.1	40.1	59.8	(63.3)	0.9	270.6
Finance costs						(27.0)
Share of profit after tax of associates						3.7
Gain on revaluation of existing investment						11.4
Profit before tax						258.7
Claims ratio	55%	50%	60%			56%
Expense ratio	26%	42%	37%			33%
Combined ratio	81%	92%	97%			89%

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

The following tables show the reconciliation between the management information provided to the chief operating decision maker and the consolidated statement of profit or loss.

	Six months ended 30 June 2015
Consolidated statement of profit or loss	Management information £m	Reconciling items £m	IFRS Consolidated statement of profit or loss £m
Gross written premium	2,007.6	-	2,007.6
Net written premium	1,670.3	52.7	1,723.0
Gross earned premium	1,160.0	-	1,160.0
Reinsurance premium ceded	(128.7)	6.0	(122.7)
Net earned premium	1,031.3	6.0	1,037.3
Insurance claims and claims settlement expenses	(624.2)	-	(624.2)
Insurance claims and claims settlement expenses recoverable from reinsurers	58.2	-	58.2
Expenses for the acquisition of insurance contracts	(238.5)	-	(238.5)
Underwriting expenses	(132.9)	-	(132.9)
Profit attributable to underwriting	93.9	6.0	99.9
Investment return	95.9	(6.0)	89.9
Other operating income	10.5	-	10.5
Other non-underwriting expenses	(45.5)	-	(45.5)
Result of operating activities	154.8	-	154.8
Finance costs	(12.0)	-	(12.0)
Share of profit after tax of associates	0.5	-	0.5
Profit before tax	143.3	-	143.3

The reconciling items relate to items of income and expense under the Group's risk transfer contracts with Tramline Re II Ltd. These contracts incepted on 1 July 2013 and 1 January 2015 and each provide cover for risk periods of four years. From a management information perspective, these instruments are 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 instruments are classified as derivatives 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 2014				Year ended 31 December 2014
Consolidated statement of profit or loss	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	1,891.2	-	1,891.2	2,564.0		-	2,564.0
Net written premium	1,637.2	14.9	1,652.1	2,278.9		17.0	2,295.9
Gross earned premium	1,240.6	-	1,240.6	2,476.4		-	2,476.4
Reinsurance premium ceded	(125.8)	3.2	(122.6)	(293.0)		17.2	(275.8)
Net earned premium	1,114.8	3.2	1,118.0	2,183.4		17.2	2,200.6
Insurance claims and claims settlement expenses	(617.2)	-	(617.2)	(1,306.8)		-	(1,306.8)
Insurance claims and claims settlement expenses recoverable from reinsurers	16.8	-	16.8	83.6		-	83.6
Expenses for the acquisition of insurance contracts	(240.2)	-	(240.2)	(473.0)		-	(473.0)
Underwriting expenses	(132.6)	-	(132.6)	(241.2)		-	(241.2)
Profit attributable to underwriting	141.6	3.2	144.8	246.0		17.2	263.2
Investment return	54.9	(3.2)	51.7	118.5		(17.2)	101.3
Other operating income	3.0	-	3.0	8.0		-	8.0
Other non-underwriting expenses	(39.3)	-	(39.3)	(101.9)		-	(101.9)
Result of operating activities	160.2	-	160.2	270.6		-	270.6
Finance costs	(13.6)	-	(13.6)	(27.0)		-	(27.0)
Share of profit after tax of associates	1.9	-	1.9	3.7		-	3.7
Gain on revaluation of existing investment	-	-	-	11.4		-	11.4
Profit before tax	148.5	-	148.5	258.7		-	258.7

6.  Outstanding claims

	Outstanding claims £m	Reinsurers' share £m	Net outstanding claims £m
At 1 January 2015	2,928.2	(305.9)	2,622.3
Claims incurred during the current period	649.5	(35.2)	614.3
Movements arising from prior year claims	(25.3)	(23.0)	(48.3)
	624.2	(58.2)	566.0
Claims paid during the period	(680.0)	71.5	(608.5)
Accretion of fair value adjustment	1.6	(0.2)	1.4
Exchange adjustments	(63.7)	(23.4)	(87.1)
At 30 June 2015	2,810.3	(316.2)	2,494.1

	Outstanding claims £m	Reinsurers' share £m	Net outstanding claims £m
At 1 January 2014	2,897.1	(343.1)	2,554.0
Claims incurred during the current period	666.9	(26.4)	640.5
Movements arising from prior year claims	(49.7)	9.6	(40.1)
	617.2	(16.8)	600.4
Claims paid during the period	(550.2)	20.8	(529.4)
Accretion of fair value adjustment	2.1	(0.3)	1.8
Other movements	-	(0.8)	(0.8)
Exchange adjustments	(67.6)	2.4	(65.2)
At 30 June 2014	2,898.6	(337.8)	2,560.8

	Outstanding claims £m	Reinsurers' share £m	Net outstanding claims £m
At 1 January 2014	2,897.1	(343.1)	2,554.0
Claims incurred during the current year	1,387.2	(74.4)	1,312.8
Movements arising from prior year claims	(80.4)	(9.2)	(89.6)
	1,306.8	(83.6)	1,223.2
Claims paid during the year	(1,288.7)	133.3	(1,155.4)
Accretion of fair value adjustment	3.8	(0.6)	3.2
Exchange adjustments	9.2	(11.9)	(2.7)
At 31 December 2014	2,928.2	(305.9)	2,622.3

7.  Investment return

	6 months 2015 £m	6 months 2014 £m	12 months 2014 £m
Investment income
- dividend income	14.5	12.7	22.9
- interest income	8.5	11.2	20.5
- cash and cash equivalents interest income	0.5	0.7	1.5
	23.5	24.6	44.9
Net realised gains/(losses)
on assets held for trading
- equity securities	56.7	14.2	26.0
- debt securities	6.6	24.6	50.5
- property funds	-	0.3	(0.1)
- derivative instruments	15.7	(1.4)	(5.7)
- derivative instruments relating to the Group's contracts with Tramline Re Ltd and Tramline Re II Ltd	(1.6)	(1.5)	(17.9)
on assets classified as other than trading
- participation in investment pools	0.8	0.8	1.7
	78.2	37.0	54.5
Net unrealised (losses)/gains
on assets held for trading
- equity securities	(14.5)	3.0	26.0
- debt securities	5.3	8.0	(19.2)
- property funds	1.8	1.7	5.5
- derivative instruments	-	(19.4)	(10.0)
- derivative instruments relating to the Group's contracts with Tramline Re Ltd and Tramline Re II Ltd	(4.4)	(1.7)	0.7
on assets classified as other than trading
- other	-	(1.5)	(1.1)
	(11.8)	(9.9)	1.9
	89.9	51.7	101.3

Note:  Included within debt securities held for trading are £nil realised gains and losses and £1.5m unrealised gains  relating to the investment in the funds managed by Leadenhall Capital Partners LLP (30 June 2014: £2.8 million realised losses and £3.8 million unrealised gains; 31 December 2014: £1.7 million realised losses and £4.8 million unrealised gains).

8.  Other operating income

	6 months 2015 £m	6 months 2014 £m	12 months 2014 £m
Investment management income	7.6	-	2.4
Commission income	1.3	1.7	2.9
Other non-insurance income	1.6	1.3	2.7
	10.5	3.0	8.0

Note:  Investment management income represents income from funds managed by Leadenhall Capital Partners LLP, which became a subsidiary of the Group on 23 October 2014.

9.  Other operating expenses

	6 months 2015 £m	6 months 2014 £m	12 months 2014 £m
Expenses relating to underwriting
Employee expenses, excluding employee incentives	72.9	67.0	133.5
Lloyd's expenses	12.4	12.0	20.2
Other administrative expenses	46.2	41.4	83.9
Underwriting foreign exchange losses	1.4	12.2	3.6
	132.9	132.6	241.2
Other expenses
Employee expenses, excluding employee incentives	14.7	10.5	22.4
Employee incentive and related social security costs	16.7	18.5	43.7
Asset management fees	4.1	4.0	8.9
Other administrative expenses	8.9	7.6	20.2
Non-underwriting foreign exchange losses/(gains)	1.1	(1.3)	6.7
	45.5	39.3	101.9
	178.4	171.9	343.1

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

Changes to Group Incentive Schemes

During the period ended 30 June 2015, the Group introduced two new employee incentive schemes, summarised below.

A new variant of the Amlin Performance Share Plan (PSP) was established, which is a long term equity settled award for senior executives to replace and combine existing PSP, Capital Builder and LTIP schemes.  There are no significant changes from previous PSP schemes. PSP awards are subject to a single performance criterion, Return on Net Tangible Assets (RONTA) and exercisable from five years after the grant date.

A new short term incentive scheme for all employees called the Amlin Annual Bonus Plan (ABP) which has separate arrangements for employees based on seniority.  The target and maximum bonus payment that may be made in respect of the annual performance bonus is determined by the Board and calculated as a percentage of the employee's fixed salary.  For underwriting employees, an additional bonus element applies linked to underwriting performance which is funded by a SBU profit pool. ABP awards are a mixture of cash and/or shares. Deferral arrangements apply for all eligible employees.  Provision for payment of an award under the ABP is calculated for each performance period and expensed over a four year vesting period, during which employees are required to remain in employment.

The current year costs of these new schemes do not vary materially from the prior period.

10.  Tax

	6 months 2015 £m	6 months 2014 £m	12 months 2014 £m
Current tax - current period/year
Corporate income tax	5.3	7.9	0.6
Foreign tax	2.1	2.6	1.6
	7.4	10.5	2.2
Current tax - adjustment in respect of previous periods/years
Corporate income tax	(0.2)	(1.2)	(2.0)
Deferred tax - current period/year
Origination and reversal of temporary differences	1.8	3.9	19.3
Deferred tax - adjustment in respect of previous periods/years
Movement for the period/year	1.6	-	4.9
Impact of change in UK tax rate	(0.1)	(0.7)	(2.1)
	1.5	(0.7)	2.8
Income tax expense	10.5	12.5	22.3

Recent UK budgets have announced changes in the main rate of UK corporation tax. The new rate of 20% was enacted on 2 July 2013 and applies from 1 April 2015.

The UK budget on 8 July 2015 announced two further reductions to the main rate of UK corporation tax. The new rates of 19% and 18% will apply from 1 April 2017 and 1 April 2020 respectively. These rates have not yet been substantively enacted so their impact is not included in these financial statements.

In addition to the above, tax of £4.9 million has been charged to other comprehensive income (30 June 2014: £0.8 million charge; 31 December 2014: £1.9 million credit). Tax of £1.4 million has been charged direct to other reserves (30 June 2014: £0.6 million charge; 31 December 2014: £0.6 million charge).

11. Dividends

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

Group	6 months 2015 £m	6 months 2014 £m	12 months 2014 £m
Final dividend for the year ended:
- 31 December 2014 of 18.9 pence per ordinary share	94.6	-	-
- 31 December 2013 of 18.2 pence per ordinary share	-	90.8	90.8
Special dividend for the year ended:
- 31 December 2014 of 15.0 pence per ordinary share	75.1	-	-
Interim dividend for the year ended:
- 31 December 2014 of 8.1 pence per ordinary share	-	-	40.4
	169.7	90.8	131.2

An interim dividend of 8.4 pence per ordinary share for 2015, amounting to £42.2 million and payable in cash, was declared by the Board on 21 August 2015. This dividend has not been adjusted for within these financial statements in accordance with International Financial Reporting Standards.

12. Earnings per share

Basic and diluted earnings per share are as follows:

	6 months 2015	6 months 2014	12 months 2014
Profit attributable to owners of the Parent Company	£133.0m	£136.1m	£236.5m
Weighted average number of shares in issue	500.3m	498.9m	498.9m
Dilutive shares	9.1m	8.1m	8.6m
Adjusted average number of shares in issue	509.4m	507.0m	507.5m
Basic earnings per share	26.5p	27.3p	47.4p
Diluted earnings per share	26.1p	26.8p	46.6p

13. Financial assets and liabilities

In the six months to 30 June 2015 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.

a) Fair value hierarchy

i) Fair value methodology

For financial instruments carried 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 occur 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 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). As such, unobservable inputs reflect the assumptions it is considered that market participants would use in pricing the asset.

There were no changes to the valuation techniques during the period.

Shares and other variable yield securities

Listed equities traded on a primary exchange in an active market are classified as Level 1.

Available-for-sale unlisted equities represent the Group's investments in broker businesses and do not have a quoted price in an active market. As such they are valued using a discounted cash flow of future income method adjusted for management expectation of market exit prices which is largely unobservable. Hence, they have been included in Level 3 with fair value movements being recognised in other comprehensive income.

Debt and other fixed income securities

The fair value is based upon quotes from pricing services where available. These pricing services derive prices based on an average of quotes provided by brokers. Where multiple quotes are not available, the fair value is based upon evaluated pricing services, which typically use proprietary cash flow models and incorporate observable market inputs, such as credit spreads, benchmark quotes and other trade data. If such services 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.

Where there is an active market for these assets and their fair value is the unadjusted quoted market price, these are classified as Level 1. This is typically the case for government bonds. Level 1 also includes bond funds, where fair value is based upon quoted prices. Where the market is inactive or the price is adjusted, but significant market observable inputs have been used by the pricing sources, then these are considered to be Level 2. This is typically the case for government agency debt, corporate debt, mortgage and asset backed securities and catastrophe bonds. Certain assets, for which prices or other market inputs are unobservable, are classified as Level 3.

Property funds

The Group's property fund portfolios are valued using the most recent net asset value provided by the fund managers. The net asset values, which may be a quarter in arrears, are determined by the fund managers using proprietary cash flow models. In such cases, adjustments may be made to bring the net asset value to a more current valuation. The inputs into that valuation, such as discount rates, are primarily unobservable and, as such, these assets are classified as Level 3. Where an investment is made into a new property fund the transaction price is considered to be the fair value if it is the most recent price available.

Participation in investment pools

These are units held in money market funds and the value is based upon unadjusted, quoted and executable prices provided by the fund manager and these are classified as Level 1.

Derivatives

Listed derivative contracts, such as futures, that are actively traded are valued using quoted prices from the relevant exchange and are classified as Level 1. Over the counter currency options are valued by the counterparty using quantitative models with multiple market inputs such as foreign exchange rate volatility. The market inputs are observable and the valuation can be validated through external sources. These are classified as Level 2. The Group's risk transfer contracts with Tramline Re Ltd and Tramline Re II Ltd have been classified as derivative instruments. The valuation of these instruments is based on forecast cash flow models which contain principally unobservable market inputs, and as such are classified as Level 3.

a) Fair value hierarchy continued

ii) Net financial investments by fair value grouping

	Fair value hierarchy
	Level 1 £m	Level 2 £m	Level 3 £m	Total 30 June 2015 £m
Assets
Financial assets held for trading at fair value through profit or loss
Shares and other variable yield securities	607.2	-	-	607.2
Debt and other fixed income securities	2,494.6	237.8	-	2,732.4
Property funds	-	-	285.4	285.4
Derivative instruments	-	18.3	1.7	20.0
Other financial assets at fair value through profit or loss
Participation in investment pools	272.3	-	-	272.3
Deposits with credit institutions	152.8	-	-	152.8
Other	1.0	-	0.1	1.1
Available-for-sale financial assets
Unlisted equities	-	-	6.5	6.5
Other
Derivative instruments in designated hedge accounting relationships	-	21.6	-	21.6
Total assets	3,527.9	277.7	293.7	4,099.3
Liabilities
Financial liabilities held for trading at fair value through profit or loss
Derivative instruments	-	(8.6)	-	(8.6)
Other
Derivative instruments in designated hedge accounting relationships	-	(0.3)	-	(0.3)
Total liabilities	-	(8.9)	-	(8.9)
Net financial investments	3,527.9	268.8	293.7	4,090.4

The table above excludes the Group's holdings of cash and cash equivalents of £196.0 million (30 June 2014: £222.6 million; 31 December 2014: £204.8 million). These are categorised as Level 1 in the fair value hierarchy.

The table also excludes the Group's borrowings which are not measured at fair value but for which fair value information is provided in note 13(b). These are categorised as Level 3 in the fair value hierarchy.

The table also excludes the Group's loans and receivables and other payables, which are carried at amounts that approximate to the fair value and are categorised as Level 3 in the fair value hierarchy.

The majority of the Group's investments are valued based on quoted market information or other observable market data. The Group holds 7.2% (30 June 2014: 5.2%; 31 December 2014: 6.0%) of its net financial investments at a fair value based on estimates and recorded as Level 3 investments. Where estimates are used, these are based on a combination of independent third party evidence and internally developed models, calibrated to market observable data where possible. While such valuations are sensitive to estimates, it is believed that changing one or more of the assumptions to reasonably possible alternative assumptions might result in a higher or lower fair value measurement, though this is unlikely to be significant.

	Fair value hierarchy			Total 30 June 2014 £m	Fair value hierarchy			Total 31 December 2014 £m
	Level 1 £m	Level 2 £m	Level 3 £m		Level 1 £m	Level 2 £m	Level 3 £m
Assets
Financial assets held for trading at fair value through profit or loss
Shares and other variable yield securities	531.7	-	-	531.7	652.4	-	-	652.4
Debt and other fixed income securities	2,377.7	492.3	1.0	2,871.0	2,722.1	256.4	-	2,978.5
Property funds	-	-	205.6	205.6	-	-	255.5	255.5
Derivative instruments	-	6.9	4.8	11.7	-	32.5	-	32.5
Other financial assets at fair value through profit or loss
Participation in investment pools	312.5	-	-	312.5	280.6	-	-	280.6
Deposits with credit institutions	234.5	-	-	234.5	176.7	-	-	176.7
Other	1.3	-	0.3	1.6	1.3	-	0.1	1.4
Available-for-sale financial assets
Unlisted equities	-	-	6.7	6.7	-	-	6.6	6.6
Other
Derivative instruments in designated hedge accounting relationships	-	10.4	-	10.4	-	6.1	-	6.1
Total assets	3,457.7	509.6	218.4	4,185.7	3,833.1	295.0	262.2	4,390.3
Liabilities
Financial liabilities held for trading at fair value through profit or loss
Derivative instruments	-	(8.5)	-	(8.5)	-	(21.6)	-	(21.6)
Other
Derivative instruments in designated hedge accounting relationships	-	(0.2)	-	(0.2)	-	(7.0)	-	(7.0)
Total liabilities	-	(8.7)	-	(8.7)	-	(28.6)	-	(28.6)
Net financial investments	3,457.7	500.9	218.4	4,177.0	3,833.1	266.4	262.2	4,361.7

iii) Transfers between levels of 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.

There have been no transfers between Levels 1, 2 and 3 during the period.

In the comparative period, debt and other fixed income securities of £1.0 million at 30 June 2014 (31 Dec 2014: £nil) were transferred from Level 2 into Level 3 due to a lack of observable inputs in determining a fair value for these assets.

The tables below analyse the movements in assets and liabilities classified as Level 3 investments:

	Debt and other fixed income securities £m	Property funds £m	Derivative instruments £m	Other £m	Unlisted equities £m	Total £m
At 1 January 2015	-	255.5	-	0.1	6.6	262.2
Total net gains/(losses) recognised in investment return in profit or loss	-	1.8	(5.9)	-	-	(4.1)
Sales	-	(1.8)	-	-	-	(1.8)
Purchases	-	37.6	-	-	-	37.6
Settlements	-	(1.6)	7.6	-	-	6.0
Foreign exchange losses	-	(6.1)	-	-	(0.1)	(6.2)
At 30 June 2015	-	285.4	1.7	0.1	6.5	293.7
Total unrealised losses for the period recognised in investment return in profit or loss for assets and liabilities held at the end of the reporting period						(5.7)

	Debt and other fixed income securities £m	Property funds £m	Derivative instruments £m	Other £m	Unlisted equities £m	Total £m
At 1 January 2014	-	181.0	(0.1)	2.0	6.7	189.6
Total net gains/(losses) recognised in investment return in profit or loss	-	2.0	(3.4)	(1.5)	-	(2.9)
Sales	-	(5.5)	-	-	-	(5.5)
Purchases	-	33.6	-	-	-	33.6
Settlements	-	(1.0)	8.3	-	-	7.3
Transfer into Level 3	1.0	-	-	-	-	1.0
Foreign exchange losses	-	(4.5)	-	(0.2)	-	(4.7)
At 30 June 2014	1.0	205.6	4.8	0.3	6.7	218.4
Total unrealised losses for the period recognised in investment return in profit or loss for assets and liabilities held at the end of the reporting period						(1.5)

	Debt and other fixed income securities £m	Property funds £m	Derivative instruments £m	Other £m	Unlisted equities £m	Total £m
At 1 January 2014	-	181.0	(0.1)	2.0	6.7	189.6
Total net gains/(losses) recognised in investment return in profit or loss	-	5.4	(17.2)	(1.2)	(0.1)	(13.1)
Sales	-	(20.2)	-	-	-	(20.2)
Purchases	-	86.8	-	-	-	86.8
Settlements	-	(1.5)	16.9	-	-	15.4
Foreign exchange gains/(losses)	-	4.0	0.4	(0.7)	-	3.7
At 31 December 2014	-	255.5	-	0.1	6.6	262.2
Total unrealised gains for the year recognised in investment return in profit or loss for assets and liabilities held at the end of the reporting period						2.4

b) Borrowings

	6 months 2015 £m	6 months 2014 £m	12 months 2014 £m
Subordinated debt	229.6	287.8	261.5
Revolving credit facility	67.4	-	-
Other	0.5	0.6	0.6
	297.5	288.4	262.1

The current and non-current portions are expected to be as follows:

	6 months 2015 £m	6 months 2014 £m	12 months 2014 £m
Current portion	67.5	58.5	32.2
Non-current portion	230.0	229.9	229.9
	297.5	288.4	262.1

The Directors' estimation of the fair value of the Group's subordinated debt is £257.1 million (30 June 2014: £325.9 million, 31 December 2014: £287.0 million). The aggregate fair values are based on a discounted cash flow model. This model uses a current yield curve appropriate for the remaining terms to maturity. The discount rate used was 0.6% (30 June 2014: 1.2%, 31 December 2014: 1.2%).

The US$ subordinated debt, which was in two tranches of US$50 million, was fully repaid in November 2014 and March 2015.

14. Capital & reserves

a) Share capital

	Number	£m
Allotted, called up and fully paid ordinary shares
At 1 January 2014 and 30 June 2014 issued ordinary shares of 28.125 pence each	504,799,359	142.0
Ordinary shares of 28.125 pence each issued in the period ending 31 December 2014	66,541	-
At 31 December 2014 issued ordinary shares of 28.125 pence each	504,865,900	142.0
Ordinary shares of 28.125 pence each issued in the period ending 30 June 2015	144,000	-
At 30 June 2015 issued ordinary shares of 28.125 pence each	505,009,900	142.0

During the period the Company transferred 455,252 shares out of treasury at a cost of £1.2 million (30 June 2014: 202,011 shares at a cost of £0.5 million; 31 December 2014: 756,372 shares at a cost of £1.9 million). The shares have been transferred to meet exercises of employee share options, leaving 3,040,461 shares in treasury at 30 June 2015 (30 June 2014: 4,050,074 shares; 31 December 2014: 3,495,713 shares).

The Group issued 144,000 ordinary shares on 1 June 2015 in conjunction with the acquisition of Leadenhall Capital Partners LLP. The shares issued have the same rights as all other shares in issue. The fair value of the shares issued is £0.7 million (487.0 pence per share).

On 31 July 2015, 1,167,151 shares were issued to settle the deferred consideration of US$7.5 million relating to the acquisition of RaetsMarine Insurance B.V.

b) Net assets per share

Net assets and tangible net assets per share are as follows:

	30 June 2015	30 June 2014	31 December  2014
Net assets	1,683.0	1,670.4	1,785.9
Non-controlling interests	(2.9)	(0.1)	(3.1)
Equity attributable to owners of the Parent Company	1,680.1	1,670.3	1,782.8
Adjustments for goodwill and intangible assets (excluding non-controlling interest's share)	(255.5)	(234.7)	(263.6)
Tangible net assets	1,424.6	1,435.7	1,519.2
Number of shares in issue at end of period/year	505.0	504.8	504.9
Adjustment for ESOT and treasury shares	(4.0)	(5.7)	(5.3)
Basic number of shares after ESOT and treasury shares adjustment	501.0	499.1	499.6
Basic net assets per share	335.3p	334.7p	356.8p
Basic tangible net assets per share	284.4p	287.7p	304.1p

Note: The calculation of tangible net assets was amended in December 2014 to incorporate an adjustment for Non-controlling interests included in the Equity attributable to owners of the Parent Company.

15. 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 are:

	6 months 2015 Average rate	At 30 June 2015	6 months 2014 Average rate	At 30 June 2014	12 months2014 Average rate	At 31 December 2014
US dollar	1.52	1.57	1.67	1.71	1.65	1.56
Canadian dollar	1.88	1.97	1.83	1.82	1.82	1.81
Euro	1.37	1.41	1.22	1.25	1.24	1.29
New Zealand dollar	2.06	2.32	1.97	1.95	1.99	1.99
Japanese yen	183.28	192.01	170.97	173.22	174.22	186.79

16. Contingent liabilities

Aside from the escrow account entered into with the Trustee of the Lloyd's Superannuation Fund defined benefit plan, as described in note 16(a) of the annual report, the Group has no material contingent liabilities at 30 June 2015 (30 June 2014 and 31 December 2014: £nil).

17. Related party transactions

Aside from the catastrophe risk contract entered into with Tramline Re II Limited, as per note 5(c), transactions with related parties during the period are consistent in nature and scope with those disclosed in note 21 to the 2014 Annual Report.

18. Events after the reporting period

No significant events have been identified between the date of the consolidated statement of financial position and the date on which the condensed consolidated interim financial statements were authorised.

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.

The current directors of Amlin plc are listed on page 36 of this interim report. Sir Mark Wrightson, Bt, a non-executive director, retired from the Board on 21 May 2015. Biographies of the directors can be found on the company's website: www.amlin.com

By order of the Board

Charles Philipps	Richard Hextall
Chief Executive	Chief Finance & Operations Officer
21 August 2015	21 August 2015

Independent review report to Amlin plc

For the six months ended 30 June 2015

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed the condensed consolidated interim financial statements, defined below, in the Interim Report of Amlin plc for the six months ended 30 June 2015. Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements are 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.

This conclusion is to be read in the context of what we say in the remainder of this report.

What we have reviewed

The condensed consolidated interim financial information, which are prepared by Amlin plc, comprise:

•   the Consolidated statement of financial position as at 30 June 2015;

•   the Consolidated statement of profit or loss and Consolidated statement of other comprehensive income for the period then ended;

•   the Consolidated statement of cash flows for the period then ended;

•   the Consolidated statement of changes in equity for the period then ended; and

•   the explanatory notes to the condensed consolidated interim financial statements.

As disclosed in note 1, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

The condensed consolidated interim financial statements included in the Interim Report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

What a review of consolidated financial information involves

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.

We have read the other information contained in the Interim Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial statements.

Responsibilities for the condensed consolidated interim financial statements and the review

Our responsibilities and those of the directors

The Interim Report, including the condensed consolidated interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express to the Company a conclusion on the condensed consolidated interim financial statements in the Interim Report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of complying with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, 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.

PricewaterhouseCoopers LLP

Chartered Accountants
21 August 2015

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

As at 21 August 2015

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

2015

4 September      Record date for payment of 2015 interim dividend

1 October            Payment of 2015 interim dividend

2016

29 February        Expected announcement date of results for the year ending 31 December 2015

May                        Annual General Meeting

May                        Expected payment of 2015 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, Equiniti Limited on 0871 384 2383 (UK) or [phone] (Overseas).

Amlin's website is at www.amlin.com

Directors and advisers

As at 21 August 2015

Directors

Richard Davey (Chairman)*

Simon Beale (Chief Underwriting Officer)

Julie Chakraverty*

Marty Feinstein*⁺

Richard Hextall (Chief Finance & Operations Officer)

Shonaid Jemmett-Page*

Oliver Peterken*

Charles Philipps (Chief Executive)

* Non-executive

+ Senior independent director

Audit Committee

Shonaid Jemmett-Page (Chairman)

Julie Chakraverty

Marty Feinstein

Oliver Peterken

Remuneration Committee

Julie Chakraverty (Chairman)

Shonaid Jemmett-Page

Oliver Peterken

Risk and Solvency Committee

Marty Feinstein (Chairman)

Julie Chakraverty

Richard Davey

Shonaid Jemmett-Page

Oliver Peterken

Nomination Committee

Richard Davey (Chairman)

Julie Chakraverty

Marty Feinstein

Shonaid Jemmett-Page

Charles Philipps

Oliver Peterken

Secretary

Mark Stevens

Registered Office

St Helen's

1 Undershaft

London

EC3A 8ND

Auditors

PricewaterhouseCoopers LLP

7 More London Riverside

London

SE1 2RT

Investment Bankers

Evercore Partners International LLP

15 Stanhope Gate

London

W1K 1LN

Joint Stockbrokers

Morgan Stanley & Co. International plc

25 Cabot Square

Canary Wharf

London

E14 4QA

Numis Securities Ltd

The London Stock Exchange Building

10 Paternoster Square

London

EC4M 7LT

Corporate Lawyers

Linklaters LLP

One Silk Street

London

EC2Y 8HQ

Principal Bankers

Lloyds Bank plc

25 Gresham Street

London

EC2V 7HN

Registrar

Equiniti Limited

Aspect House

Spencer Road

Lancing

West Sussex

BN99 6DA

 

END

 

 

IR LLFVTTAIVFIE