Rights Issue

Amlin PLC
20 December 2001


20 December 2001


Amlin plc ('Amlin' or 'the Company')




FOR PUBLICATION IN THE UNITED KINGDOM ONLY. NOT FOR RELEASE, PUBLICATION 
ORDISTRIBUTION IN ANY OTHER JURISDICTION, INCLUDING THE UNITED STATES, 
AUSTRALIA, CANADA OR JAPAN OR THEIR RESPECTIVE TERRITORIES OR POSSESSIONS.



Proposed 2 for 7 Rights Issue at 77 p per share to raise £43.2 million net of 
expenses




Amlin, the largest independent business operating in the Lloyd's market, is 
pleased to announce its plans to raise approximately £43.2 million, net of 
expenses, by way of a Rights Issue:



*      2 for 7 Rights Issue of 59,582,887 New Amlin Shares at 77 pence per New  
       Amlin Share to raise approximately £43.2 million, net of expenses



*      Proceeds to be used to reduce gearing and strengthen balance sheet



*      Underwritten by Hoare Govett other than in respect of the 7,957,338 New  
       Amlin Shares in respect of which irrevocable undertakings have been      
       obtained to subscribe under the Rights Issue.


Charles Philipps, Chief Executive of Amlin, said:


'The fund raising is another step in our plan to consolidate our leading 
position in the Lloyd's market and to take advantage of very favourable 
insurance market conditions.  In the aftermath of 11 September we moved swiftly 
to increase our capacity for 2002 and to put in place the finance to support it.
 This we did by negotiating a letter of credit with State Farm for $130 million,
which meant we had high balance sheet gearing in the short term.  With the 
proceeds of the issue, we will bring the gearing down and place ourselves in a 
stronger financial position.'


Enquiries:

Amlin
Charles Philipps                                     Tel: [phone]
Richard Hextall                                      Tel: [phone]

Hoare Govett Limited
(Financial adviser and broker to Amlin)
Andrew Thompson                                      Tel: [phone]

Haggie Financial Limited
(Financial PR Advisers to Amlin)
David Haggie                                         Tel: [phone]

The Directors of Amlin plc are the persons responsible for the information 
contained in this document. To the best of the knowledge and belief of the 
Directors (who have taken all reasonable care to ensure that such is the case) 
the information contained in this document is in accordance with the facts and 
does not omit anything likely to affect the import of such information.


Hoare Govett Limited is acting for Amlin plc and for no one else in connection 
with the Rights Issue and will not be responsible to anyone other than Amlin for
providing the protections afforded to clients of Hoare Govett or for providing 
advice in relation to the Rights Issue or any other matter referred to in the 
Prospectus expected to be sent to Shareholders later today.






FOR PUBLICATION IN THE UNITED KINGDOM ONLY. NOT FOR RELEASE, PUBLICATION OR 
DISTRIBUTION IN ANY OTHER JURISDICTION, INCLUDING THE UNITED STATES, AUSTRALIA, 
CANADA OR JAPAN AND THEIR RESPECTIVE TERRITORIES OR POSSESSIONS.


Amlin plc ('Amlin' or 'the Company')


Proposed 2 for 7 Rights Issue at 77 p per share to raise £43.2 million net of 
expenses


Introduction


Amlin is proposing to raise approximately £43.2 million, net of expenses, by the
issue of 59,582,887 New Amlin Shares at a price of 77 pence per New Amlin Share.
The issue is being made by way of a Rights Issue to Qualifying Shareholders 
(other than certain Overseas Shareholders) on the basis of 2 New Amlin Shares 
for each 7 existing Amlin Shares held at the close of business on 9 January 
2002. The Rights Issue Price of 77 pence per New Amlin Share represents a 17.6 
per cent. discount to the closing middle market price of 93.5 pence per Amlin 
Share on 19 December 2001, the last business day before the announcement of the 
Rights Issue. The Rights Issue, which has been underwritten by Hoare Govett, 
other than in respect of the 7,957,338


New Amlin Shares in respect of which irrevocable undertakings have been obtained
to subscribe under the Rights Issue, is conditional upon, inter alia, 
shareholder approval which will be sought at the Extraordinary General Meeting 
of the Company to be held on 14 January 2002.


Information on Amlin


Amlin is the third largest, and largest independent, business operating in the 
Lloyd's market (measured by premium income capacity for the 2001 year of 
account). Over the past two years, Amlin has focused its activities on Syndicate
2001, divesting non-core interests, such as its Lloyd's members' agency and its 
interests in Lloyd's third party syndicates. Amlin has successfully grown its 
ownership of Syndicate 2001's capacity to approximately 72 per cent. (the final 
percentage depending on the extent of any further dropping of capacity by third 
party members of the syndicate) for the 2002 year of account, compared with 38 
per cent. for the 1999 year of account. In October 2000, Amlin reorganised its 
underwriting activities into four divisions which are focused on particular 
business classes and which have strong underwriting teams. In addition to these 
changes, the underlying financial performance of Syndicate 2001 has improved and
the Board is confident that Syndicate 2001's underlying performance for both the
2000 and 2001 years of account will be strong relative to other Lloyd's 
syndicates.


Amlin has a diversified book of insurance business as shown below:



Division        Principal classes of business      Proportion of estimated 2001 
                                                   year of account gross premium
Harvey Bowring  International Reinsurance, 
                Property and Casualty              51%

Amlin Insurance UK Motor, Property and Casualty    23%
Services 

Amlin Aviation  Airlines, Airports and Space       16%

Coles           Marine                             10%

Syndicate 2001's diversity provides a balanced exposure to risk, both 
geographically and between classes of business. Some business classes generate 
high margins but can be volatile (such as catastrophe reinsurance) whilst other 
classes are less volatile and usually generate lower margins (such as motor).


Syndicate 2001 aims to achieve gross underwriting profits in each class of 
business and uses its reinsurance programme to protect against extreme severity 
and/or frequency of loss. The Directors believe that Syndicate 2001's gross 
incurred loss ratios for both the 1999 and 2000 years of account are better than
most competitors in the Lloyd's market. Accordingly, the Directors believe that 
Amlin will be in a relatively strong position to trade successfully in an 
environment where reinsurance capacity is more scarce.


Reasons for the Rights Issue


The Directors believe that Amlin is now entering a period which will offer very 
favourable underwriting conditions compared with recent years.  Insurance rates,
which were already hardening before the tragic events of 11 September 2001, have
increased significantly in almost all classes since that date and policy terms 
are being tightened.

The Board believes that a number of factors will help sustain current strong 
market conditions. The size of the insured losses across the insurance industry 
from the events of 11 September and other major losses over the past 12 months 
is resulting in the removal of capacity from the market. In addition, the 
Directors expect the reduction in reinsurance capacity and lower than expected 
investment returns to have positive influences on rates. The Directors believe 
that insurers which have relied heavily on reinsurance to subsidise poor gross 
underwriting claims ratios will need to raise rates to achieve adequate gross 
underwriting profits. Moreover, they believe that insurers will be unable to 
rely to the same extent on investment income on retained premiums to generate 
returns and this will increase insurers' focus on obtaining an acceptable 
underwriting return.


The Board believes that, in these market conditions, Amlin will benefit from 
expanding its business and consolidating its leading position in the Lloyd's 
market. Amlin has, with Lloyd's approval, increased Syndicate 2001's capacity by
39 per cent. to £800 million for the 2002 year of account and, on the basis 
described in the section above entitled 'Information on Amlin', the Directors 
expect Amlin to own around 72 per cent. of that syndicate's capacity in the 2002
year of account. In the short term, as announced on 27 November 2001, Amlin has 
met its solvency capital requirement to write this business through US$130 
million of unsecured letters of credit procured for the Group by State Farm 
Mutual Automobile Insurance Company, which owns approximately 13.3 per cent. of 
Amlin's issued ordinary shares, on normal commercial terms.


With the State Farm letters of credit and other drawn-down banking facilities, 
Amlin's debt to equity ratio is presently high, at around 90 per cent. The 
proceeds of the Rights Issue will reduce the level of gearing in the short term 
and place Amlin in a stronger position to be able to acquire additional capacity
on Syndicate 2001 and to support the underwriting of that capacity.


Interim results for the six months ended 30 June 2001

Amlin announced its unaudited interim results for the six months ended 30 June 
2001 on 18 September 2001. The Group's gross premium income written during the 
first six months was £355.8 million (2000: £187.4 million) reflecting improving 
rates, organic growth in business written and increased ownership of Syndicate 
2001. Amlin's share of its Managed Syndicates grew from 57.8 per cent. in 2000 
to 69.6 per cent. in 2001. Earned premium increased to £165.6 million from £97.2
million in 2000.



Terrorist attacks in the United States


At this stage it is not possible to assess with certainty the level of insurance
claims that will materialise from the events of 11 September in the United 
States. Amlin's principal exposures relate to its aviation, property insurance 
and property reinsurance accounts. The gross loss of Amlin's Managed Syndicates 
is estimated at approximately US$690 million, which equates to a net loss of 
approximately US$130 million, after taking into account reinsurance recoveries 
and the associated costs of reinstating reinsurance coverages.


Losses from these events will affect the 2000 and 2001 years of account in which
Amlin's ownership share of its Managed Syndicates was 57.8 per cent. and 69.6 
per cent. respectively. Accordingly, the Directors estimate that the net loss to
Amlin from these events will be approximately £60 million before tax, equivalent
to 21 pence per existing Amlin Share after tax. This estimate is based on the 
Directors' knowledge as at the date of this announcement. It is possible that 
facts or circumstances will come to light in the future which may materially 
affect this estimate. Your attention is drawn to the assumptions and methodology
underlying Amlin's estimate of these losses and to the risk factors set out in 
Appendix 1 of this announcement.


The financial effect of the terrorist attacks will, under the Group's accounting
policies, be recognised in the profit and loss account for the year ending 31 
December 2001. Whilst it is too early to make any forecast of the outcome of the
2001 year of account, the effect of the terrorist attacks will, in part, be 
mitigated by the stronger underlying performance of Syndicate 2001 in the 2000 
and 2001 years of account. However, most of the improvement in underlying 
trading performance in the 2001 year of account will not be recognised in the 
Group's profit and loss account until the year ending 31 December 2002. Amlin 
stated in the quarterly managed syndicate forecasts announced on 27 November 
2001 that Syndicate 2001 met its US gross funding requirements (amounting to 
US$133 million) without the need for a cash call on its capital providers. This 
is an indication of the underlying balance sheet strength of the syndicate.


Quarterly Managed Syndicate Forecasts


The quarterly managed syndicate forecasts as at 30 September 2001, which were 
announced on 27 November 2001 and are set out below, are expressed in a 5 per 
cent. range as a percentage of capacity and are after standard Names' expenses, 
including agent's fees and commission.


1999 year of account forecasts


This year of account has developed broadly in line with expectations. The 
improvement in Syndicate 2001's forecast reflects strong investment returns to 
date and a continued improvement in closed year loss ratios. Following the 
events of 11 September 2001, and given the longer tail nature of Syndicate 
1141's account, the provision for reinsurance bad debt has been increased by 
£2.2 million.




Syndicate No.  Capacity % owned by  Latest forecast         Previous forecast   
                  £m       Amlin       % to %                      % to %

902             37.6        45.5%      (7.0) to (2.0)         (7.0) to (2.0)

1141            76.2        52.1%      (25.0) to (20.0)       (23.0) to (18.0)

2001            453.0       35.2%      (4.5) to 0.5           (5.5) to (0.5)

Total           566.8                  (7.4) to (2.4)         (8.0) to (3.0)


2000 year of account forecasts

The changes in forecasts for this year of account are attributable largely to 
the events of 11 September, which are estimated to have impacted the 2000 year 
of account of Syndicates 902, 1141 and 2001 by £1.8 million, £0.9 million and 
£19.2 million respectively.


In addition, investment return forecasts for next year have been lowered 
following the stronger than expected performance during the last six months of 
Amlin's bond portfolios.




Syndicate No.   Capacity £m % owned by      Latest forecast   Previous forecast 
                                Amlin            % to %           % to %  


902             37.6        56.7%           (32.5) to (27.5)  (22.5) to (17.5)

1141            76.2        69.7%           (28.0) to (23.0)  (23.0) to (18.0)

2001            423.4       55.8%           (5.0) to 0.0       0.0 to 5.0

Total           537.2                       (10.2) to (5.2)    (4.9) to 0.1

Syndicates 902 and 1141 ceased to trade at the end of the 2000 year of account 
and selected parts of their accounts were transferred to Syndicate 2001.


Current trading and outlook


Trading conditions to date have continued in line with those stated in the 
quarterly managed syndicate forecasts announcement made on 27 November 2001.  
The current year is benefiting from rate increases that were gathering momentum 
prior to 11 September 2001 and which have accelerated significantly since then. 
It is also benefiting from cost savings and other efficiencies that have 
resulted from the reorganisation of Amlin's underwriting divisions which was 
implemented in October 2000. In the light of this, the Directors consider that 
underlying underwriting conditions for the current financial year are showing an
improvement over the previous year. However, the Company's results for the 
current year will be adversely affected by the attacks of 11 September 2001.


The following is indicative of rate changes achieved since 11 September 2001:




Airline hull and liability           +200% (including terrorism surcharges)
Direct property                      +50%
Hull                                 +30%
Specie                               +50%

Additionally, policy terms are being tightened, insured retentions are 
increasing and terrorism cover is being limited or excluded in a number of 
areas.


The Directors expect prospects for the next financial year and the few years 
beyond to be excellent and, with the substantial increase in capacity for 2002 
confirmed, the Directors believe that Syndicate 2001 is well positioned to take 
advantage of these conditions. The Directors expect to grow Amlin's market 
position in such an environment.


With regard to investment fund movements affecting the Group's current trading, 
as announced in Amlin's interim results statement for the six months ended 30 
June 2001, the Group's equity portfolio was sold immediately following the 
attacks of 11 September. This resulted in a capital loss to be charged to the 
profit and loss account in the second half of 2001 of approximately £12.5 
million. Since that time the Group's investments, which comprise its Funds at 
Lloyd's (other than letters of credit), have been invested entirely in fixed 
interest stocks and cash. The Board expects Amlin's returns from fixed interest 
stocks and cash in the second half of 2001 to exceed the relevant long term 
benchmark return, which is 6 per cent. per annum.


Dividends


The Board announced in Amlin's interim results for the six months ended 30
June 2001 that it would defer consideration of dividends in respect of the
2001 financial year until the final results for that year were determined.  In
view of the scale of the losses from the 11 September attacks and the
underwriting opportunities that the Board believes now exist, the Directors
have decided to retain capital in the business and not to pay a dividend for
the current financial year. The Board expects that the Company will resume
interim and final dividend payments in respect of the 2002 financial year.