Accountability

Corporate Governance

Board internal control statement

The Board has overall responsibility for the Group’s system of internal control and has applied Principle C.2 of the Combined Code by establishing a continuous process for identifying, evaluating and managing the significant risks the Group faces. This process has been in place from the start of 2008 to the date of approval of this report and is in accordance with revised guidance on internal control published in October 2005 (the Turnbull Guidance). This process explicitly includes the risks, and opportunities to enhance value, arising from social, environmental and ethical matters. The Board is responsible for the Group’s system of internal control and for reviewing its effectiveness and the directors are aware that such a system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable, and not absolute, assurance against material misstatement or financial loss.

In compliance with Provision C.2.1 of the Combined Code, the Audit Committee reviews regularly on behalf of the Board the effectiveness of the Group’s system of internal control. Monitoring covers all controls, including financial, operational and compliance controls and risk management. Necessary actions have been or are being taken to remedy any significant identified control failings or weaknesses. The Board has put in place a management structure with defined lines of responsibility and delegation of authority. The Group also operates a financial performance monitoring process involving detailed reporting against budgets and the preparation of longer term projections. The Audit Committee simultaneously reviews and monitors matters which are the regulatory responsibility of the board of AUL (on which it reports directly to that board as well as to the Amlin plc Board) and of the board of ABL (on which it reports via the Group Chief Executive and Finance Director in their capacities as directors of ABL). The plc Board receives regular reports from the Audit Committee which reviews the following main processes established by the Group:

Output from the risk management framework, and the assessment and reporting of key risks and their corresponding controls. In 2008 this included output from the implementation of a new system for reporting on all the identified risks to the achievement of Group objectives and on the nature and effectiveness of the controls and other management processes to manage the key risks. Significant risks, their potential impact on the Group’s financial position, and the actions taken to manage those risks, are regularly reviewed by the Group’s Risk Committee of senior executives. The Risk Committee’s quarterly meetings are scheduled to report through to the subsequent meeting of the Audit Committee.
Managers reporting on those parts of the framework for which each of them is responsible through meetings with the risk management team. In 2008 this took place for the key Group risks through evaluation and control assessments carried out in workshops held between the Risk Assessment & Monitoring department and key staff.
Internal audit and compliance monitoring work carried out respectively by the Group’s Internal Audit and Risk Assessment & Monitoring departments. The latter also provides compliance advice. The heads of both departments report to the Group Chief Executive and to the Audit Committee. The Group has established a risk based audit and compliance programme for reviewing and evaluating the internal controls and compliance procedures used in the management of risk.

These processes are designed to ensure that significant risks are identified, evaluated, managed and controlled. They also permit the Audit Committee to determine whether any significant weaknesses have been promptly remedied or require more extensive monitoring.

The Audit Committee has also performed a specific assessment for the purpose of this Annual Report. This assessment considers all significant aspects of internal control arising during the period covered by the report, including the work of internal audit. The Audit Committee assists the Board in discharging its review responsibilities.

During the course of its review of the system of internal control the Board has not identified or been advised of any failings or weaknesses which it has determined to be significant. The Audit Committee has additionally reviewed and remains satisfied with the arrangements by which staff may, in confidence and if they wish via an external reporting line, raise concerns about possible improprieties in financial reporting or other matters.

By Order of the Board