Accountability

Directors’ remuneration report

Executive directors’ service contracts

The dates of the service or employment contracts of each executive director who served during the year, all of which are or were with the Company’s subsidiary, Amlin Corporate Services Limited, are as stated below. Salaries have been periodically reviewed since the original contract dates, the most recent annual review date being 1 April 2008.

All of the contracts, other than Mr Holt’s, remain in force at the date of this report and are on a full time basis, provide for 12 months’ notice of termination on either side and automatically terminate on the director’s contractual retirement date. Mr Holt’s contract was amended to a part time basis with effect from 1 June 2008 and he then retired from executive office, and from all his Group directorships, on 31 December 2008. His contract accordingly terminated as at that date (and was subsequently replaced by a nonexecutive appointment letter with effect from 5 January 2009, as detailed later in this report). The retirement dates of Messrs Hextall and Philipps were agreed in 2006 to be amended to each of their sixty-fifth birthdays in line with a choice given to employees generally. Mr Carpenter has retained a retirement date of sixty. There are no special provisions for compensation on termination in any director’s contract other than that the employer has the right to pay salary in lieu of any required period of notice. Executive directors’ service or employment contracts are available for inspection at the Company’s registered office.

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Remuneration received

The remuneration received in respect of the year ended 31 December 2008 by each of the directors in respect of their periods of service as directors, excluding pension contributions and long term incentive plan payments, is shown in the [above] table. In addition, Mr Hextall received and retained a non-executive director’s fee of £23,000 from the City of London Investment Trust PLC (2007: £3,315). The amounts paid to non-executive directors include fees paid on behalf of the Company’s subsidiary, Amlin Underwriting Limited. Other than Mrs Bosse, all of the non-executive directors of Amlin plc served as non-executive directors of that subsidiary for most of the year.

The annual bonuses and/or profit commission amounts shown are those paid or payable in respect of the year. Messrs Hextall and Philipps received performance bonuses under the Group Bonus Scheme, in respect of which they had the following business performance ROE targets and percentage payments:

The lower thresholds for 2008 compared with 2007 reflected internal budgets at the start of the year. In addition to the above business performance related element of their bonus, Messrs Hextall and Philipps are eligible for a personal performance related element. In view of each of their exceptional personal performance in 2008, as determined by the Committee, this was awarded at the maximum level of personal performance payment for the year of 36% of salary.

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Mr Carpenter’s and Mr Holt’s bonuses and/or profit commission (PC) were made up as set out in the table below.

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During the year the Committee agreed that Mr Holt would be treated as a ‘good leaver’ for remuneration purposes as a result of his early retirement from executive office on 31 December 2008. He therefore received no compensation for loss of office but his share based incentives are eligible for early vesting within six months of that date (subject to close periods for dealing and to apportionment and performance conditions in the case of the LTIP). In consideration of Mr Holt agreeing not to take up any position with a competitor, he will also be permitted to receive his profit commission entitlements in respect of the years of account up to and including 2008 as the relevant underwriting years close (but with no first installment after two years). He will also receive any payments due to him under the Capital Builder Plan, apportioned for the relevant periods up to his retirement from executive office. Other than for Mr Holt, no payments were made or terms agreed during the year in respect of any director leaving the Board or ceasing to be employed as an executive by the Group.

Executive directors’ pensions

The pension details, as applicable for each executive director (non-executives not being eligible), all of whom served as executive directors throughout the year, are shown in the above table. The total DC employer contributions for the directors were £170,074 (2007: £169,100). Increases in accrued pensions during the year exclude those due to inflation. The transfer values of increases during the year, and changes in total transfer values during the year, are shown before the effects of inflation and after deduction of the directors’ own DB contributions during the year. Increases in transfer values during 2008 have partly resulted from changes in mortality assumptions made by the trustee following the 2007 triannual actuarial review. Mr Holt ceased to accrue his pension on his early retirement at the end of the year and his total accrued DB pension shown above is on the basis of him drawing his pension from his normal retirement age (although, as in other cases, he may choose to draw his pension earlier or later, with consequential actuarial adjustment). Transfer values as at 31 December 2007 and 2008 are calculated in accordance with guidance published by the Institute of Actuaries and the Faculty of Actuaries dated 4 August 2003.

Executive directors’ Capital Builder Plan participations, payments and estimate to date

The applicable classes of business which have determined, or will determine, the rewards payable to each of the directors of the Company participating in the 2001 and 2006 Plans respectively are the classes which they themselves underwrite, the wider performance of the respective divisions that they headed at the relevant time and the Group’s underwriting as a whole. There have been no material changes in the classes in which they participate between the 2007 and 2008 awards. Mr Holt participates in the 2006 award on a three fifths basis, the 2007 award on a two fifths basis and the 2008 award on a one fifth basis, reflecting his service only until his executive retirement on 31 December 2008.

Since 2006 Amlin Bermuda Ltd’s underwriting has been included, with different applicable percentage participations, in the results of those classes written in both the UK and Bermuda.

The final total rewards, including the final payments made in mid-2008, of each of the directors in respect of 2001 Plan are as shown below.

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In 2006, 2007 and 2008 awards were made under the 2006 Plan in respect of performance periods of the underwriting years 2006 to 2010, 2007 to 2011 and 2008 to 2012 respectively. No payments will be made under the 2006 Plan until mid-2011 and, with the reserving on which the first payments will be based being not until as at 31 December 2010, any forecasts of rewards at this stage are tentative and subject to material change. Subject to that caveat, the forecast rewards based on earned premium and reserving as at 31 December 2008, for the periods stated to date, are as shown below.

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Executive directors’ Performance Share Plan, Long Term Incentive Plan and share options participations

As described in the ‘Remuneration policies’ section earlier in this report, all of these incentive plans involve options being granted over shares in the Company, whether at exercise prices determined in relation to the market price at the date of grant (executive options), a discount to such price (Sharesave) or at a nominal exercise price of £1 in total per exercise (PSP and LTIP).

As at 31 December 2008 the options held under these plans by executive directors serving at the year end, all of whom were directors throughout the year, and the changes during the year, are set out in the tables above. In addition each executive director was awarded 1,049 shares as Free Shares in the SIP in April 2008. All SIP shareholdings, including these, are included in the directors’ shareholding interests set out in the Directors’ report. The share price on the date of the 2008 PSP and LTIP awards (4 March) was 273.25p.

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The performance against the primary conditions of those executive options grants which had not vested by the start of 2008, which involve ranking the Company’s TSR against that of a comparator group of Lloyd’s companies, in each case over the three year measurement period since grant, was as shown in the table above. The Committee has confirmed that the primary conditions of the above grants of options, including those which required top quartile performance, were in all cases satisfied. The Committee has also concluded that the secondary conditions were satisfied. In reaching the latter conclusion the Committee had regard to underlying earnings, returns on equity, and increases in net tangible assets per share over the relevant periods.

Use of unissued and existing shares for incentive plans

The rules of all those of the Company’s incentive plans which can result in the issue or transfer of shares to participants include limits on the overall number of unissued shares over which options may be granted. The only employee schemes under which either unissued or treasury shares are committed to be issued are the executive share option schemes, the Sharesave plans and the French schedule to the LTIP. New shares were also issued in 2007 to the trustee of the Share Incentive Plan as SIP Free Shares but in 2008 such shares were purchased in the market. Shares awarded under the PSP and LTIP are intended to be satisfied from shares held, or to be purchased, by the Group’s Employee Share Ownership Trust (ESOT) unless overseas requirements, such as applies in the case of awards to French employees, dictate otherwise.

Grants of options or awards over new and/or treasury shares under any selective plan, after deducting any such options or awards which have lapsed, are limited to 5% of the issued share capital in any 10 year period. Grants over new/ treasury shares under any scheme are also limited to 10% over 10 years. The percentages of the year end shares in issue, together with the equivalent percentages a year earlier relating to each of these limits are shown in the middle table above.

All scheme utilisation figures in the table include 533,940 shares issued in April 2007 to Yorkshire Building Society as trustee of the SIP. The SIP’s total holding as at 31 December 2008, including shares bought in the market during 2008, was 1,057,151 shares (2007: 461,352).

In addition, the shares set out in the table above were committed to be transferred to participants by the trustee of the ESOT, subject, where applicable, to the future fulfillment of performance conditions.

Of the total potential commitment of the ESOT as at 31 December 2008, it then held 1,221,891 shares (2007: 1,064,470 against a commitment of 2,367,107). It is intended that the balance will be purchased in the market by the ESOT, as necessary using funds advanced by the Company, before they are required. The changes in the shares held by the ESOT during 2008 resulted from the exercises of options and vesting of awards over a total of 57,273 shares and the purchase by the ESOT in the market of 214,694 shares principally using the proceeds received by the ESOT from the return of capital completed in January 2008. Taking account of exercises up to 23 February 2009, the ESOT’s shareholding is 1,197,028 shares.

Total shareholder return performance

The graphs below illustrate the total shareholder return performance of the Company’s ordinary shares relative to the FTSE 350 and the FTSE All Share Insurance indices respectively (Amlin’s shares are a constituent of both) over the five years to 31 December 2008. Comparisons are shown with both these indices as the performance of Amlin’s shares is affected both by the general UK stock market in companies of its size and by its insurance sector. The graphs show the values, at each year end from 2004 to 2008 inclusive, of £100 invested in the Company’s shares on 31 December 2003 compared with the values of £100 invested in the relevant index on the same date. To produce a fair value, each point on the graphs is the average of the relevant return index over the 30 days preceding the relevant year end.