Annual Report 2008

21 Intangible assets

	Syndicate participations £m	Goodwill £m	Other intangibles £m	Total £m
At 31 December 2007	63.2	2.8	3.0	69.0
Acquisitions	–	27.5	10.4	37.9
Amortisation	–	–	(1.4)	(1.4)
Foreign exchange gains	–	3.6	1.1	4.7
At 31 December 2008	63.2	33.9	13.1	110.2

Syndicate participations represent the ongoing rights, acquired in Lloyd’s auctions and by an offer to Lloyd’s Names, to trade on Syndicate 2001 within the Lloyd’s insurance market. Amlin subsidiaries have supported all of the ongoing capacity of Syndicate 2001 since 1 January 2004. All remaining liabilities of the Syndicate underwritten by third party capital prior to this date were taken on by Amlin subsidiaries at 1 January 2004.

Included within goodwill and other intangibles acquired during the year are amounts relating to the acquisition of Financiere Europe Assurances group (FEA). Note 35 provides further details relating to the acquisition of FEA.

Other intangibles also include the costs of acquiring rights to customer contractual relationships. The additions during the year comprise the Group’s acquisition of certain customer relationships from HCC Underwriting Agency Limited which are amortised using the straight line method over the estimated useful life of five years.

Amortisation of intangible assets is included in the operating expenses line of the Income Statement.

22 Share capital

	2008 Number	2008 £m	2007 Number	2007 £m
Authorised ordinary shares
At 1 January authorised ordinary shares of 28.125p each (2007: 25p)	711,111,104	200.00	800,000,000	200.0
Reduction of authorised ordinary shares	–	–	(88,888,889)	–
Cancelled ordinary shares	–	–	(7)	–
At 31 December authorised ordinary shares of 28.125p each (2007: 28.125p)	711,111,104	200.00	711,111,104	200.0
Authorised redeemable non-cumulative preference shares (‘B shares’)
At 1 January authorised B shares of 22.4p each	544,642,000	122.0	–	–
B shares authorised	–	–	544,642,000	122.0
At 31 December authorised B shares of 22.4p each	544,642,000	122.0	544,642,000	122.0
Issued, called up and fully paid ordinary shares
At 1 January issued ordinary shares of 28.125p each (2007: 25p)	477,984,195	134.4	534,006,720	133.5
Shares issued on exercise of options	589,244	0.2	3,695,766	0.9
Reduction of issued ordinary shares	–	–	(59,718,291)	–
At 31 December issued ordinary shares of 28.125p each (2007: 28.125p)	478,573,439	134.6	477,984,195	134.4
Issued redeemable non-cumulative preference shares (‘B shares’)
At 1 January issued B shares of 22.4p each	537,464,619	120.4	–	–
B shares issued	–	–	537,464,619	120.4
B shares redemption	(532,129,144)	(119.2)	–	–
At 31 December issued B shares of 22.4p each	5,335,475	1.2	537,464,619	120.4

The ordinary shares issued on exercise of options were issued for a total consideration of £3.8 million at an average price of 131 pence per share (2007: £4.5 million, average price 122 pence).

The Company acquired 10,765,000 of its own shares through purchases on the London Stock Exchange during the period and the Group’s Employee Share Ownership Trust (ESOT) purchased 214,694 shares. The total amount paid, including expenses, was £28.0 million (2007: £1.5 million), which was deducted from shareholders’ equity as disclosed in note 24. From the shares acquired, 2,001,348, at a cost of £5.0 million, were subsequently transferred out of treasury to meet exercises of employee share options leaving 8,763,652 ordinary shares in Treasury at 31 December 2008 (2007: nil).

On 14 November 2007, the Group announced its intention to return approximately £120 million of capital to shareholders by way of a B share issue combined with a consolidation of Amlin’s existing shares on the basis of 8 new ordinary shares for 9 existing ones. This was subsequently approved by the shareholders at an Extraordinary General Meeting held on 12 December 2007.

B shares were issued on 17 December 2007 to existing shareholders on the basis of one B share for each ordinary share held on 14 December 2007. Each B share enabled the shareholder to redeem the share at 22.4 pence per share at various dates in the future up to August 2009 or, alternatively, to receive a B share initial dividend in January 2008 of 22.4 pence per share. Following such dividend receipt, the relevant B shares were converted into deferred shares which were themselves redeemed on 14 January 2008 for a total redemption value of one penny in all. In total 532,129,144 million B shares were redeemed during the year at a value of £119.2 million. The amount outstanding to be returned to B shareholders at 31 December 2008 has been recognised as a liability in note 25. The total cost of the issue including expenses was £120.4 million which is charged against retained earnings as the B shares are redeemed.

23 Share options and share-based incentive awards

Details of the Amlin Executive Share Option Schemes are set out in the Directors’ remuneration report in the Accountability section. At 31 December 2008 the following options over new or treasury shares, which are potentially exercisable between three and ten years after grant, or earlier in special circumstances such as redundancy, were outstanding under these executive schemes:

Usual first month of exercise	2008 Option price per share	2008 Number of shares	2007 Option price per share	2007 Number of shares
May 2005	76.33p	77,281	76.33p	112,380
October 2002	80.16p	–	80.16p	16,652
May 2004	108.09p	7,770	108.09p	36,422
September 2001	108.54p	–	108.54p	45,000
April 2006	110.82p	156,055	110.82p	435,062
March 2007	152.85p	491,725	152.85p	1,057,018
March 2008	161.77p	958,128	161.77p	2,207,065
March 2009	293.00p	1,854,014	293.00p	2,020,164
December 2011*	–	54,608	–	–
		3,599,581		5,929,763

*Unconditional awards over 54,608 treasury shares (2007: nil) were made in December 2008 to Group employees in France pursuant to the Company’s Long Term Incentive Plan (LTIP). Such shares are normally capable of vesting after three years for no consideration.

The following changes to new or treasury shares either under option or the subject of conditional awards pursuant to the executive option schemes and the French schedule to the Long Term Incentive Plan took place during the year:

	Number of shares 2008	Weighted average exercise price 2008 (pence)	Number of shares 2007	Weighted average exercise price 2007 (pence)
At 1 January	5,929,763	198.57	8,817,052	180.40
Granted/awarded during the year	54,608	–	–	–
Exercised during the year	(2,124,990)	150.02	(2,755,592)	139.09
Lapsed during the year	(259,800)	235.74	(131,697)	241.10
At 31 December	1,326,393	221.53	5,929,763	198.57

The weighted average remaining contractual life of the executive options outstanding at 31 December 2008 was 6.5 years (2007: 7.1 years).

In addition to these executive options, the following employee Sharesave options over new or treasury shares were outstanding at 31 December 2008:

Savings period	Usual first month of exercise	Option price per share	Number of shares
5 years	July 2009	134.11p	108,007
3 years	December 2008	146.49p	45,439
5 years	December 2010	146.49p	166,824
3 years	July 2010	266.00p	286,120
5 years	July 2012	266.00p	195,295
3 years	December 2011	246.00p	313,953
5 years	December 2013	246.00p	210,755
			1,326,393

The following changes in new or treasury shares under option pursuant to the Sharesave scheme took place during the year:

	Number of shares 2008	Weighted average exercise price 2008 (pence)	Number of shares 2007	Weighted average exercise price 2007 (pence)
At 1 January	1,364,339	187.45	1,324,239	123.17
Granted during the year	525,956	246.00	544,062	266.00
Exercised during the year	(465,602)	137.31	(406,234)	122.70
Lapsed during the year	(98,300)	188.00	(94,247)	171.58
Adjustments during the year	–	–	(3,481)	195.25
At 31 December	1,326,393	228.22	1,364,339	187.45

The weighted average remaining contractual life of the Sharesave options outstanding at 31 December 2008 was 3.1 years (2007: 2.6 years).

The trustee of the ESOT held 1,221,891 ordinary shares and nil B shares as at 31 December 2008 (2007: 1,064,470 ordinary shares and 1,197,529 B shares), of which 43,115 shares (2007: 100,388) were reserved to meet potential future exercises of executive options, in addition to the options over new or treasury shares detailed above. In addition, there are arrangements whereby the ESOT will provide up to 2,154,676 Performance Share Plan (PSP) shares, normally exercisable five years after grant, on dates between 2009 and 2013, and up to 1,550,752 Long Term Incentive Plan (LTIP) shares normally exercisable three years after grant, in 2010 and 2011, and up to 37,289 shares over which options were granted in May 2008 (to a non-director employee) normally not exercisable until 2011 and 2012. The ESOT shares are valued at the lower of cost and net realisable value. The market value of Amlin plc ordinary shares at 31 December 2008 was 357.5p per share (2007: 298.0p).

The assets, liabilities, income and costs of the ESOT are incorporated into the consolidated financial statements. The ESOT waives the right to dividends on ordinary shares in excess of 0.01p per each share ranking for an interim or final dividend.

A charge has been made to the income statement for options granted after 7 November 2002 pursuant to the executive and Sharesave option schemes, click here for the PSP and LTIP.

The weighted average share price of Amlin plc throughout the year was 290.06 pence (2007: 305.42 pence).

The “Black Scholes” option pricing model has been used to determine the fair value of the option grants listed above. The assumptions used in the model are as follows:

	2008	2007
Weighted average grant price	213.34	201.78
Weighted average exercise price	186.03	183.37
Expected volatility	30.00%	30.00%
Expected life (years)	3.00–7.50	3.25–7.50
Risk free rate of return	3.50%–5.00%	4.30%–5.00%
Expected dividend yield	2.00%–7.00%	2.00%–5.00%

Volatility

The volatility of the Amlin share price is calculated as a normalised standard deviation of the log of the daily return on the share price. In estimating a 30% volatility, the volatility of return for six months, one year and three year intervals are considered. As a guide to the reasonableness of the volatility estimate similar calculations are performed on a selection of Amlin’s peer group.

Interest rate

The risk free interest rate is consistent with government bond yields.

Dividend yield

The assumptions are consistent with the information given in the report and accounts for each relevant valuation year.

Staff turnover

The option pricing calculations are split by staffing grades as staff turnover is higher for more junior grades. Furthermore historical evidence suggests that senior employees tend to hold their options for longer whereas more junior levels within the organisation appear to exercise earlier. In addition, senior employees hold a larger proportion of the options but represent a smaller group of individuals.

Market conditions

Amlin issues options that include targets for the Group’s performance against a number of market and non-market conditions. Failure to meet these targets can reduce the number of options exercisable. In some circumstances no options may be exercised. Assumptions are made about the likelihood of meeting the market and non-market conditions based on the outlook at the time of each option grant.

24 Reserves

	Share premium £m	Other reserves £m	Treasury shares £m	Minority interest £m	Retained earnings £m
At 1 January 2008	230.8	(30.2)	(2.1)	0.4	719.0
Purchase of treasury shares (note 22)	–	–	(28.0)	–	–
Defined benefit pension fund actuarial loss (note 27)	–	(5.9)	–	–	–
Currency translation differences on overseas operations (note 3)	–	256.1	–	–	–
Losses on revaluation of hedge instruments	–	(74.7)	–	–	–
Foreign exchange gains on translation of intangibles arising from investments in overseas operations (note 3)	–	4.7	–	–	–
Deferred tax (note 14)	–	2.8	–	–	–
Profit for the financial year	–	–	–	0.1	80.3
Share option valuation charge	–	0.4	–	–	–
Issues of share capital on exercise of options over new shares (note 22)	0.7	–	5.0	–	(2.1)
Dividends paid (note 29)	–	–	–	(0.2)	(75.6)
Return of capital (note 22)	–	119.2	–	–	(119.2)
At 31 December 2008	231.5	272.4	(25.1)	0.3	602.4

	Share premium £m	Other reserves £m	Treasury shares £m	Minority interest £m	Retained earnings £m
At 1 January 2007	347.6	(21.8)	(0.6)	0.3	477.4
Net purchase of treasury shares	–	–	(1.5)	–	–
Gains on revaluation of employee share ownership trust recognised directly in equity	–	(0.1)	–	–	–
Currency translation differences on overseas operations	–	(8.2)	–	–	–
Deferred tax	–	(1.3)	–	–	–
Profit for the financial year	–	–	–	0.1	352.7
Share option valuation charge	–	1.2	–	–	–
Issues of share capital on exercise of options over new shares	3.6	–	–	–	–
Dividends paid (note 29)	–	–	–	–	(111.1)
Return of capital (note 22)	(120.4)	–	–	–	–
At 31 December 2007	230.8	(30.2)	(2.1)	0.4	719.0

Other reserves is comprised of £45.7 million (2007: £45.7 million) being the cumulative amount of goodwill written off to reserves on acquisitions prior to January 1999, a capital redemption reserve, charges for share options issued, deferred tax in respect of share options, cumulative foreign exchange gains of £196.8 million (2007: £59.3 million loss) on investments in overseas operations and £74.7 million (2007: £nil) cumulative losses on hedges of investments in overseas operations.

25 Trade and other payables and deferred income

On 8th November 2008, the Group announced that with effect from 1 January 2009 no new policies would be transacted in respect of its credit insurance business. Costs associated with the closure of this business amounting to £4.3 million have been provided for and are included within trade payables and accrued expenses.

26 Financial liabilities – borrowings

	2008 £m	2007 £m
Bank loans	–	0.1
Subordinated debt	295.9	277.4
	295.9	277.5
	2008 £m	2007 £m
Current portion	–	0.1
Non-current portion	295.9	277.4
	295.9	277.5

The Group’s borrowings comprise three issues of subordinated debt. Details of the subordinated debt issues are as follows:

Issue date	Principal amount	Reset date	Maturity date	Interest rate to reset date %	Interest rate from reset date to maturity date %
23 November 2004	$50m	November 2014	November 2019	7.11	LIBOR + 3.48
15 March 2005	$50m	March 2015	March 2020	7.28	LIBOR + 3.32
25 April 2006	£230m	December 2016	December 2026	6.50	LIBOR + 2.66

The bonds will be redeemed on the maturity dates at the principal amounts, together with any outstanding accrued interest. The Company has the option to redeem the bonds in whole, subject to certain requirements, on the reset dates or any interest payment date thereafter at the principal amount plus any outstanding accrued interest.

The directors’ estimation of the fair value of the Group’s borrowings is £360.4 million (2007: £322.2 million).

On 3 September 2008 the Company and certain of its subsidiaries entered into a renegotiated debt facility with its banks which is available for five years from the date of signing and provides an unsecured £250 million multicurrency revolving credit facility available by way of cash advances or letter of credit (LOC) and a secured $200 million LOC. The facility is guaranteed by the Company’s subsidiaries Amlin Corporate Services Limited and Amlin (Overseas Holdings) Limited. The secured LOC is secured by a fixed charge over a portfolio of assets managed by Insight Investment Management (Global) Limited with State Street Bank and Trust Company as custodian. As at 31 December 2008 the facility was undrawn.

On 3 September 2008 Amlin Bermuda Ltd cancelled its previous unsecured revolving credit facility of $100 million. On 23 October 2008 Amlin Bermuda Ltd extended its existing secured LOC facility of $200 million to 31 December 2009. The secured LOC facility is secured by a registered charge over a portfolio of assets managed by Aberdeen Asset Management Limited with State Street Bank and Trust Company as custodian. As at 31 December 2008 $36.8 million (31 December 2007: $28.7 million) LOCs were issued with an additional $24.2 million LOCs issued in January 2009.

27 Retirement benefit obligations

The Group participates in a number of pension schemes, including defined benefit, defined contribution and personal pension schemes. The total (credit)/ charge to the income statement for these schemes is shown in the table below:

	2008 £m	2007 £m
Defined benefit schemes
Lloyd's Superannuation Fund	(2.6)	0.5
Ongoing Funding	–	1.2
Defined contribution schemes	3.7	3.8
	1.1	5.5

a) The Lloyd’s Superannuation Fund funded defined benefit scheme

The scheme is operated as part of the Lloyd’s Superannuation Fund (the Fund). The Amlin Group is the employer in respect of two sections of the scheme, the Amlin section and now also the J E Mumford section, the latter as a result of a transfer during 2007 referred to above. The summary of liabilities at 31 December 2008 includes liabilities relating to the J E Mumford section.

Historically the Fund has catered for a number of employers in the Lloyd’s market. As a consequence of the consolidation in the market, employers closing final salary schemes and some companies failing there are now only around 3 (2007: 5) employers with active members in the Fund. A large proportion of the liability of the Fund relates to employers no longer participating in the Fund. The assets of the Fund are pooled and the current active employers are responsible collectively for the funding of the Fund as a whole.

For the purposes of determining contributions to be paid, the Trustee has split the Fund into a number of notional sections. This is a notional split and has no legal force. Previously this notional split allowed for separate sections in respect of each employer’s active members and one combined section for non-employed members of all current and former employers.

With effect from 31 December 2002, the Trustee altered this notional split so that, from that date, the active employers contributing to the Fund, including the Amlin Group, have individual notional sections comprising the notionally allocated assets in respect of their active employees, deferred pensioners and pensioners, and their corresponding liabilities. A separate notional fund is maintained for members whose former employers no longer contribute to the Fund (Orphan Schemes). Amlin is also liable for a proportion of the Orphan Schemes’ liabilities.

Since this alteration Amlin has been able to more clearly identify its expected contribution requirement to the Fund. During the year, one more employer who had a material share and a strong covenant, bought themselves out of the scheme and there now remain only three active employers. As a result of this, Amlin is now able to ascertain its share of the assets and liabilities with sufficient certainty to account for the pension as a defined benefit scheme and bring the assets and liabilities of the scheme onto the balance sheet of the Group.

Prior to 2008, the scheme was accounted for as a multi-employer scheme and accounted for as a defined contribution scheme. Amlin had an agreed schedule of contributions with the Trustee for which in accordance with IAS 19, the net present value of contractual obligations was recorded as a liability on the balance sheet. The value of these obligations at the end of 2007 was £2.8 million.

In accordance with IAS8, Accounting Policies, Changes in Accounting Estimates and Errors, the effect of the change from accounting as a defined contribution to a defined benefit scheme represents a change in accounting estimate. As such no restatement of the prior year comparatives has been made. The effect of this change is to reverse in full of the provision held at the end of 2008 of £2.8 million during the current year. Of this provision £2.3 million has been recognised directly into equity. The remaining £0.5 million relating to anticipated additonal costs for bringing the J E Mumford section into the Fund was taken through the income statement.

Fund contributions

In 2004 Amlin agreed with the Trustee that it would make six annual payments to the Fund of £1.2 million. This agreement was based on the formal valuation at 31 March 2004 and not the updated valuation at 31 December 2004. The first payment was made in December 2004 and five subsequent annual payments were agreed commencing on 31 March 2005.

In 2004 Amlin agreed to pay contributions to the notional orphans’ section to rectify a share of the funding shortfall revealed in the actuarial valuation at 31 March 2004, when the Group and Syndicate’s share of the shortfall was estimated to be £11.4 million and £12.8 million respectively. The first payment of £3.5 million was made on 31 December 2004. Three subsequent annual payments of £3.5 million were agreed commencing on 31 March 2005.

Contributions will also be paid to provide for the cost of benefit accrual after the date of the valuation. The rate of contribution agreed with the Trustee is 19% (2007: 30%) paid by the employer plus 5% (2007: 5%) member contributions, in each case of pensionable earnings, and totalled £1.3 million (2007: £1.3 million).

The expected contribution to the fund during the current financial year is £0.8 million by the Group and £0.2 million by plan participants.

Funding assessment

The funding position of the Fund is assessed every three years by an independent qualified actuary. Contributions are made at the funding rates recommended by the actuary, which vary across different sections of the Fund reflecting the notional sections then adopted, and typically include adjustments to amortise any funding surplus or shortfall over a period. Amounts borne under the scheme are charged to Syndicate 2001 or other Group companies. Actuarial amounts quoted below are for the Group’s notional share of the scheme.

The last completed formal valuation of the Fund was as at 31 March 2007 and was carried out by Mr N Wharmby, Fellow of the Institute of Actuaries, and used the projected unit credit actuarial method. For the purpose of providing disclosure in accordance with IAS19, the Group has requested the actuary to update the 2007 valuation to 31 December 2008 using appropriate techniques and the following assumptions:

	2008 % pa	2007 % pa
Price inflation	2.8	3.4
Rate of increase in pay	–	–
Rate of increase in pensions payment
– LPI (maximum 5% pa)	2.8	3.4
– LPI (minimum 3% pa, maximum 5% pa)	3.5	3.6
– LPI (maximum 3% pa)	2.3	3.0
Rate of increase of statutory revaluation on deferred pension	2.8	3.4
Discount rate	6.3	5.7

During 2005 the Group reviewed its remaining defined benefit arrangements and made a number of changes to the schemes’ operations, which were implemented during 2006. In particular in order to remove much of the risk associated with salary inflation, the scheme was changed to allow members to continue accruing additional years’ service under the schemes, but these accruals would be generally based on March 2006 pensionable salaries. Future salary increases are pensionable through the defined contribution schemes. Therefore the salary inflation assumption used for the ongoing valuation is now nil%.

The mortality assumptions used in the latest valuation included the following life expectancies:

	31 December 2008		31 December 2007
Life expectancy (years) at age 60 for a member currently:	Male	Female	Male	Female
Aged 60	25.3	28.3	25.2	28.2
Aged 45	26.6	29.5	26.6	29.4

Amounts recognised in income in respect of the defined benefit scheme are as follows:

	2008 £m	2007 £m (comparative)
Current service cost	0.5	1.0
Interest cost	16.5	15.0
Expected return on scheme assets	(19.1)	(18.0)
Past service cost	–	6.0
Reversal of provision for additional pension payments	(0.5)	–
Total (credited) / debited to income (included in staff costs)	(2.6)	4.0

Amounts recognised in the Consolidated Statement of Changes in Equity are as follows:

	2008 £m	2007 £m (comparative)
Recognition of net loss / (gain)	31.2	(11.0)
Ceiling limit on asset gains	(23.0)	23.0
Reversal of contractual cash obligations	(2.3)	–
	5.9	12.0

The amount included in the balance sheet arising from the Group’s obligations in respect of its defined benefit retirement benefit scheme is as follows:

	2008 £m	2007 £m (comparative)
Present value of defined benefit obligations	260.0	295.0
Fair value of scheme assets	256.0	318.0
(Deficit) / surplus in scheme	(4.0)	23.0
Restriction to defined benefit asset due to asset ceiling	–	(23.0)
Liability recognised in the balance sheet	(4.0)	–

The table below shows the impact on the defined benefit obligation that a change in certain key assumptions would have.

Assumption change	Defined benefit obligation impact £m
– (Increase) / decrease in discount rate by 0.25%	(9)/10
– Increase / (decrease) in inflation rate by 0.25%	5/(5)
– Increase in floor mortality improvements for males of 1.5% and females of 1.0% per annum	5

Movements in the present value of defined benefit obligations were as follows:

	2008 £m	2007 £m (comparative)
At 1 January	295.0	304.0
Employer service cost	0.5	1.0
Interest cost	16.5	15.0
Contributions from scheme members	0.2	–
Actuarial gains	(40.3)	(20.0)
Benefits paid from plan assets	(11.9)	(14.0)
Changes to plan	–	6.0
Settlements	–	3.0
At 31 December	260.0	295.0

The expected benefit total payments to plan participants during 2009 is £11.9 million.

Movements in the fair value of scheme assets were as follows:

	2008 £m	2007 £m (comparative)
At 1 January	318.0	315.0
Actual return on scheme assets	(52,4)	9.0
Employer contributions	2.1	5.9
Plan participant contributions	0.2	–
Benefits paid	(11.9)	(13.9)
Settlements	–	2.0
At 31 December	256.0	318.0

The analysis of the Fund’s assets and the expected rate of return at the balance sheet date are as follows:

	Asset mix 31 December 2008		Asset mix 31 December 2007		Long term rate of return
	Amlin Sections	Orphans Section	Amlin Sections	Orphans Section	31 December 2008	31 December 2007
Equities	31%	31%	32%	32%	7.5%	7.6%
Bonds	69%	69%	68%	68%	5.6%	5.4%

The long term rates of return are estimated by the Directors based upon current expectations of future investment performance.

The five-year history of experience adjustments is as follows:

	2008 £m	2007 £m	2006 £m	2005 £m	2004 £m
Asset experience
Fair value of scheme assets	256.0	318.0	315.0	305.0	259.0
Asset (gain)/loss during period	71.5	9.0	–	(41.0)	(6.0)
Asset (gain)/loss as percentage of plan assets	28%	3%	0%	(14%)	(2%)
Liability experience
Defined benefit obligations	260.0	295.0	304.0	311.0	275.0
Liability (gain)/loss during period	6.7	(5.0)	–	9.0	–
Liability (gain)/loss as percentage of plan assets	3%	(2%)	0%	3%	0%
Liability assumptions
Liability (gain)/loss over period	(47.0)	(15.0)	2.0	27.0	6.0
Liability (gain)/loss as percentage of defined benefit obligations	(18%)	(5%)	1%	9%	2%

The total amounts paid in respect of the Fund are analysed in the table below.

	2008 £m	2007 £m
Contributions relating to:
2004 valuation deficit – Amlin scheme	1.2	1.2
2004 valuation deficit – Orphan scheme	–	3.5
Ongoing funding	0.9	1.2
	2.1	5.9
Group share of total payment	2.1	5.9

b) The stakeholder defined contribution scheme

The defined contribution scheme operated by the Group is a stakeholder arrangement. The total contributions for the year ended 31 December 2008 to the scheme were £3.7 million (2007: £3.8 million).

The estimated amounts of contributions to the Group’s defined contribution pension scheme for the year ending 31 December 2009 are approximately £3.8 million.

c) Other arrangements

Other pension arrangements include an occupational money purchase scheme which provides Death In Service protection for all employees. Regular contributions, expressed as a percentage of employees’ earnings, are paid into this scheme and are allocated to accounts in the names of the individual members, which are independent of the Group’s finances. There were no outstanding contributions at 31 December 2008 (2007: £nil).

28 Earnings and net assets per share

Earnings per share are based on the profit attributable to shareholders and the weighted average number of shares in issue during the period. Shares held by the Employee Share Ownership Trust (ESOT) and treasury shares are excluded from the weighted average number of shares.

Basic and diluted earnings per share are as follows:

	2008	As restated* 2007
Profit attributable to equity holders of the Parent Company	£80.3m	£352.7m
Weighted average number of shares in issue	471.2m	512.7m
Dilutive shares	5.6m	6.1m
Adjusted average number of shares in issue	476.8m	518.8m
Basic earnings per share	17.1p	68.8p
Diluted earnings per share	16.9p	68.0p

Basic and diluted tangible net assets per share are as follows:

	2008	2007
Net assets	£1,216.1m	£1,052.3m
Adjustments for intangible assets	(£110.2m)	(£69.0m)
Tangible net assets	£1,105.9m	£983.3m
Number of shares in issue at end of period	478.6m	478.0m
Adjustment for ESOT shares and treasury shares	(10.0m)	(1.1m)
Basic number of shares after ESOT and treasury shares adjustment	468.6m	476.9m
Net assets per share	259.5p	220.7p
Tangible net assets per share	236.0p	206.2p

* The weighted average number of shares in issue has been restated to reflect those shares deemed to have been consolidated without a return of capital as part of the share consolidation which took place in December 2007.

29 Dividends

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

Group	2008 £m	2007 £m
Final dividend for the year ended:
– 31 December 2007 of 10.0 pence per ordinary share	47.6	–
– 31 December 2006 of 7.8 pence per ordinary share	–	41.7
Interim dividend for the year ended:
– 31 December 2008 of 6.0 pence per ordinary share	28.0	–
– 31 December 2007 of 5.0 pence per ordinary share	–	26.7
Special dividend for the year ended:
– 31 December 2006 of 8.0 pence per ordinary share	–	42.7
	75.6	111.1

The final ordinary dividend of 11.0 pence per ordinary share for 2008, amounting to £51.5 million, payable in cash was approved by the Board on 27 February 2009 and has not been included as a liability as at 31 December 2008.

30 Principal exchange rates

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

	Average rate		Year end rate
	2008	2007	2008	2007
US dollar	1.85	2.00	1.46	1.99
Canadian dollar	1.96	2.15	1.78	1.96
Euro	1.26	1.46	1.05	1.36

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