Performance

Profitability and return

Expenses

Total expenses, including underwriting, nonunderwriting and finance costs, decreased to £311.9 million from £332.9 million in the prior year. Included within total expenses are net foreign exchange gains of £18.9 million (2007: £8.0 million).

Business acquisition costs of £193.0 million, representing 19% of gross earned premium, were broadly consistent with the prior year (2007: £196.0 million, 18%).

Non-underwriting costs (excluding finance costs and exchange losses) decreased by 14.4% to £43.5 million. Within this, total staff costs decreased from £42.3 million to £31.0 million. Staff incentive plans accounted for £21.5 million of these costs (2007: £31.4 million) with the decrease largely due to lower profitability levels.