Amlin – Annual Report 2008

Directors’ report

The directors of Amlin plc (the Company) present their report, the audited accounts of the Company and the consolidated accounts of the Company and its subsidiaries (the Group) for the year ended 31 December 2008.

Principal activity, Business Review and key performance indicators

The Group’s principal activity is non-life insurance and reinsurance underwriting in the Lloyd’s market and in Bermuda. A review of the Group’s business, and developments during the year, is set out in the Review and Performance sections. Further information is provided in the risk disclosure note and Accountability section. The Review and Performance sections, risk disclosure note and Accountability section together include the information and analysis required by section 417 of the Companies Act 2006 to be included in a Business Review, including information on key performance indicators and on the Group’s financial and other risk management and policies. Such information and analysis is hereby incorporated by reference into this report.

Share capital, treasury shares and dividends

The Company’s share capital consisted throughout the year of ordinary shares of 28.125p each (Ordinary Shares) and redeemable non-cumulative preference shares of 22.4p each (B Shares). The 537,464,619 B Shares in issue at the start of the year had been issued on 17 December 2007 on a one-for-one basis to the holders of the previous ordinary shares of 25p each. At the same time each nine ordinary shares of 25p had been subdivided and consolidated into eight Ordinary Shares of 28.125p each. Each B Share entitled the holder to a return of capital of 22.4p per share on 14 January 2008 (Return of Capital), payable at the shareholder’s choice either as a capital redemption or as a B Share dividend. As a third option, shareholders could elect to retain B Shares for future redemption on any of 1 August 2008, 2 February 2009 or 3 August 2009. By 31 December 2008, 5,335,475 B Shares remained in issue, of which 1,113,263 have since been redeemed on 2 February 2009. The total value of the Return of Capital was £120.4 million, of which £119.2 million was returned to shareholders, either as dividends or redemption proceeds, during 2008.

A programme to buy back Ordinary Shares in the market was operated during part of the year, resulting in 10,765,000 shares being purchased into treasury at an average price of 256.09p per share (2007: nil). 2,001,348 of such shares were subsequently transferred out of treasury during the year to service exercises of employee share options, so that 8,763,652 Ordinary Shares remained in treasury at the year end (2007: nil) out of a total of 478,573,439 Ordinary Shares in issue (2007: 477,984,195). There have been no issues of shares or further share buy backs or transfers into treasury since the year end but a further 84,822 Ordinary Shares had by 23 February 2009 been transferred from treasury to satisfy employee share options, leaving 8,678,830 shares in treasury at that date.

In addition to the Return of Capital, an interim dividend of 6.0p per Ordinary Share (2007, in respect of shares of 25p each: 5.0p) was paid on 10 October 2008 to shareholders on the register on 12 September 2008. The directors now propose a final dividend of 11.0p per Share (2007: 10.0p), to be paid on 20 May 2009 to shareholders on the register at the close of business on 27 March 2009. This makes total ordinary dividends in respect of the year of 17.0p per Ordinary Share. Those shareholders wishing to use any of these dividends to purchase further shares were, and are, able to participate in a Dividend Reinvestment Plan. Details of the Plan are available on the Company’s website and are being recirculated to shareholders at the same time as this Annual Report.

Directors

The biographical details of the present directors are set out here. Mrs Christine Bosse joined the Board on 1 November 2008. All of the other current directors served throughout the year. Mr Roger Joslin retired from the Board on 24 April 2008.

Messrs Buchanan, Davey, Carpenter, Hextall and Philipps, and Sir Mark Wrightson, Bt, were each elected or re-elected for three year terms in 2005, expiring at the Annual General Meeting to be held on 13 May 2009 (the AGM). All of such directors, being eligible, offer themselves for re-election for further terms of office of three years. Mr Holt, who was also last re-elected to the Board in 2005, retired as an executive director at the year end but was re-appointed by the Board as a non-executive director at the year end. Mr Holt offers himself, and Mrs Bosse offers herself, for election at the AGM for three year terms, this being the first AGM since their respective re-appointment and appointment to the Board. Mr Mylvaganam, who was first appointed to the Board in 1998 and was re-elected for a one year term in 2008, will retire at the AGM and not seek re-election.

Directors’ interests

The interests, all of which are beneficial, of those directors and their related parties who have interests in the shares of the Company, were as follows:

	At 31 Dec 2008 No of Ord Shares	At 31 Dec 2007 No of Ord Shares	At 31 Dec 2007 No of B Shares
N J C Buchanan	11,200	11,200	12,600
B D Carpenter	379,165	378,116	425,382
R A Hextall	160,385	159,336	179,153
A W Holt	152,054	2,167,818	2,757,114
R W Mylvaganam	4,617	4,369	4,916
C E L Philipps	569,205	476,313	535,752
R J Taylor	17,986	17,986	20,235
Sir Mark Wrightson Bt	8,888	8,888	10,000

All of the above B Shares held on 31 December 2007 had been redeemed by 31 December 2008 other than the following numbers of B Shares retained by directors and/or their related parties: Mr Holt, 45,890; and Mr Philipps, 37,150. There have been no changes between the year end and 23 February 2009 in the Ordinary or B Shares held by directors and their related parties, other than the acquisition of 6,635 shares by Mr Holt as a result of the exercise of a Sharesave option (increasing his total holding to 158,689 Ordinary Shares).

In the cases of the present or past executive directors, Messrs Carpenter, Hextall, Holt and Philipps, the above holdings include beneficial interests held through the Company’s Share Incentive Plan (SIP). Details of their interests in share options and long term incentive plans, are set out in the Directors’ Remuneration Report in the Accountability section of the Annual Report, as are details of the total interests of the SIP and of the Group’s Employee Share Ownership Trust. Details of transactions between the Group and directors who served during the year are set out in note 34 to the Accounts.

No directors have any other interests in the shares or any other securities of the Company or any of its subsidiaries.

Substantial shareholdings

At 23 February 2009 the Company had been formally notified of the following holdings of 3% or more of its issued ordinary share capital:

	Number of shares held*	% of shares in issue*
Invesco Ltd	49,555,580	10.5
Legal & General Group Plc companies	26,433,832	5.6
AXA S.A.	23,197,732	4.9
J P Morgan Chase & Co companies	19,624,490	4.2

* Based on the Ordinary Shares in issue, excluding treasury
shares, as at 23 February 2009 of 469,894,609

Corporate governance

The Board Corporate Governance Statement, reports from the Board’s Nomination and Audit Committees, and the Directors’ Remuneration Report are all set out with other reports in the Accountability section of the Annual Report. Details of the Company’s rules on the appointment and removal of directors, and on how the Company’s Articles of Association may be amended, are set out in the section entitled “Director and shareholder governance provisions in the Articles of Association” in the Board Corporate Governance Statement.

Employment policies

The People section of the Review provides commentary on the Group as an employer, including its commitment to training and professional development. The Group recognises the importance of employee engagement and has therefore established the Amlin Consultative Forum as a framework for discussion and consultation between staff and management.

The Group’s equal opportunities policy aims to ensure that no employee, in application for initial employment or as an existing employee (including in the event of a change in his or her circumstances), receives less favourable treatment because of his or her sex, actual or perceived sexual orientation, gender (including gender reassignment), marital or family status, age, ethnic origin, disability, race, colour, nationality, national origin, creed, political affiliation, part-time status, or any other condition, unless it can be shown to be legally justifiable.

Copies of the Group’s policies on professional qualifications, family leave, flexible working, sabbaticals, staff harassment and equal opportunities are available on the Company’s website or from the Secretary on request. The Group’s health and safety policy is publicised to staff through its intranet and on staff notice boards and is monitored by a staff Health and Safety Committee, which reports to the Chief Executive who makes an annual health and safety report to the Board.

Corporate responsibility and charitable donations

A report on the Group’s corporate responsibility activities, including its employee, environmental and community engagement, is set out in the Corporate Responsibility report in the Accountability section of the Annual Report. The Group Chief Executive has direct responsibility at Board level for leading the Group’s initiatives on all corporate responsibility related matters, with the relevant senior managers and advisory groups reporting to him. Relevant policies and terms of reference are available on the Company’s website or from the Secretary on request.

The Group made charitable donations during the year of £80,986 (2007: £65,492), including donations in Bermuda by the Company’s subsidiary, Amlin Bermuda Ltd (ABL). The Group’s charitable donations were part of broader corporate responsibility expenditure during the year totalling £154,164. The Group’s charities budget (excluding ABL’s) is managed by the Company’s Community and Charities Panel chaired by the Group Finance Director, Mr Hextall. The ABL budget is managed in Bermuda under the direction of the ABL board. Further details of the Group’s community and charitable activities, and of their governance, are set out in the Corporate Responsibility and Board Corporate Governance Statement respectively.

Political donations

The Group made no political donations during the year (2007: nil).

Supplier payment policy and performance

The Group’s policy is to pay suppliers in accordance with agreed terms of business. Whenever possible, purchase orders are placed on the basis of the Group’s standard terms and conditions which include provision for the payment of suppliers within 30 days of the end of the month in which the Group receives the goods or in which the services are provided. Average trade creditors of the Group during 2008, which excludes insurance creditors, represented approximately 26 days (2007: 27 days), based on the ratio of Group trade creditors to the amounts invoiced during the year.

Annual General Meeting

The Notice of Annual General Meeting, to be held at noon on Wednesday 13 May 2009 at the offices of the Company at St Helen’s, 1 Undershaft, London, EC3A 8ND, is contained in a separate circular to shareholders which is being mailed or otherwise provided to shareholders at the same time as this report.

Directors’ indemnities

The Company has made third party indemnity provisions for the benefit of its directors and certain directors of the Company’s subsidiaries. These had initially been made from 2006 onwards and were in most cases replaced by new indemnities during 2008, which take into account changes in the law and in the Company’s Articles of Association which were made during the year. Mrs Bosse has entered into an indemnity deed for the first time since the year end. Such indemnities remain in force at the date of this report.

Authorisation of directors’ conflicts of interest

With effect from 1 October 2008, the Company’s Articles of Association permit the authorisation of a director’s potential conflict of interest or duty, for instance arising from a director’s appointment as a director of another company which may have a business relationship with Amlin. Such authorisations may be given by the remaining directors who are independent of the potential conflict. Following an exercise to ensure that all such potential conflicts of interest had been identified, a number of such authorisations have been approved by the Board in this manner. Such authorisation does not remove the director’s duty to ensure that any actual conflict of interest or duty, should it arise, is dealt with appropriately, usually by the director taking no part in the relevant Board decision.

Directors’ statement on the disclosure of

information to the auditors Each director at the date of the approval of this report confirms that:

so far as the director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and
the director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 234ZA of the Companies Act 1985.

Going concern

The Group’s business, risk and financial management, performance and position, together with factors that are likely to affect future development, are described in the Business Review. Capital management strategy, which covers how regulatory and economic capital needs are measured and how capital is deployed, is described in the Financial Management section. The financial position of the Group, including commentary on cash and investment levels, currency management, insurance liability management, liquidity and borrowings, is also covered in that section.

In addition, note 2 to the accounts describes capital management needs and policies, and note 3 covers underwriting, market, liquidity an credit risks which may affect the financial position of the Group.

The Group has considerable financial resources to meet its financial needs and manages a mature portfolio of insurance risk through an experienced and stable team. The directors believe that the Group is well positioned to manage its business risks successfully in the current uncertain economic environment.

After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

Auditors

In accordance with section 489 of the Companies Act 2006 a resolution is to be proposed at the Annual General Meeting for the re-appointment of Deloitte LLP (formerly named Deloitte & Touche LLP) as auditors to the Company and to authorise the directors to fix their remuneration.

By Order of the Board

C C T Pender Secretary
27 February 2009