Review

Delivering our strategy – key performance indicators

Key performance indicators (KPIs) are used to measure performance in each area. We set targets and monitor performance against these on a monthly basis. Our KPI hierarchy is summarised in the table below, but other supporting measures are also employed, as referred to in the following sections of this Review.

What we measure

Why we measure it

How we performed
Shareholder value    
  • Total shareholder return relative to peer groups.
  • Average cross cycle return on equity >15%.
  • Dividend per share growth.
  • Measures the total value created for shareholders, including cash returns and share price performance.
  • Measures how effectively we use capital and a key driver of share price performance.
  • Reflects the cash returned to shareholders.
  • Total shareholder return of 365% over the past five years represents top quartile performance within Lloyd’s, European, Bermudian and North American peer groups.
  • Five year weighted average return on equity is 25.5%.
  • Dividend per share increase of 2.0 pence represents 13.3% increase on 2007. Our three year average compound growth is 18.6%.
Underwriting    
  • Gross written premium > plan.
  • Combined ratio < plan.
  • Rate movement within 2.5% of plan.
  • Measures Amlin’s gross underwriting income against expectations.
  • Measures Amlin’s underwriting profitability against expectations.
  • Reflects the impact of price changes on Amlin’s expected profitability.
  • Gross written premium of £1,034.0 million was 3.4% below plan. This reflects Amlin’s focus on underwriting profitability in increasingly challenging markets.
  • Combined ratio of 76%,10% below plan due to foreign exchange gains.
  • Average rate reduction of 6.8%, within 2.5% of plan.
Clients    
  • Retention ratio > plan.
  • >85% of policies contract certain.
  • 90% of claims turned around < 4 days.
  • Indicates the level of customer satisfaction.
  • Indicates quality of service provided to customer.
  • Key driver of customer satisfaction.
  • Retention ratio of 84% is 2% ahead of plan.
  • 99% of all policies led are fully compliant.
  • 87% of claims turned around < 4 days.
Risk management    
  • Incurred claims ratio within 5% variance from expectation.
  • Realistic disaster scenarios (RDS) remain within risk appetite.
  • Incurred ratios are a measure of variability of plan against actuarial best estimate.
  • RDS modelling and clear risk appetite principles control risk exposure.
  • Claims ratio of 55%, 3% below plan despite hurricane activity.
  • Maximum RDS represents 124% of risk appetite. Click here.
People    
  • Staff turnover < 15%.
  • Senior underwriter turnover < 10%.
  • Average years insurance experience of senior underwriters > 15 years.
  • Training expenditure targeted at 3% of salary costs.
  • Measures staff motivation and retention of expertise.
  • Measures senior underwriter motivation and retention of expertise.
  • Shows depth and experience of underwriting resource.
  • Measures the extent of personal and professional development.
  • Staff turnover of 11.3% is within target.
  • Senior underwriter turnover of 4.2% is better than target.
  • Senior underwriters have an average of 22 years experience.
  • Training expenditure represents 1.7% of salary costs.
Financial management    
  • Return on equity within 5% of plan.
  • Cash and investments at least double shareholders’ equity.
  • Measures how effectively we use capital.
  • Reflects profitable trading, liquidity and the ability to pay large claims quickly.
  • Return on equity of 7.8% is >5% below plan, caused by a low investment return.
  • Cash and investment represent 2.4 times shareholders' equity.