Notes to accounts

For the year ended 31 December 2007

4 Segmental reporting by business group

The tables below show segmental information by business segment. Business segments are primary segments and represent the divisions by which the business is managed. Each segment underwrites sub-classes of business which fall within the broad classes of Aviation, Marine, Non-marine and UK Commercial business. The segments are discussed in more detail in the Profitability and return section. The non-marine business group is large and comprises direct and reinsurance books of business.

The segmental disclosure excludes insurance premium, income and claims expenses from the receipt of reinsurance to close as detailed in note 5 as these have no impact on profit for the year.

Income and expenses by business segment – Year ended 31 December 2007
Assets and liabilities by business segment – At 31 December 2007

Income and expenses by business segment – Year ended 31 December 2006
Assets and liabilities by business segment – At 31 December 2006

5 Net earned premium

 2007
£m 		2006
£m
Insurance contracts premium
   
Gross premium written
 1,044.7 1,113.8
Change in unearned premium provision
 43.3 (26.5)
Gross premium earned
 1,088.0 1,087.3
Insurance premium revenue from the receipt of reinsurance to close
 – 78.8
Reinsurance premium ceded
   
Reinsurance premium payable
 (106.4) (100.3)
Change in unearned reinsurance premium provision
 (9.3) (13.1)
(115.7) (113.4)
Net earned premium
972.3 1,052.7

The insurance premium revenue from the receipt of reinsurance to close represents the premium received from the third party syndicate members on the 2003 year of account who sold their capacity to Amlin, for use by Amlin’s corporate members, for the following year of account of Syndicate 2001. An identical amount is recorded as a movement in claims, representing the additional liabilities taken on by Amlin from the third party members. Overall these transactions have no impact on profit for the year. For the 2004 year of account and onwards 100% of Syndicate 2001 capacity is owned by the Group.

6 Investment return

 2007
£m 		2006
£m
Investment income
   
– dividend income
 12.5 4.5
– interest income
77.8 67.7
Cash and cash equivalents interest income
25.1 26.5
115.4 98.7
Net realised gains/(losses) on assets held for trading
    
– equity securities
21.6 7.4
– debt securities
(1.5) (0.3)
– property
(0.1) –
20.0 7.1
Net fair value gains/(losses) on assets held for trading
    
– equity securities
(7.1) 10.3
– debt securities
30.2 (1.0)
– property
(0.1) –
– derivative instruments
(1.4) –
21.6 9.3
157.0 115.1

7 Insurance claims and loss adjustment expenses

 2007
£m 		2006
£m
Gross
   
Current year insurance claims and loss adjustment expenses
 502.7 515.7
Reduced costs for prior period insurance claims
 (122.6) (55.0)
380.1 460.7
Insurance claims and loss adjustment expenses relating to the receipt
of reinsurance to close (note 5)
 
– 		 
78.8
 
Reinsurance
   
Current year insurance claims and loss adjustment
expenses recoverable from reinsurers
(39.5) (44.7)
Reduced/(additional) costs for prior period claims recoverable from reinsurers
13.6 (13.8)
(25.9) (58.5)
Total net insurance claims and loss adjustment expenses
354.2 481.0

8 Expenses for the acquisition of insurance contracts

  2007
£m 		2006
£m
Expenses for the acquisition of insurance contracts
 187.0 203.4
Changes in deferred expenses for the acquisition of insurance contracts
 9.0 (8.0)
  196.0 195.4

9 Other operating expenses

 2007
£m 		2006
£m
Expenses related to underwriting
   
Employee expenses, excluding employee incentives
26.1 24.9
Lloyd’s expenses
22.5 21.0
Other administrative expenses
25.5 26.0
Underwriting exchange (gains)/ losses
(7.0) 36.5
67.1 108.4
Other expenses
   
Employee expenses, excluding employee incentives
 10.9 6.4
Employee incentives
 31.4 18.6
Asset management fees
 3.1 1.3
Other administrative expenses
 5.4 1.6
Group company exchange gains
 (1.0) (9.6)
49.8 18.3
Total
116.9 126.7

10 Directors’ remuneration

The aggregate remuneration of the directors of the Company, including amounts received from subsidiaries, was:

 2007
£m 		2006
£m
Emoluments of executive directors (including payments
made under long term incentive plans)
 
5.8 		 
6.6
Fees to non-executive directors
 0.5 0.5
6.3 7.1
Pension contributions
 0.3 0.2
6.6 7.3

Remuneration includes remuneration during the period of office only. Details of directors' remuneration and pension benefits, including those of the highest paid director, are included in the Directors' Remuneration report in the Accountability section. Payments were made to both a defined benefit pension scheme and stakeholder defined contribution scheme for two executive directors and to stakeholder defined contribution schemes for two other executive directors.