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CORPORATE GOVERNANCE / 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 2004.
Principal activities, corporate and business review
The Group’s principal activity is non-life insurance underwriting.
A review of the Group’s business, and developments during the year,
is included in the Chairman’s statement and the Operating and
Financial Review (OFR).
Dividends
An interim dividend of 3.0p (2003: 0.85p) per ordinary share was paid
on 1 November 2004. The directors propose a final dividend of 5.0p
per ordinary share (2003: 1.65p), to be paid on 24 May 2005 to
shareholders on the register at the close of business on 29 March
2005. This makes total dividends for the year of 8.0p per ordinary
share (2003: 2.5p). A scrip dividend alternative is being offered in
respect of the final dividend, as it was in respect of the 2004 interim
and previous dividends. Details of the shares issued during the year in
respect of scrip dividends are included in note 19 to the Accounts.
Directors
The biographical details of the present directors are set out on the 'Board' page of this report.
Mr Buchanan joined the Board on 22 March 2004 and
Messrs Kennedy, Sanders and Stace retired from the Board at the
Annual General Meeting on 19 May 2004. Messrs Kemp, Joslin,
Mylvaganam and Taylor, and Lord Stewartby, retire at the 2005 Annual
General Meeting by rotation. Lord Stewartby, being eligible, offers
himself for re-election for a term of office of one year. Messrs Kemp,
Joslin, Mylvaganam and Taylor, being eligible, each offers himself for
re-election for a term of office of three years.
Directors’ interests
The interests of directors and their related parties in the ordinary
shares of the Company, all of which are beneficial, were as follows:
|
At 4 Mar 2005 and
at 31 Dec 2004
No of shares |
At 31 Dec 2003
No of shares |
|
| N J C Buchanan |
6,300 |
n/a |
| B D Carpenter |
561,463 |
541,004 |
| R A Hextall |
50,665 |
18,937 |
| A W Holt |
2,522,518 |
2,463,441 |
| R W Mylvaganam |
3,285 |
3,189 |
| C E L Philipps |
103,823 |
103,823 |
| Lord Stewartby |
46,054 |
46,054 |
| R J Taylor |
15,351 |
15,351 |
|
In addition, Messrs Carpenter, Hextall, Holt, and Philipps are deemed,
as employees of a Group company, and therefore potential beneficiaries,
to be interested in the whole of the holding of the Group’s Employee
Share Ownership Trust (ESOT), details of which are given below.
The directors’ own ESOT and other share options are set out in the
Directors’ remuneration report. Details of transactions between the
Group and directors who served during the year are set out in note 32
to the Accounts.
No directors have any other interests in the shares of the Group or any
of its subsidiaries.
Shares held by Employee Share Ownership Trust
The trustee of the Group’s ESOT, Kleinwort Benson (Guernsey) Trustees
Limited, held 4,229,734 shares in the Company on 31 December
2004 (2003: 5,209,922 shares). On 4 March 2005, the ESOT’s
shareholding was 4,083,651 shares. All of the changes in the ESOT’s
shareholding between 31 December 2003 and 4 March 2005 were as a
result of exercises of options.
Substantial shareholdings
At 4 March 2005 the Company had been notified of the following
holdings of 3% or more of its issued ordinary share capital:
|
Number of
shares held |
% of
shares
in issue * |
|
| Fidelity International Limited and FMR Corporation |
59,539,412 |
15.1 |
| State Farm Mutual Automobile Insurance Company |
38,945,955 |
9.8 |
| Barclays PLC |
23,866,696 |
6.0 |
| Legal & General Group Plc companies |
11,944,369 |
3.0 |
|
* Based on the shares in issue as at 4 March 2005 of 395,468,235
Corporate governance
Statements on corporate governance, including reports from the Board’s
Nomination and Audit Committees, immediately follow this report. The
Directors’ remuneration report, which includes details of the Board’s
Remuneration Committee and is subject to approval by shareholders at
the forthcoming Annual General Meeting, starts in the remuneration report.
Employment policies
The Group is committed to keeping employees informed about the
business through such means as a Group intranet, presentations to
staff and management conferences. An Employee Consultative Forum,
made up of representatives of the employees and of senior management,
was instituted during the year. The Group encourages its employees to
develop their full potential by providing opportunities for training and
professional development.
The Group’s equal opportunities policy aims to ensure that no potential
or existing employee receives less favourable treatment because of
his/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, equal
opportunities, family leave and sabbaticals are available on the
Company’s website at www.amlin.com 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 directly to the Chief Executive
who makes an annual health and safety report to the Board.
Group employees are encouraged to participate in the Group’s pension
arrangements, details of which are set out in the Directors’
remuneration report and in note 9 to the Accounts.
The Company also facilitates employees’ participation in its equity
through direct share ownership and share option schemes, including
a Sharesave scheme open to all permanent employees.
Further information relevant to the Group as an employer is set out in
the ‘People’ section of the OFR.
Corporate responsibility
General
The Group recognises the potential impact of its dealings not only on
shareholders and employees, but also on other stakeholders including
customers, external capital providers, suppliers, creditors and the Lloyd’s
and wider communities. Since the previous Annual Report the Board has
been developing its corporate responsibility policies and programmes by
particular reference to analysis of the Group’s impact on each of these
stakeholder groups. As part of this process, the Group has mapped its new
Vision in terms of its positive impact on each stakeholder group, and has
participated in Business in the Community’s corporate responsibility survey
for the last two years. 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
reporting to him.
This section summarises some of the areas, in addition to employment
policies, and health and safety, which are covered immediately above,
which are most relevant to the Group’s fulfilment of its wider
corporate responsibilities.
In terms of most of the areas commonly associated with corporate
responsibility, such as the environment, the Group’s local communities
and its supply chain, the Board considers that the social impact of the
Group’s activities is relatively low. The major exception is Amlin’s
impact as an employer, which is covered in the ‘Employment policies’
section above and in the ‘People’ section of the OFR.
The Lloyd’s community
A key Amlin stakeholder is the Lloyd’s community and market, as
Amlin’s performance has a potential impact on perceptions of the wider
Lloyd’s community. As Amlin presently operates solely in the Lloyd’s
market, it is also in Amlin’s interest for the market to operate effectively
and for its reputation to be sound. As outlined in the ‘People’ and
‘Infrastructure’ sections of the OFR, Amlin participates actively in the
Lloyd’s community in order to influence the market’s performance and
governance and is at the forefront of a number of initiatives aimed at
improving the Lloyd’s marketplace.
Environmental
Notwithstanding its low overall environmental impact, Amlin recognises
the need to manage the impact of its activities on the environment in such
areas as internal processes, re-cycling, energy use and encouraging its
suppliers and insureds to act responsibly regarding environmental impacts
and risk. The Company adopted a Group Environmental Policy in 2001,
which it continues to implement and develop.
Targets have been set, and performance measured, in a number
of environmental areas. Amlin is a member of Business in the
Environment (part of Business in the Community), the business-led
campaign for environmental responsibility which assists its members
in monitoring and improving environmental performance. The Group’s
Environmental Committee is chaired by a senior executive, David
Harris, the Group Operations Director, who is a member of the Board
of the principal operating subsidiary, Amlin Underwriting Limited,
and reports directly to the Chief Executive.
Ethical and Human Rights
The Group operates a Business Ethics Policy, which sets out the high
ethical standards to which the Group is committed in carrying out its
business. The policy is intended to assist in protecting the trust and
confidence of those with whom the Group deals, including particularly
that of its customers. This is of fundamental importance to Amlin’s
reputation and business.
As a UK based insurance business, the Group has no non-UK
employees and no material physical supply chain originating outside
the UK. Thus, although the majority of the Group’s premium income
originates from overseas risks (particularly from North America, but also
elsewhere), most of the potential abuses of human rights that a formal
policy would address are covered by the Company’s commitment to
carry out its business according to the laws of the countries in which
it operates.
Community involvement beyond Lloyd’s
The Group encourages employee involvement in community projects,
particularly in conjunction with the Lloyd’s Community Programme in
the neighbouring London Borough of Tower Hamlets. Examples of some
of the Company’s activities in this sphere are given in the ‘People’
section of the OFR.
Risk management
As part of the Group’s general risk management review processes, the
significant risks to the Company’s short and long term value arising
from social, environmental and ethical matters, and the opportunities
to enhance value from an appropriate response, are incorporated as a
specific consideration. This review has identified no specific risks in
this area with other than a low probability of incidence or low potential
impact on the Group. More details of risk management generally are
included in the Board corporate governance statement.
Copies of the Group Environmental Policy, the latest environmental
progress report and the Business Ethics Policy are available in the
corporate governance section of investor relations on the Company’s
website or from the Secretary on request.
Charitable activities and donations
The Group made charitable donations during the year of £34,425
(2003: £29,998). The Group’s charities budget is managed by a
Charities Committee of staff representatives. Special consideration is
given to community projects and fund raising in which members of staff
themselves are involved, as well as to charities involved with children
and health in London.
Political donations
The Group made no political donations during the year (2003: £nil).
The Board’s policy is that the Group does not make political donations,
other than incidentally in circumstances where an employee might be
allowed time off for public service deemed to be political. The Board
does not propose to seek any discretion from shareholders regarding
political donations pursuant to the Companies Act 1985 (as amended
by the Political Parties, Elections and Referendums Act 2000).
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 2004, which
excludes insurance creditors, represented approximately 28 days
(2003: 28 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 18 May 2005 at the offices of the Company at St Helen’s,
1 Undershaft, London, EC3A 8ND, was contained in a separate circular to shareholders which was mailed with the printed report.
Auditors
In accordance with Section 385 of the Companies Act 1985,
a resolution is to be proposed at the Annual General Meeting for the
re-appointment of 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
7 March 2005
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