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 2006.
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 included in the Chairman’s statement and the Operating and Financial Review (OFR). The OFR includes the information and analysis required by section 234ZZB of the Companies Act 1985 to be included in a Business Review, including information on key performance indicators and on the Group’s financial risk management and policies. Such information and analysis is hereby incorporated by reference into this report.
The Group measures a number of key performance indicators and leading indicators. These include: changes in gross premium written, movements in the price of inwards business, claims ratios, expenses compared with budget, combined ratios, strength of reserving, returns on capital and equity, cash flow and employeee turnover. Most of these are measured by business area and across the Group. The OFR includes analysis of a number of these performance indicators.
Dividends
An interim dividend of 4.2p (2005: 4.0p) per ordinary share was paid on 20 October 2006. The directors propose a final ordinary dividend of 7.8p per ordinary share (2005: 6.2p), to be paid on 30 May 2007 in respect of shares on the register at the close of business on 30 March 2007. This makes total ordinary dividends for the year of 12.0p per ordinary share (2005: 10.2p). In addition, the Directors propose a special dividend of 8.0p per share, also in respect of shares on the register at the close of business on 30 March 2007 and payable on 30 May 2007. Those shareholders who wish to use their dividends to purchase further shares through a Dividend Reinvestment Plan may do so for the proposed 2006 final and special dividends. 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 on pages 46 and 47. Sir Mark Wrightson Bt joined the Board on 15 March 2006. Lord Stewartby served on the Board from the start of the year until 25 May 2006, when he did not offer himself for re-election at the Annual General Meeting. All of the current directors were elected or re-elected for three year terms in either 2005 or 2006 and therefore none of such directors complete their terms of office at the 2007 Annual General Meeting.
Directors’ interests
The interests, all of which are beneficial, of those directors and their related parties who have interests in the ordinary shares of the Company, were as follows:
| At 1 Mar 2007 and at 31 Dec 2006 No of shares |
At 31 Dec 2005 No of shares |
|
 |
||
| N J C Buchanan | 12,600 | 12,600 |
|---|---|---|
| B D Carpenter | 624,352 | 724,352 |
| R A Hextall | 146,362 | 146,362 |
| A W Holt | 2,756,084 | 2,756,084 |
| R W Mylvaganam | 4,610 | 4,460 |
| C E L Philipps | 534,722 | 285,019 |
| R J Taylor | 20,235 | 20,235 |
| Sir Mark Wrightson Bt | 10,000 | n/a |
|
||
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 or any other securities of the Company 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 774,579 shares in the Company on both 31 December 2006 and 1 March 2007 (31 December 2005: 2,227,489 shares). All of the changes in the ESOT’s shareholding between 31 December 2005 and 1 March 2007 were as a result of exercises of options.
Substantial shareholdings
At 1 March 2007 the Company had been notified of the following holdings of 3% or more of its issued ordinary share capital:
| % of Number of shares | shares held in issue* | |
|
Fidelity International Limited | 44,702,939 | 8.4 |
|---|---|---|
| J P Morgan Chase & Co companies | 42,068,758 | 7.9 |
| State Farm Mutual Automobile Insurance Company | 38,945,955 | 7.3 |
| Barclays PLC | 21,500,316 | 4.0 |
| Legal & General Group Plc companies | 18,907,713 | 3.5 |
|
||
* Based on the shares in issue as at 1 March 2007 of 534,010,393
Corporate governance
Statements on corporate governance, including reports from the Board’s Nomination and Audit Committees, immediately follow this report. The Directors’ remuneration report, includes details of the Board’s Remuneration Committee and is subject to approval by shareholders at the forthcoming Annual General Meeting.
Employment policies
The Group is committed to keeping employees informed about the business, including through the Group intranet, presentations to staff, management conferences and an Employee Consultation Forum.
The Group encourages its employees to develop their full potential by providing opportunities for training and professional development. Such opportunities, as well as career development and promotion, are equally available to disabled employees, whether newly recruited or existing employees who become disabled whilst in the Group’s employment.
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, family leave, sabbaticals 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 directly to the Chief Executive who makes an annual health and safety report to the Board.
Further commentary on the Group as an employer is included in the People section.
Corporate responsibility
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.
Environment
As discussed in the OFR, Amlin recognises the need to manage the impact of its activities on the environment and the importance of global climate change to insurers such as Amlin.
The Group’s Environmental Policy is available on the Company’s website or from the Secretary. It is implemented and developed with the assistance of the Group’s Environmental Committee, which is chaired by a senior executive, David Harris, the Group Operations Director, who is a member of the Board of the principal UK operating subsidiary, Amlin Underwriting Limited, and reports directly to the Chief Executive.
Risk management
In most of the areas commonly associated with corporate responsibility, other than Amlin’s role as an employer, the Board considers that the social impact of the Group’s activities is relatively low. Nonetheless, 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. More details of risk management generally are included in the Board corporate governance statement.
Charitable donations
The Group made charitable donations during the year of £54,915 (2005: £47,557, including a £10,000 special donation to the Disaster Emergencies Committee in respect of the Asian tsunami). Donations in 2006 include those made in Bermuda by the Company’s subsidiary, Amlin Bermuda Ltd (ABL). The Group’s charities budget (excluding ABL’s) is managed by a Charities Committee of staff representatives. The ABL budget is managed in Bermuda under the overall direction of the ABL board. In both the UK and Bermuda 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.
Further commentary on these and other aspects of the Group’s social responsibility, community and charitable activities are included in the Charity and Community area.
Political donations
The Group made no political donations during the year (2005: 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 2006, excluding insurance creditors, represented approximately 30 days (2005: 30 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 Thursday 24 May 2007 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 with 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 were made during the year and remain in force at the date of this report.
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.
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
2 March 2007
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