4. Aviation risks

The Group underwrites a direct and facultative reinsurance account from most parts of the world. The portfolio is made up of the following classes with maximum lines.

Aviation classes

	2006 gross premium £m	Current maximum line size £m	2006 average line size £m
Airline (hull & liability)	16	84	23.8
General aviation (hull & liability)	7	57	15.3
Airline (hull & liability)	16	84	23.8
General aviation (hull & liability)	7	57	15.3
Risk excess (hull & liability)	8	57	10.4
Airports liability	17	57	21.0
Products liability	11	50	14.6
Space (hull & liability)	6	46	9.0

Notes:

1. Limits are set in US dollars converted at a rate of £1 = US$1.5 and therefore currency rate of exchange changes may increase or reduce the sterling limits.
2. Maximum line size is after business written and ceded by specific proportional treaties to Amlin Bermuda Ltd.
3. Premiums are stated net of acquisition costs.

The airline account is exposed to large claims arising from property damage, death or injury arising from aircraft accident. The domicile of the airline and passengers has a notable influence on the cost of claims as US court awards are generally higher. The general aviation book covers smaller aircraft or cargo and covers owner or operators against loss or damage and third party injury.

Airport liability insurance covers airport operators, refuellers and air traffic controllers against losses arising from injury caused by their activities, or occurring on the premises of, the assured. Product liability covers manufacturers against accidents arising from faulty parts or equipment, or poor servicing of aircraft. Both airport and product liability coverage is written on a losses occurring basis meaning that claims advices can be made after the policy has expired. Space insurance covers property and liability during launch and the operation of satellites whilst in orbit for a limited period of normally one year.

The aviation account is subject to both small and large claims. Claims involving loss of life or serious injury to high earning passengers or third parties are subject to the ongoing inflation of court awards particularly in the United States. Large accidents involving the potential death of 500 or so passengers are feasible and could result in a gross claim to the division of more than $200 million before reinsurance if, for example, two major airlines were to collide. Space losses are generally one off large amounts caused by launch failure or operational failure in orbit.

© Copyright Amlin 2006