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DIRECTOR'S 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 2003.
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, the Chief Executive’s
strategy review and the Operating and financial review.
Dividends
An interim dividend of 0.85p (2002: 0.75p) per ordinary share was
paid on 3 November 2003. The directors propose a final dividend of
1.65p per ordinary share (2002: 1.25p), to be paid on 25 May 2004
to shareholders on the register at the close of business on
26 March 2004. This makes total dividends for the year of 2.5p per
ordinary share (2002: 2.0p). A scrip dividend alternative is being
offered in respect of the final dividend, as it was in respect of the
2003 interim and 2002 final dividends. Details of the shares issued
during the year in respect of scrip dividends are included in note 19.
Directors
The biographical details of the present directors are set out here. There were no changes to the composition of the Board
during 2003. From 1 January 2004, Mr Stace’s status altered from
executive to non-executive. The current terms of office of Messrs
Kennedy, Sanders and Stace end at the Annual General Meeting on
19 May 2004 and they will not be offering themselves for re-election.
Mr Philipps retires at the Annual General Meeting by rotation and,
being eligible, offers himself for re-election.
Directors’ interests
The interests of directors and their related parties in the ordinary
shares of the Company, all of which are beneficial except as stated
immediately below, were as follows:
|
At 5 March 2004
and at 31 Dec 2003
No of shares |
At 31 Dec 2002
No of shares |
|
| B D Carpenter |
541,004 |
382,911 |
| R A Hextall |
18,937 |
18,613 |
| A W Holt |
2,463,441 |
2,283,958 |
| J M Kennedy |
23,818 |
23,411 |
| R W Mylvaganam |
3,189 |
3,135 |
| C E L Philipps |
103,823 |
102,744 |
| J R Sanders |
120,000 |
120,000 |
| J L Stace |
607,077 |
1,258,683 |
| Lord Stewartby |
46,054 |
46,054 |
| R J Taylor |
15,351 |
15,351 |
|
The interests shown above of Mr Stace at 5 March 2004 and
31 December 2003 include 5,000 shares held non-beneficially by a
charity of which he is a trustee and 260,000 shares held by a trust of
which he is the sole beneficiary. These interests were nil and
650,000 shares respectively at 31 December 2002.
In addition, Messrs Carpenter, Hextall, Holt, Philipps and Stace are
deemed, as employees or former employees of Group companies, 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 immediately 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.
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 5,209,922 shares in the Company on
31 December 2003 (2002: 6,098,302 shares). On 5 March 2004,
the ESOT’s shareholding was 5,144,490 shares. All of the changes in
the ESOT’s shareholding between 31 December 2002 and 5 March
2004 were as a result of exercises of options.
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Substantial shareholdings
At 5 March 2004 the Company had been notified of the following
holdings of 3 per cent or more of its issued ordinary share capital:
|
Number of
shares held |
% of
shares
in issue * |
|
| Fidelity International Limited and FMR Corporation |
49,794,131 |
12.7 |
| State Farm Mutual Automobile Insurance Company |
39,445,955 |
10.1 |
| Barclays PLC |
16,206,764 |
4.1 |
| Partners in Rostrum Investors limited partnerships** |
12,945,544 |
3.3 |
| Legal & General Group Plc companies |
11,944,369 |
3.1 |
|
* Based on the shares in issue as at 5 March 2004 of 391,409,745.
** The above interest of the partners of Rostrum Investors limited partnerships is the
aggregate interest of the following limited partners, whether or not such shares are
held within the partnerships, all of which have disclosed interests in the same shares:
Rostrum Limited, BriTel Fund Trustees Limited, British Airways Pension Trustees
Limited, Kleinwort Benson (Jersey) Trustees Limited, Possfund Custodian Trustee
Limited and Stargas Nominees Limited. In addition, Mr M J Wade is interested in
such shares by reason of his effective shareholding in Rostrum Limited.
Corporate governance
Corporate governance reports, 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.
Employment policies
The Group is committed to keeping employees informed about the
business. An Employee Consultative Forum, made up of representatives
of the employees and of senior management, has recently been
instituted, holding its first meeting later in March 2004. 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.
The Group also has a comprehensive health and safety policy which
is publicised to staff through its intranet and on staff notice boards.
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.
The Company encourages employees to participate in its equity
through direct share ownership and share option schemes, including
a Sharesave scheme open to all permanent employees. Details of the
schemes are set out in the Directors’ remuneration report, as are details of the Group’s remuneration policies.
Corporate responsibility
General
The Group recognises the potential impact of its dealings not only on
shareholders and employees, but also on customers, external capital
providers, suppliers, creditors, competitors and the wider community.
The Board has commissioned an independent review of its corporate
social responsibility (CSR) programme to assist in the appraisal of
existing initiatives and potential additional opportunities and in the
assessment of benefits, risks and costs. The Board is in the process
of considering the results of this review.
This section summarises some of the areas, in addition to
employment policies, which are most relevant to such considerations.
Environmental
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 has
continued to implement and develop during the past two years.
Targets have been set, and performance measurement commenced,
in a number of key 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 was
chaired during the year by the Company’s Vice Chairman, Mr Stace.
Ethical
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 the protection of the trust and
confidence of those with whom the Group deals, which is considered of
fundamental importance to Amlin’s reputation and business.
Community involvement
The Group encourages employee involvement in community projects,
particularly in conjunction with the Lloyd’s Community Programme in
the London Borough of Tower Hamlets. During the year, participation
by Amlin staff increased in that programme’s reading partners
scheme with primary school pupils. Early in 2004, a senior employee
also joined a new Tower Hamlets police mentoring scheme. The
Company also participates in its community of the City of London
through electoral registration of employee representatives for City
Corporation elections.
Charitable activities and donations
The Group made charitable donations during the year of £29,998
(2002: £29,791). The Group’s charities budget is managed by a
Charities Committee which includes staff representatives. Special
consideration is given to projects and fund raising in which members
of staff themselves are involved, such as community projects mentioned
above. Also linked to the local community was the renewal during the
year of the Company’s special partnership charity arrangement with
Macmillan cancer relief: a new three year commitment has been given
to provide financial support to a special unit at Guy’s Hospital, the
nearest main hospital to the Company’s London operations.
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. More details of risk management 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 the Amlin website or from the Secretary on request.
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Political donations
The Group made no political donations during the year (2002: £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) as any such incidental expenditure deemed
to be within the scope of this legislation would be well within the
applicable £5,000 annual threshold.
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 services are provided.
Average trade creditors of the Group during 2003, which excludes
insurance creditors, represented approximately 28 days (2002:
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 19 May 2004 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.
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. Deloitte &
Touche were first appointed the Company’s auditors in 2000 and
were last re-appointed by shareholders at the Annual General Meeting
in May 2003. Pursuant to Section 26(5) of the Companies Act 1989,
the consent of the Company was given by the Board in September
2003 to treating Deloitte & Touche’s appointment as extending to the
newly formed Deloitte & Touche LLP (limited liability partnership).
By Order of the Board
C C T Pender Secretary
9 March 2004
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