|
Non-
marine
£m |
|
Marine
£m |
|
Aviation
£m |
|
UK
commercial
£m |
|
Other
technical
£m |
|
Total
£m |
|
|
| Gross premium written |
499.3 |
|
160.4 |
|
90.2 |
|
187.5 |
|
- |
|
937.4 |
|
|
| Gross premium earned |
445.0 |
|
133.4 |
|
91.2 |
|
167.8 |
|
- |
|
837.4 |
|
| Gross claims incurred |
(169.3 |
) |
(65.3 |
) |
(45.5 |
) |
(131.8 |
) |
(1.5 |
) |
(413.4 |
) |
| Reinsurance balance |
(82.0 |
) |
(7.3 |
) |
(17.3 |
) |
14.2 |
|
- |
|
(92.4 |
) |
| Gross operating expenses |
(114.0 |
) |
(41.7 |
) |
(20.5 |
) |
(38.1 |
) |
2.1 |
|
(212.2 |
) |
|
| Balance on the technical account excluding allocated investment return |
79.7 |
|
19.1 |
|
7.9 |
|
12.1 |
|
0.6 |
|
119.4 |
|
| Investment return |
|
|
|
|
|
|
|
|
|
|
32.0 |
|
| Net non-technical expenses |
|
|
|
|
|
|
|
|
|
|
(31.1 |
) |
|
| Profit before tax |
|
|
|
|
|
|
|
|
|
|
120.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segmental net assets |
61.6 |
|
21.9 |
|
24.3 |
|
28.2 |
|
- |
|
136.0 |
|
| Net assets not attributed to a business segment |
|
|
|
|
|
|
|
|
|
|
247.3 |
|
|
| Net assets |
|
|
|
|
|
|
|
|
|
|
383.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-
marine
£m |
|
Marine
£m |
|
Aviation
£m |
|
UK
commercial
£m |
|
Other
technical
£m |
|
Total
£m |
|
|
| Gross premiums written |
385.1 |
|
110.5 |
|
91.2 |
|
126.0 |
|
4.3 |
|
717.1 |
|
|
| Gross premiums earned |
330.2 |
|
84.4 |
|
87.5 |
|
110.8 |
|
4.3 |
|
617.2 |
|
| Gross claims incurred |
(192.2 |
) |
(53.5 |
) |
(19.7 |
) |
(74.4 |
) |
(1.0 |
) |
(340.8 |
) |
| Reinsurance balance |
(36.4 |
) |
2.6 |
|
(42.7 |
) |
(10.0 |
) |
(4.3 |
) |
(90.8 |
) |
| Gross operating expenses |
(93.4 |
) |
(25.3 |
) |
(13.5 |
) |
(18.6 |
) |
(7.8 |
) |
(158.6 |
) |
|
| Balance on the technical account excluding allocated investment return |
8.2 |
|
8.2 |
|
11.6 |
|
7.8 |
|
(8.8 |
) |
27.0 |
|
| Investment return |
|
|
|
|
|
|
|
|
|
|
42.5 |
|
| Net non-technical expenses |
|
|
|
|
|
|
|
|
|
|
(14.1 |
) |
|
| Profit before tax |
|
|
|
|
|
|
|
|
|
|
55.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segmental net (liabilities) assets |
(45.6 |
) |
2.7 |
|
8.3 |
|
20.7 |
|
- |
|
(13.9 |
) |
| Net assets not attributed to a business segment |
|
|
|
|
|
|
|
|
|
|
320.7 |
|
|
| Net assets |
|
|
|
|
|
|
|
|
|
|
306.8 |
|
|
|
| Gross premiums written analysed by location of risk |
2003
£m |
|
2002
£m |
|
|
| UK |
277.5 |
|
197.8 |
|
| USA |
349.4 |
|
300.2 |
|
| Europe |
87.1 |
|
51.3 |
|
| Canada, Central and South America |
62.8 |
|
52.9 |
|
| Asia |
62.6 |
|
46.3 |
|
| Other locations |
42.6 |
|
24.4 |
|
| Worldwide |
55.4 |
|
44.2 |
|
|
| Total |
937.4 |
|
717.1 |
|
|
Back to top
|
| 2 Investment return |
| Investment income and expenditure reported in the non-technical account is as follows: |
|
|
|
|
|
|
|
|
|
|
2003
£m |
|
2002
£m |
|
|
| Income from investments |
|
|
40.0 |
|
40.2 |
|
| (Losses) gains on realisation of investments |
|
|
(3.4 |
) |
0.3 |
|
|
|
|
|
36.6 |
|
40.5 |
|
|
| Unrealised (losses) gains on investments |
|
|
(3.1 |
) |
3.2 |
|
|
| Investment management fees |
|
|
(1.1 |
) |
(0.4 |
) |
| Interest on loan stock and bank loans |
|
|
(0.4 |
) |
(0.8 |
) |
|
|
|
|
(1.5 |
) |
(1.2 |
) |
|
| Total investment return |
|
|
32.0 |
|
42.5 |
|
|
|
In respect of equity investments and fixed interest securities the longer term rate of return has been determined by having regard to the
Group’s historical and expected returns and current portfolio strategy. The rates of return are:
|
|
|
|
|
2003 |
|
2002 |
|
|
| Equities |
|
|
7.0% |
|
7.0% |
|
| Fixed interest securities |
|
|
4.5% |
|
5.5% |
|
|
These returns are applied to the average, over the year, of the investments attributable to the shareholders and insurance technical provisions
of the aligned syndicate participations. The attributable shareholders’ funds are based on the Funds at Lloyd’s which represent the estimated
risk based capital supporting the insurance business. The expected longer term rate of return has been reduced to 4.5% for 2003, as long
term inflation and, consequently, interest rates are expected to remain at low levels.
The actual return on investments since 1 January 1998, compared with the aggregate longer term return over the same period, is set out
below. All figures are gross of expenses.
|
|
|
|
|
|
|
|
|
|
|
1 Jan 1999
to 31 Dec
2003
£m |
|
1 Jan 1998
to 31 Dec
2002
£m |
|
|
| Actual return attributable to the technical account |
|
|
119.4 |
|
117.8 |
|
| Longer term return attributable to the technical account |
|
|
140.2 |
|
136.2 |
|
|
| Effect of short term fluctuations over the period |
|
|
(20.8 |
) |
(18.4 |
) |
|
|
| 3 Prior periods’ claims provisions |
| Material over (under) provisions for claims at the beginning of the year as compared with net payments and provisions at the end of the year
in respect of prior periods’ claims for continuing business are as follows: |
|
|
|
|
2003
£m |
|
2002
£m |
|
|
| Movement in reserves |
|
|
24.5 |
|
(20.3 |
) |
|
|
| 4 Net operating expenses |
|
|
|
|
2003
£m |
|
2002
£m |
|
|
| Acquisition costs |
|
|
177.2 |
|
137.9 |
|
| Changes in deferred acquisition costs |
|
|
(24.4 |
) |
(20.4 |
) |
| Administrative expenses |
|
|
56.8 |
|
35.8 |
|
| Syndicate exchange losses |
|
|
2.6 |
|
5.3 |
|
|
|
|
|
212.2 |
|
158.6 |
|
|
|
| 5 Other income |
|
|
|
|
2003
£m |
|
2002
£m |
|
|
| Managing agent’s fee income |
|
|
0.8 |
|
1.3 |
|
| Managing agent’s profit commission |
|
|
3.3 |
|
0.5 |
|
| Other income |
|
|
- |
|
0.2 |
|
|
|
|
|
4.1 |
|
2.0 |
|
|
|
| 6 Other charges |
|
|
|
|
2003
£m |
|
2002
£m |
|
|
| Central, management and other expenses |
|
|
6.6 |
|
5.4 |
|
| Amortisation of purchased syndicate participations |
|
|
3.1 |
|
0.9 |
|
| Financing charges |
|
|
6.6 |
|
5.6 |
|
| Employee incentives |
|
|
18.9 |
|
4.2 |
|
|
|
|
|
35.2 |
|
16.1 |
|
|
|
| 7 Directors’ remuneration |
| The aggregate remuneration of the directors of the Company, including amounts received from subsidiaries, was: |
|
|
|
|
2003
£m |
|
2002
£m |
|
|
| Emoluments of executive directors |
|
|
2.3 |
|
1.9 |
|
| Fees to non-executive directors |
|
|
0.3 |
|
0.3 |
|
|
|
|
|
2.6 |
|
2.2 |
|
| Pension contributions |
|
|
0.2 |
|
0.2 |
|
|
|
|
|
2.8 |
|
2.4 |
|
|
Remuneration includes remuneration during the period of appointment only. Details of directors’ remuneration and pension benefits, including
those of the highest paid director, are included in the Directors’ remuneration report.
|
Back to top
|
| 8 Employee information |
| The average number of persons employed by the Group, including directors, was: |
|
|
|
|
2003 |
|
2002 |
|
|
| Underwriting divisions |
|
|
|
|
|
|
| Underwriting, claims, and reinsurance |
|
|
340 |
|
305 |
|
| Finance and administration |
|
|
126 |
|
114 |
|
| Central functions |
|
|
|
|
|
|
| Operations |
|
|
59 |
|
52 |
|
| Finance |
|
|
52 |
|
42 |
|
| Internal audit and compliance |
|
|
8 |
|
8 |
|
|
|
|
|
585 |
|
521 |
|
|
The aggregate payroll costs in respect of these persons were:
|
|
|
|
|
2003
£m |
|
2002
£m |
|
|
| Wages and salaries |
|
|
19.8 |
|
17.7 |
|
| Employee incentives and related social security costs |
|
|
18.9 |
|
4.3 |
|
| Social security costs |
|
|
2.7 |
|
2.3 |
|
| Pension costs |
|
|
12.3 |
|
4.7 |
|
|
|
|
|
53.7 |
|
29.0 |
|
|
|
| 9 Pensions |
The Group participates in a number of pension schemes, including
defined benefit, defined contribution and personal pension schemes.
The total pension cost for the schemes operated by the Group in the
year was £12.3 million (2002: £4.7 million) of which £10.8 million
(2002: £3.4 million), related to the defined benefit schemes and
£1.5 million (2002: £1.3 million) related to the defined contribution
and personal pension schemes.
The charge to the Group profit and loss account, after accounting
for the Group’s share of the charges to the managed syndicate, was
£9.1 million (2002: £3.2 million).
a) The Amlin plc funded defined benefit scheme
The scheme is operated by the Lloyd’s Superannuation fund.
Historically the scheme has catered for a number of employers
in the Lloyd’s market. Because of the consolidation in the market,
employers closing final salary schemes and some companies failing,
there are now only 10 employers with active members in the scheme.
The scheme has mutuality of liability between the active employers
in the scheme.
During the year the structure of the scheme has been altered. The
active employers, including Amlin, contributing to the scheme now
have individual notional funds comprising the allocated assets in
respect of their active employees, their deferred pensioners and
pensioners. A separate notional fund is maintained for members
whose former employers no longer exist (Orphan schemes).
Amlin has previously only provided information about its active
members. This change has now enabled Amlin to more clearly
identify the liabilities associated with its current and former
employees. However, the asset allocation is notional and at the
discretion of the Trustees, therefore it is not possible for Amlin to be
certain of its overall surplus or deficit position at any time. For this
reason, the scheme is classified as a multi-employer scheme for the
purposes of Financial Reporting Standard No. 17 (FRS 17) –
Retirement benefits.
It should be noted that all of the actuarial amounts quoted are at
the Group and 100% Syndicate level. The profit and loss account
charge in the Group accounts varies depending upon the year of
account for which the charge is incurred. Amounts incurred by
Syndicate 2001 will be reflected in the Group accounts to the extent
that the Group owns the year of account charged. This varies between
69.65% for the 2001 year of account and 86.14% for the 2003 year
of account.
This scheme is valued every three years by an independent qualified
actuary. Contributions are made at the funding rates recommended by
the actuary, which historically varied across different sections of the
scheme. The recommended rates reflect an adjustment to amortise
any small surplus or deficit over the average remaining lifetimes of
the current active membership.
The latest actuarial assessment of the scheme, at 31 March 2001,
used the projected unit actuarial method and was based on the
principal assumption that long-term returns on investments would be,
on average, 1.8% higher than increases in earnings. The valuation
showed that the assets of the active members of the scheme were
£18.8 million, being £5.1 million less than the members’ accrued
liabilities, resulting in a deficit of 21%. To rectify this deficit, and the
subsequent further deteriorations on the stock markets, payments of
£2.0 million were made in 2002 and January 2003. Additionally,
a further payment of £2.0 million was made in January 2004.
Following the restructuring of the scheme, the Trustees provided
an interim valuation as at 31 December 2002, which indicated that
the Amlin part of the scheme had between a £5.0 million deficit and
£3.0 million surplus using real investment returns of between 3.6%
and 4.0%. The £2.0 million payment in 2004 noted above will
reduce the potential deficit.
In addition to its liabilities on its own scheme, Amlin is also liable for
a proportion of the orphan scheme liabilities. The interim valuations,
as at 31 December 2002, carried out as a result of the restructuring
have identified that the orphan scheme currently has net liabilities of
between £29.0 million and £16.0 million based upon real investment
returns of between 2.5% and 3.0%. The Group and Syndicate’s share
of this is currently estimated to be between £21.8 million and
£12.0 million respectively. On 30 December 2003, a payment
of £6.8 million was made in order to reduce this deficit. Further
payments over the next four years are likely to be required following
a full actuarial review at 31 March 2004.
In 2003, funding rates and charges to the profit and loss account
were as recommended by the 2001 valuation and ranged between
18.3% and 39.3% of pensionable salaries, and totalled £1.4 million
(2002: £1.2 million), which in combination with the additional
payments noted above, gives a total charge for the scheme of
£10.2 million (2002: £3.2 million). The Group’s share of the
contributions charged to the profit and loss account was £7.5 million
(2002: £2.2 million). Funding rates have been adjusted to 30.2% for
all sections of the scheme in 2004.
b) The Angerstein Underwriting Ltd funded defined
benefit scheme
SSAP 24 disclosures
The scheme consists of a closed funded defined benefit scheme
for certain past employees of Angerstein Underwriting Limited.
Contributions to the scheme are determined by an independent
qualified actuary, based upon triennial valuations, using the attained
age actuarial method. The most recent valuation was at 1 July 2001,
when the market value of the scheme assets was £1.4 million
representing 89% of the benefits accrued to the members, allowing
for future earnings increases.
Group contributions made to this scheme in respect of the year ended
31 December 2003 were £0.1 million (2002: £0.2 million), and the
agreed contribution rate for future years is 22.5% of pensionable
salaries. In addition, an accrual of £0.5 million, included to partially
rectify the deficit described below, was made at 31 December 2003.
A 1.5% per annum differential between investment returns and salary
increases is assumed.
The Group’s share of the actual and accrued contributions, charged to
the profit and loss account, was £0.4 million (2002: £0.1 million).
FRS 17 disclosures – Angerstein Underwriting Ltd defined benefit scheme
For the purposes of the FRS 17 disclosures, the 1 July 2001 valuation has been reviewed and updated to 31 December 2003. The disclosures
are based upon the following annual financial assumptions:
|
|
2003 |
|
2002 |
|
2001 |
|
|
| Inflation |
2.80% |
|
2.25% |
|
2.50% |
|
| Increase in salaries |
4.80% |
|
4.25% |
|
4.50% |
|
| Increase in pensions in payment |
2.70% |
|
2.25% |
|
2.50% |
|
| Increase in pensions in deferment |
2.80% |
|
2.25% |
|
2.50% |
|
| Discount rate for scheme liabilities |
5.40% |
|
5.50% |
|
6.00% |
|
| Return on equities |
6.80% |
|
6.50% |
|
7.00% |
|
|
Under these assumptions the valuation of the scheme at 31 December would have been:
|
|
2003
£m |
|
2002
£m |
|
2001
£m |
|
|
| Assets |
|
|
|
|
|
|
| Equities |
1.1 |
|
0.8 |
|
1.9 |
|
| Liabilities |
|
|
|
|
|
|
| Present value of scheme liabilities |
(2.3 |
) |
(1.8 |
) |
(2.2 |
) |
|
| Scheme deficit |
(1.2 |
) |
(1.0 |
) |
(0.3 |
) |
|
| Scheme deficit attributable to the Group |
(1.2 |
) |
(0.9 |
) |
(0.2 |
) |
| Related deferred tax asset |
0.4 |
|
0.3 |
|
0.1 |
|
|
| Net scheme deficit |
(0.8 |
) |
(0.6 |
) |
(0.1 |
) |
|
The members of the scheme are, or were, employed for the benefit of Syndicate 2001 or its predecessors. Because of the varying ownership
of the years of account to which the contributions are charged, the following amounts which would have been recognised in the performance
statements for the year ended 31 December 2003 under FRS 17, are shown on the assumption that any charges would be taken to the 2004
year of account, when Amlin owns all of the capacity and therefore would receive all charges (2002: 2003 year of account, where the Amlin
share was 86.16%).
|
|
|
|
2003
£m |
|
2002
£m |
|
|
| Operating profit |
|
|
|
|
|
|
| Current service cost |
|
|
0.1 |
|
0.1 |
|
|
|
|
|
|
|
|
|
| Other finance income |
|
|
|
|
|
|
| Expected return on pension scheme assets |
|
|
0.1 |
|
0.1 |
|
| Interest on pension scheme liabilities |
|
|
(0.1 |
) |
(0.1 |
) |
|
| Net return |
|
|
- |
|
- |
|
|
|
|
|
|
2003
£m |
|
2002
£m |
|
|
| Statement of total recognised gains and losses (STRGL) |
|
|
|
|
|
|
| Actual return less expected return on assets |
|
|
0.1 |
|
(1.3 |
) |
| Experience gains on liabilities |
|
|
0.1 |
|
0.6 |
|
| Changes in assumptions |
|
|
(0.3 |
) |
(0.1 |
) |
|
| Actuarial loss recognised in STRGL |
|
|
(0.1 |
) |
(0.8 |
) |
|
|
| Movement in deficit during the year |
|
|
|
|
|
|
| Deficit in scheme at 1 January |
|
|
(1.0 |
) |
(0.3 |
) |
| Current service cost |
|
|
(0.1 |
) |
(0.1 |
) |
| Contributions made |
|
|
0.1 |
|
0.2 |
|
| Other finance costs |
|
|
(0.1 |
) |
- |
|
| Actuarial loss |
|
|
(0.1 |
) |
(0.8 |
) |
|
| Deficit in scheme at 31 December |
|
|
(1.2 |
) |
(1.0 |
) |
|
|
|
|
|
2003 |
|
2002 |
|
|
| History of experience gains and losses |
|
|
|
|
|
|
| Difference between the expected and actual return on scheme assets |
|
|
|
|
| Amount (£ million) |
|
|
0.1 |
|
(0.6 |
) |
| Percentage of scheme assets |
|
|
12% |
|
(88% |
) |
| Experience gains on scheme assets |
|
|
|
|
|
|
| Amount (£ million) |
|
|
0.1 |
|
0.1 |
|
| Percentage of scheme assets |
|
|
3% |
|
3% |
|
| Total amount recognised in the STRGL |
|
|
|
|
|
|
| Amount (£ million) |
|
|
(0.1 |
) |
(0.7 |
) |
| Percentage of scheme assets |
|
|
(5% |
) |
(43% |
) |
|
c) The defined contribution scheme
With effect from 1 February 1997 all new employees have been invited to join this scheme. Contributions made by the Group vary by age and
by the level of contribution that employees voluntarily make to the scheme. Contributions range from 4% to 26% and are fully expensed to the
profit and loss account when due and payable. Total contributions for the year ended 31 December 2003 were £1.4 million (2002: £1.1 million).
The Group’s share of the contributions charged to the profit and loss account was £1.2 million (2002: £0.9 million). Outstanding contributions
at 31 December 2003 were £0.1 million (2002: £0.1 million).
d) Other arrangements
Other pension arrangements include a small self-administered scheme, an occupational money purchase scheme and personal pension
arrangements. Regular contributions, expressed as a percentage of employees’ earnings, are paid into these schemes and are allocated to
accounts in the names of the individual members, which are independent of the Group’s finances. The contributions are charged against
profits in the period in which they are payable. There were no outstanding contributions at 31 December 2003 (2002: nil).
Back to top
10 Profit on ordinary activities before taxation
Profit on ordinary activities before taxation is stated after charging:
|
|
|
|
2003
£m |
|
2002
£m |
|
|
| Depreciation |
|
|
|
|
|
|
| - Owned assets |
|
|
4.0 |
|
4.3 |
|
| - Leased assets |
|
|
0.1 |
|
0.1 |
|
| Operating lease charges |
|
|
1.9 |
|
1.8 |
|
| Amortisation of intangible assets |
|
|
3.1 |
|
0.9 |
|
| Auditors’ remuneration |
|
|
|
|
|
|
| - Group audit fees |
|
|
0.3 |
|
0.4 |
|
| - Other services |
|
|
0.1 |
|
0.1 |
|
|
Company audit fees amounted to £42,000 (2002: £50,000). Group audit fees include £131,819 (2002: £198,553) representing the Group’s
share of fees paid in relation to the audit of the managed syndicates. Other services comprise taxation advice fees totalling £38,905 (2002:
£34,957), advice on capital issues £20,000 (2002: £nil), internal audit and controls advice £16,000 (2002: £19,000), systems testing
£14,250 (2002: £nil), liquidation advice £nil (2002: £11,859) and other fees of £945 (2002: £670). A further £367,727 of costs were paid
to the auditors for their work relating to the share issues in 2002, which were charged to the share premium account in that year.
11 Tax on profit on ordinary activities
a) Analysis of tax charge for the year
|
|
|
|
2003
£m |
|
2002
£m |
|
|
| Current taxation |
|
|
|
|
|
|
| UK corporation tax at 30% (2002: 30%) |
|
|
- |
|
- |
|
| Under provision in prior periods |
|
|
0.3 |
|
3.0 |
|
|
| Corporation tax |
|
|
0.3 |
|
3.0 |
|
| Overseas taxation recoverable |
|
|
(10.0 |
) |
- |
|
| Overseas taxation suffered |
|
|
11.4 |
|
0.1 |
|
|
| Total current tax (see note 11(b)) |
|
|
1.7 |
|
3.1 |
|
|
| Deferred taxation |
|
|
|
|
|
|
| Origination and reversal of timing differences |
|
|
35.2 |
|
17.0 |
|
| Under (over) provision in prior years |
|
|
0.1 |
|
(8.9 |
) |
|
| Total deferred taxation (see note 24) |
|
|
35.3 |
|
8.1 |
|
|
| Taxation on profit on ordinary activities |
|
|
37.0 |
|
11.2 |
|
|
b) Factors affecting current period tax charge
The UK standard rate of corporation tax is 30% (2002: 30%), whereas the current tax assessed for the year ended 31 December 2003 as a
percentage of profit before tax is 1.4% (2002: 5.6%). The reasons for this difference are explained below:
|
|
2003
£m |
|
2003
% |
|
2002
£m |
|
2002
% |
|
|
| Profit on ordinary activities before taxation |
120.3 |
|
|
|
55.4 |
|
|
|
|
| Current taxation on profit on ordinary activities calculated at the standard rate
of corporation tax in the UK |
36.1 |
|
30.0% |
|
16.6 |
|
30.0% |
|
| Expenses not deductible for tax purposes |
0.4 |
|
0.3% |
|
0.7 |
|
1.2% |
|
| Timing differences unprovided for |
(1.3 |
) |
(1.1% |
) |
(0.3 |
) |
(0.5% |
) |
| Depreciation in excess of capital allowances |
0.3 |
|
0.3% |
|
0.3 |
|
0.5% |
|
| Difference between the technical result for accounting purposes and the technical
result for taxation purposes |
(41.7 |
) |
(34.7% |
) |
(19.1 |
) |
(34.4% |
) |
| Deferred tax on loss provisions |
0.5 |
|
0.4% |
|
0.5 |
|
0.9% |
|
| Unrelieved trading losses carried forward |
- |
|
- |
|
0.5 |
|
0.8% |
|
| Other timing differences |
5.7 |
|
4.7% |
|
0.8 |
|
1.5% |
|
| Under provision for prior periods |
0.3 |
|
0.3% |
|
3.0 |
|
5.4% |
|
|
| UK corporation tax for the year |
0.3 |
|
0.2% |
|
3.0 |
|
5.4% |
|
| Net overseas taxation suffered |
1.4 |
|
1.2% |
|
0.1 |
|
0.2% |
|
|
| Current taxation charge for the year (See note 11(a)) |
1.7 |
|
1.4% |
|
3.1 |
|
5.6% |
|
|
c) Factors which may affect future tax charges
Deferred tax is provided on the annually accounted technical result with reference to the forecast ultimate result of each of the years of account
included in the annually accounted technical result. Where the forecast ultimate result for a year of account is a taxable profit, deferred tax is
provided in full on the movement on that year of account included in this period’s annually accounted technical result. Where the forecast
ultimate result for a year of account is a loss, deferred tax is only provided for on the movement on that year of account included in this period’s
annually accounted technical result to the extent that forecasts show that the taxable loss will be utilised in the foreseeable future. Deferred tax
has been provided on the annually accounted technical result for this accounting period of £110.3 million (2002: £57.7 million).
Deferred tax is provided for on actual taxable underwriting results. Where the taxable underwriting result is a loss then deferred tax is provided for
on the taxable underwriting loss to the extent that forecasts show that the taxable underwriting losses will be utilised in the foreseeable future.
Deferred tax assets on non-aligned technical loss provisions are only provided for to the extent that forecasts show that it is more likely than
not that the ultimate taxable underwriting losses represented by these provisions will be utilised within the foreseeable future.
Deferred tax has been provided in full on non-aligned loss provisions of £3.0 million (2002: £1.5 million).
The Inland Revenue has introduced final regulations to give effect to the General Insurance Reserves provisions contained in the Finance Act
2000. The Group’s Lloyd’s corporate members fall within the remit of these regulations by virtue of their greater than 4% participation on
aligned and non-aligned syndicates. The corporation tax charge for this period contains an estimated adjustment in respect of a notional
taxable charge as calculated under these regulations of £0.7 million (2002: credit £0.4 million).
A deferred tax asset of £1.1 million (2002: £0.1 million) has been taken on existing capital losses to match against deferred tax provisions
of £1.1 million (2002: £0.1 million) on unrealised capital gains arising within the Group during this accounting period. Deferred tax has not
been provided on capital losses of £43.6 million (2002: £46.6 million).
The Group expects to continue to suffer depreciation in excess of capital allowances in future periods albeit at a diminishing rate.
The Group has suffered US tax on its share of syndicate deemed US underwriting profits. This US tax is recoverable against UK tax on the
taxable syndicate profits for the appropriate years of account. Some US tax suffered will be irrecoverable due to the difference between UK
and US tax rates and the difference between the timing of US and UK syndicate profits for tax purposes. During the period £1.4 million
(2002: £0.1 million) of US tax has been written off.
|
