|
|
|
2003
£m |
|
2002
£m |
|
|
| Bank loan |
|
|
0.4 |
|
0.5 |
|
| Corporation tax |
|
|
11.9 |
|
0.1 |
|
| Proposed dividend (see note 12) |
|
|
6.4 |
|
4.7 |
|
| Finance lease creditors (see note 26) |
|
|
0.1 |
|
0.1 |
|
| Loan stock |
|
|
6.9 |
|
9.8 |
|
| Other creditors |
|
|
6.4 |
|
5.2 |
|
|
|
|
|
32.1 |
|
20.4 |
|
|
A subsidiary, Amlin Underwriting Group plc (AUG), had £6.9 million of unsecured loan stock outstanding at 31 December 2003 (2002:
£9.8 million). Interest on the loan stock is based on the Lloyds TSB Bank plc base rate and is payable twice yearly on 1 April and 1 October.
The loan stock holder may require AUG to redeem all or part (in multiples of £100) of the loan stock on 1 April 2004 by sending a redemption
notice to AUG not less than 60 days before the due date of redemption. Loan stock not redeemed on 1 April 2004 will be redeemed on
30 April 2004. Loan stock is redeemable at par.
26 Creditors: amounts falling due after more than one year
|
|
|
|
2003
£m |
|
2002
£m |
|
|
| Bank loan |
|
|
3.0 |
|
0.6 |
|
| Finance lease creditors |
|
|
0.1 |
|
0.1 |
|
| Performance related incentive schemes |
|
|
14.4 |
|
2.6 |
|
| Other creditors |
|
|
2.3 |
|
0.5 |
|
|
|
|
|
19.8 |
|
3.8 |
|
|
Obligations due under finance leases and hire purchase contracts are payable as follows:
|
|
|
|
2003
£m |
|
2002
£m |
|
|
| Within one year |
|
|
0.1 |
|
0.1 |
|
| Within two to five years |
|
|
0.1 |
|
0.1 |
|
|
|
|
|
0.2 |
|
0.2 |
|
|
The Group’s Employee Share Ownership Trust (ESOT) had a loan from Lloyds TSB Bank plc at the year end of £3.4 million (2002: £1.1
million) secured by a fixed charge over a proportion of the Company’s shares held by the ESOT. This loan is pursuant to a new facility agreed
in September 2003 which replaced the ESOT’s previous such facility and also enabled the repayment by the ESOT of a loan from the
Company of £2.3 million. The new loan is repayable over ten years and is guaranteed by the Company. It is anticipated that it will be repaid
from the proceeds of exercises of options over Amlin plc ordinary shares held by the ESOT.
27 Commitments
There were no capital commitments or authorised but uncontracted capital commitments at the end of the financial year.
The Group leases certain land and buildings on short-term operating leases, under which the minimum annual commitments were £2.3 million
(2002: £2.2 million), expiring in over five years.
28 Reconciliation of profit before taxation to net cash inflow from operating activities
|
|
|
|
2003
£m |
|
2002
£m |
|
|
| Profit on ordinary activities before taxation |
120.3 |
|
55.4 |
|
| Net movement on Premium Trust Funds for non-aligned participations |
- |
|
3.7 |
|
| Depreciation charge |
4.1 |
|
4.4 |
|
| Syndicate capacity amortisation charge |
3.1 |
|
0.9 |
|
| Realised losses (gains) on investments |
3.4 |
|
(0.3 |
) |
| Unrealised losses (gains) on investments |
3.1 |
|
(7.6 |
) |
| Decrease in debtors |
3.7 |
|
15.7 |
|
| Increase in prepayments and accrued income |
(28.4 |
) |
(4.1 |
) |
| Increase in insurance debtors, prepayments and accrued income |
(8.1 |
) |
(57.3 |
) |
| Increase in technical provisions |
116.9 |
|
98.4 |
|
| Decrease in reinsurers’ share of technical provisions |
76.7 |
|
54.1 |
|
| Increase in provisions for other risks and charges |
17.0 |
|
1.9 |
|
| (Decrease) increase in insurance creditors, accruals and deferred income |
(73.9 |
) |
45.5 |
|
| Increase (decrease) in other creditors relating to operating activities |
27.7 |
|
(5.4 |
) |
| Increase in accruals and deferred income |
17.0 |
|
3.3 |
|
| Interest expense |
0.4 |
|
0.5 |
|
| Letter of credit charges |
6.2 |
|
5.1 |
|
|
| Net cash inflow |
289.2 |
|
214.2 |
|
|
Cash flows relating to non-aligned participations are included only to the extent that cash is transferred between the Premium Trust Funds and
the Group.
29 Movements in cash, portfolio investments and financing
|
|
At 31
December
2002
£m |
|
Cash flow
£m |
|
Changes
to market
value and
currencies
£m |
|
At 31
December
2003
£m |
|
|
| Cash at bank and in hand |
28.5 |
|
(5.1 |
) |
(0.2 |
) |
23.2 |
|
| Shares and other variable yield securities |
0.7 |
|
46.0 |
|
3.9 |
|
50.6 |
|
| Debt and other fixed income securities |
682.7 |
|
194.9 |
|
(10.3 |
) |
867.3 |
|
| Deposits with credit institutions |
78.8 |
|
40.1 |
|
- |
|
118.9 |
|
|
|
790.7 |
|
275.9 |
|
(6.6 |
) |
1,060.0 |
|
|
| Loans due within one year |
(9.8 |
) |
2.5 |
|
- |
|
(7.3 |
) |
| Loans due after one year |
(0.6 |
) |
(2.4 |
) |
- |
|
(3.0 |
) |
|
|
(10.4 |
) |
0.1 |
|
- |
|
(10.3 |
) |
|
|
780.3 |
|
276.0 |
|
(6.6 |
) |
1,049.7 |
|
|
Back to top
30 Group owned net assets
The assets and liabilities attributable to Group owned companies as opposed to the Group’s syndicate participations, are summarised below:
|
|
In Group
owned
companies
2003
£m |
|
In
syndicates
2003
£m |
|
Total
2003
£m |
|
In Group
owned
companies
2002
£m |
|
In
syndicates
2002
£m |
|
Total
2002
£m |
|
|
| Investments |
|
|
|
|
|
|
|
|
|
|
|
|
| Other financial investments |
235.7 |
|
812.7 |
|
1,048.4 |
|
227.0 |
|
546.9 |
|
773.9 |
|
| Debtors |
|
|
|
|
|
|
|
|
|
|
|
|
| Other debtors |
12.6 |
|
40.0 |
|
52.6 |
|
8.5 |
|
62.8 |
|
71.3 |
|
| Other assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Deferred tax asset |
- |
|
- |
|
- |
|
18.4 |
|
- |
|
18.4 |
|
| Intangible assets |
57.0 |
|
- |
|
57.0 |
|
60.1 |
|
- |
|
60.1 |
|
| Tangible assets |
6.4 |
|
- |
|
6.4 |
|
9.0 |
|
- |
|
9.0 |
|
| Cash at bank and in hand |
3.5 |
|
23.0 |
|
26.5 |
|
3.6 |
|
28.0 |
|
31.6 |
|
| Prepayments and accrued income |
9.8 |
|
9.2 |
|
19.0 |
|
4.0 |
|
8.7 |
|
12.7 |
|
| Other syndicate assets |
- |
|
741.5 |
|
741.5 |
|
- |
|
789.7 |
|
789.7 |
|
|
| Total assets |
325.0 |
|
1,626.4 |
|
1,951.4 |
|
330.6 |
|
1,436.1 |
|
1,766.7 |
|
|
| Provisions for other risks and charges |
(19.9 |
) |
- |
|
(19.9 |
) |
(2.9 |
) |
- |
|
(2.9 |
) |
|
| Creditors |
- |
|
- |
|
|
|
|
|
|
|
|
|
| Amounts due within one year |
(14.3 |
) |
(17.8 |
) |
(32.1 |
) |
(12.9 |
) |
(7.5 |
) |
(20.4 |
) |
| Amounts due after more than one year |
(19.8 |
) |
- |
|
(19.8 |
) |
(3.8 |
) |
- |
|
(3.8 |
) |
| Accruals and deferred income |
(11.8 |
) |
(0.1 |
) |
(11.9 |
) |
(5.2 |
) |
(0.4 |
) |
(5.6 |
) |
|
|
(45.9 |
) |
(17.9 |
) |
(63.8 |
) |
(21.9 |
) |
(7.9 |
) |
(29.8 |
) |
|
| Other syndicate liabilities |
- |
|
(1,484.4 |
) |
(1,484.4 |
) |
- |
|
(1,427.2 |
) |
(1,427.2 |
) |
|
| Consolidated shareholders’ funds at 31 December |
259.2 |
|
124.1 |
|
383.3 |
|
305.8 |
|
1.0 |
|
306.8 |
|
|
The assets of the syndicates included above are only available to pay syndicate related expenditure.
31 Contingent liabilities
a) Funds at Lloyd’s – Deeds of Covenant and Letters of Credit
The Group has entered into various deeds of covenant in respect of certain corporate member subsidiaries to meet each such subsidiary’s
obligations to Lloyd’s. At 31 December 2003, the total guarantee given by the Group under these deeds of covenant (subject to limited
exceptions) amounted to approximately £209.5 million (2002: £222.8 million). The obligations under the deeds of covenant are secured by
a fixed charge of the same amount over investments, and a floating charge over the investments and other assets of the Group, in favour
of Lloyd’s. Lloyd’s has the right to retain the income on the charged investments, although it is not expected to exercise this right unless
it considers there to be a risk that one or more of the covenants might need to be called and, if called, might not be honoured in full.
As liability under each deed of covenant is limited to a fixed monetary amount, the enforcement by Lloyd’s of any deed of covenant in the
event of a default by a corporate member, where the total value of investments has fallen below the total of all amounts covenanted, may
result in the appropriation of a share of the Group’s Funds at Lloyd’s that is greater than the proportion which that subsidiary’s overall premium
limit bears to the total overall premium limit of the Group.
The Group has also entered into Lloyd’s deposit trust deeds for Funds at Lloyd’s by which letters of credit (LOCs) for total amounts of
£130.0 million and US$90.0 million have been deposited. The US$ denominated LOCs were procured in 2001 by agreement with the
Company’s 10.1% shareholder State Farm Mutual Automobile Insurance Company and were agreed in November 2003 to be reduced from
their original aggregate value of US$130.0 million, with effect from 1 January 2004. The sterling LOCs were deposited at Lloyd’s for the first
time in November 2003 pursuant to a bank LOC facility agreed in September 2003 which has replaced the previous such facility under which
LOCs totalling £70.0 million had been provided. The net increase in LOCs was to support increased underwriting for the 2004 year of account.
b) Reinsurance to close on spread portfolio
A reinsurance to close (RITC) is a particular type of reinsurance contract entered into by Lloyd’s syndicates whereby the members of a
syndicate for a particular year of account (the closing year) agree with the members of that or another syndicate for a later year of account
(the reinsuring members) that the reinsuring members will indemnify, discharge or procure the discharge of all the known and unknown
liabilities of the closing year arising out of insurance business underwritten by the syndicate in the closing year of account.
In the event that a corporate member resigns from a syndicate or reduces its participation relative to the other members of the syndicate, it
will make a net payment of a RITC premium. The payment of the RITC premium does not release members from ultimate responsibility for
claims payable on risks they have written and in the event that the reinsuring members were unable to pay and the other elements in the
Lloyd’s chain of security fail, the members would remain liable for the payment of any outstanding claims. Payment of a RITC premium is
conventionally treated as settling a member’s outstanding claims for the closing year and this convention has been adopted in these accounts.
There is no mechanism for the Group to account for the gross claims payments and recoveries made from the reinsuring members or to
quantify the ongoing exposure in respect of closed years of account. The directors consider that the possibility of the corporate members
having to assume these liabilities is remote.
c) Loan stock
Amlin plc has given a guarantee to Lloyds TSB Bank plc for the principal sum of £6.9 million to secure the obligations of its subsidiary,
Amlin Underwriting Group plc, in respect of the issue of loan stock as detailed in note 25.
32 Related party transactions
During the period under review Mr B D Carpenter, a director, was a member of Syndicate 2001 managed by the Group as set out below. Under
the terms of an offer made in 2002 to all external members he exercised the right to participate in the 2003 year of account for 50% of his
2002 capacity and all profit commission payable to the Group was waived. As a result of the offer, Mr Carpenter does not participate in the
Syndicate for the 2004 year of account.
Capacity underwritten
|
| Year of account |
2001
£000 |
|
2002
£000 |
|
2003
£000 |
|
2004
£000 |
|
|
| B D Carpenter |
240 |
|
291 |
|
182 |
|
- |
|
|
The aggregate of fees and profit commission paid by Mr Carpenter was £1,527 (2002: £1,635), of which none was outstanding at
31 December 2003 (2002: nil).
As detailed in note 31, State Farm Mutual Automobile Insurance Company, a major shareholder, procured for the Group unsecured letters
of credit totalling US$90 million (US$130.0 million until 1 January 2004). This facility is provided at a rate of 5% and £4.0 million
(2002: £4.4 million) was paid to State Farm in respect of the year under this arrangement.
33 Principal exchange rates
The principal exchange rates used in translating foreign currency assets, liabilities, income and expenditure in the production of these
accounts were:
|
|
Average rate |
|
Year end rate |
|
|
2003 |
|
2002 |
|
2003 |
|
2002 |
|
|
| US dollar |
1.64 |
|
1.51 |
|
1.79 |
|
1.61 |
|
| Canadian dollar |
2.29 |
|
2.36 |
|
2.31 |
|
2.54 |
|
| Euro |
1.45 |
|
1.59 |
|
1.42 |
|
1.53 |
|
|
The table below sets out the Group’s share of the currency exposures of the Syndicate by currency at 31 December:
|
|
Assets
£m |
|
Liabilities
£m |
|
Net
2003
£m |
|
Net
2002
£m |
|
|
| US dollar |
921.5 |
|
836.9 |
|
84.6 |
|
29.4 |
|
| Canadian dollar |
42.9 |
|
32.9 |
|
10.0 |
|
7.6 |
|
| Euro |
61.6 |
|
56.3 |
|
5.3 |
|
2.8 |
|
|
|
1,026.0 |
|
926.1 |
|
99.9 |
|
39.8 |
|
|
