Purpose and overview
The purpose of the Remuneration Committee is to ensure that the levels and structures of the remuneration of executive directors, the Chairman and senior executives are appropriate to attract, retain and incentivise the high calibre talent that the Company and shareholders require in a demanding and complex business, and to reward them fairly. Senior executive remuneration needs to be consistent with remuneration policies for staff generally, which the Committee therefore oversees, and is designed to optimise the alignment of interests between executive management and shareholders.

During 2005 the Committee conducted a thorough review of the Company's senior executive remuneration arrangements to ensure that they continue to support and advance the Group's strategic objectives. Some resultant proposed changes are reflected in long term incentive plan proposals to be made at the forthcoming 2006 Annual General Meeting.

As illustrated below, a significant proportion of executive directors' remuneration is performance related. The bar chart below shows the applicable proportions of fixed, annual performance related and longer term performance related remuneration for each executive director in 2005.
Split of Executive Directors' remuneration in 2005



Further details of each element of the above components of remuneration are set out in the 'Remuneration policies' section of this report. Details of each directors' remuneration, including more on how the estimated values of performance related remuneration attributable to the year have been calculated, are set out in the relevant later sections.

Remuneration strategy review
The key activitity of the Remuneration Committee (the Committee) during 2005 was the conduct of a review of the Company's executive remuneration arrangements to assess whether they continued to be appropriately aligned to the Company's strategy. To that end the Committee appointed Deloitte & Touche LLP ('Deloitte'), which had not previously been involved in advising either the Company or the Committee on remuneration matters, to carry out an objective assessment of the Company's arrangements from a fresh perspective.

The Committee noted Deloitte's conclusion that the rationale underpinning the Company's remuneration arrangements was soundly based. However, the Committee concurred with Deloitte's recommendation that some of the incentive scheme arrangements, particularly long term incentives, should now be refined in response to the changing profile of the Company and evolving best practice. After further detailed advice from the Committee's retained remuneration advisers, New Bridge Street Consultants LLP ("NBSC"), the Committee recommended, and the Board is now to propose to the forthcoming 2006 Annual General Meeting, the adoption of the following new incentive arrangements:

• a long term incentive plan for both underwriting and non-underwriting directors and senior executives, which will replace grants of executive share options from 2007 onwards;
  
• the adoption of a long term incentive plan for underwriters to replace the existing Capital Builder Plan, which came to the end of its five year performance period at the end of 2005; and
  
• the adoption of an all-employee Share Incentive Plan as an additional means of encouraging staff at all levels to build up an interest in the Company's equity.

	Number of meetings attended
N J C Buchanan	9
R W Mylvaganam	6*
Lord Stewartby	8
Average % attendance	85%*

* The three meetings missed by Mr Mylvaganam were due to illness. These meetings were chaired by Lord Stewartby. Lord Stewartby missed only the formal Sharesave options grant meeting.

Remuneration policies
Overall remuneration levels
In determining the remuneration of individuals in the context of the Committee's purpose stated at the start of this report, the Group has regard to their performance in the role, job evaluation of the role and remuneration statistics for the non-life insurance sector in which the Group operates and, where applicable for certain roles, wider remuneration statistics. The annual salary review date is 1 April, but interim adjustments are sometimes made in the light of market or other factors.

Certain aspects of remuneration are influenced by the Lloyd's sector in which almost all of the Group's employees operate. Lloyd's managing agencies tend to relate a significant proportion of potential rewards, particularly those of underwriters, to the profitability of the relevant underwriting unit. Although there has been some movement away from pure profit commission, typical market practice in the sector, a significant proportion of which remains outside the UK quoted company arena, is that such 'profit commission' schemes are on an uncapped basis in money terms but they are capped as a percentage of the relevant profit pool which in turn is capped by the overall regulatory capacity of the syndicate. Amlin follows such Lloyd's market practice for staff for whom such market influenced remuneration structures are appropriate as not to do so would put it at a competitive disadvantage in competing for staff. Across all categories of staff the Group's policy is to have regard to market median salaries in the sector, with the potential for top quartile remuneration if top quartile performance is achieved. This policy aims to encourage and reward superior rather than merely average performance. There are no remuneration factors specific to the Group beyond the ones described above relating to the Lloyd's insurance sector.

Structure of directors' and employees' remuneration
As illustrated in the bar chart at the start of this report, the remuneration of the executive directors consists of three principal elements: (1) base salary, benefits and pension contributions; (2) shorter term performance rewards; and (3) longer term performance rewards. The elements of performance rewards for senior executives, including directors of the Company, differ for underwriters and non-underwriters, as follows:

Average ROE per annum	Percentage of shares awarded that will vest
Less than 10%	Nil
10%	20%
Between 10% and 15%	Straight line basis between 20% and 80%
15%	80%
Between 15% and 20%	Straight line basis between 80% and 100%
20%	100%

	Executive directors' salaries £000	Non- executive directors' fees £000	Annual bonuses and/or profit commission† £000	Benefits in kind/ allowances £000	Total year to 31 Dec 2005† £000	Total year to 31 Dec 2004 £000
N J C Buchanan*	-	45.7	-	-	45.7	31.2
B D Carpenter	222.0	-	1,077.1	14.3	1,313.4	960.8
R H Davey**	-	1.8	-	-	1.8	n/a
R A Hextall	260.0	-	285.0	25.2	570.2	421.1
A W Holt	270.4	-	990.5	14.3	1,275.2	1,098.5
K T Kemp	-	38.0	-	-	38.0	35.5
R W Mylvaganam	-	67.8	-	-	67.8	60.3
C E L Philipps	387.7	-	450.0	14.8	852.5	570.1
Lord Stewartby	-	59.6	-	-	59.6	55.8
R J Taylor	-	142.5	-	-	142.5	125.0
R S Joslin	-	38.0	-	-	38.0	35.5
Other Directors serving in 2004	n/a	n/a	n/a	n/a	n/a	49.8
	1,140.1	393.4	2,802.6	68.6	4,404.7	3,443.6

	Date of current service or employment contract
B D Carpenter	17 February 1997
R A Hextall	26 November 1999
A W Holt	11 December 2001
C E L Philipps	20 February 1997

	B D Carpenter £000	A W Holt £000
First instalment of 2004 year of account PC:	154.9	118.5
Second instalment of 2003 year of account PC:	798.1	724.4
Performance uplift on 2002 year of account PC:	124.1	145.1
Long service award payable to the value of:	-	2.5
Totals	1,077.1	990.5

Executive directors' pensions
The pension details for either defined contribution (including personal pension) schemes or defined benefit schemes, as applicable for each executive director (non-executives not being eligible), all of whom served as executive directors throughout the year, are shown in the link above. Defined benefit details take no account of the effects, if any, of the changes to the schemes taking effect during 2006. Increases in accrued pensions during the year exclude those due to inflation. The transfer values of increases during the year, and changes in total transfer values during the year, are shown before the effects of inflation and after deduction of the directors' own contributions during the year. Transfer values are calculated in accordance with guidance published by the Institute of Actuaries and the Faculty of Actuaries dated 4 August 2003.

Executive directors' Performance Share Plan participations
An outline of the Performance Share Plan, and of the basis of the participations granted to date, is set out in the 'Remuneration policies' section earlier in this report. The shares under option of the directors of the Company participating in the PSP, after adjustments made in November 2005 to take account of the effects of the rights issue made that month, are as follows:


Directors' Performance Share Plan options held

Directors' estimated capital Builder Plan rewards

	Class/division	Total estimated reward for 2001 to 2005 as at 31 December 2005 (subject to audit) £000	Total estimated reward for 2001 to 2004 £000
B D Carpenter	Class	1,061.3	609.6
	AIS division	934.9	460.8
	Syndicate 2001	186.5	105.6
	Total	2,182.7	1,176.0
	50% payable in 2006	1,091.3	n/a
A W Holt	Classes	1,010.7	665.0
	Non-marine division	1,091.4	799.9
	Syndicate 2001	466.2	263.8
	Total	2,568.3	1,728.7
	50% payable in 2006	1,284.1	n/a

Executive directors' Capital Builder Plan participations
An outline of the terms of the Capital Builder Plan is set out in the 'Remuneration policies' section earlier in this report. The applicable classes and divisions of the business which will determine the rewards payable to each of the directors of the Company participating in this Plan are as follows:

	Class of business/division
B D Carpenter	Fleet
	AIS division
	Whole of Syndicate 2001
A W Holt	Catastrophe
	Risk Excess of Loss
	Marine Excess of Loss
	Total of Excess of Loss accounts
	Reinsurance and non-marine division
	Whole of Syndicate 2001

On the basis of the current estimated returns in respect of the 2001 to 2005 Lloyd's years of account, the current estimated total rewards of each of the directors in respect of the performance period are as shown in the above table. These figures are still subject to possible amendment, upwards or downwards, as a result of an audit of each individual's entitlements which is due to be completed after the date of this report.

50% of the total estimated reward is payable based on 31 December 2005 reserving, and is being paid to participants in 2006. These amounts, which are not included in the 'Directors' remuneration received' table, are approximately £1.1 million for Mr. Carpenter and approximately £1.3 million for Mr. Holt. The balance, which is dependent on future movements in reserves, will be payable one and two years' later. It is emphasised that the prospective rewards set out in the table could be reduced, as well as increased, not only as a result of audit but also by claims development over the next two years, relative to the present reserved position, in respect of the 2001 to 2005 underwriting years.


Details of share option schemes
Introduction
The Group has a number of share option schemes relating to the Company's shares, in which executive directors and other senior employees participate, and a Sharesave scheme in which all eligible employees, including executive directors, may participate. Where relevant, such schemes have been approved by shareholders. An overview of each scheme in which directors participate, each of their performance conditions and, where applicable, the current position regarding the fulfilment of performance conditions, is set out later in this section. The schemes set up by the former Murray Lawrence group prior to its merger with the Company in 1998 involved options over existing shares held by the Group's Employee Share Ownership Trust (ESOT) rather than over new shares in the Company to be issued in the future. Options granted under the Amlin Executive Share Option Schemes in 1997, 1998, 2002, 2003 and 2004 were made entirely over new shares to be issued in the future. In the cases of grants from 1999 to 2002, some of the options granted each year were on the basis that they would, when exercised, be satisfied out of shares held by the ESOT.

The rules of the Amlin Executive Share Option Schemes and the Sharesave Scheme each include limits on the overall number of unissued shares over which options may be granted. These are the Company's only option schemes under which new shares are committed to be issued. Grants over new shares under the executive schemes, after deducting any such options which have lapsed, are limited to 5% of the issued share capital in any 10 year period. Grants over new shares under any scheme are also limited to 5% over five years and to 10% over 10 years. At 31 December 2005, the numbers of shares, and percentages of the year end shares in issue, together with the equivalent percentage a year earlier, relating to each of these limits were as follows:

	Number of shares utilised 31 Dec 2005	Percentage of shares then in issue utilised 31 Dec 2005	Percentage of shares then in issue utilised 31 Dec 2004
Executive 5% limit over 10 years	18,803,217	3.55%	3.88%
All schemes 5% limit over 5 years	15,221,018	2.87%	3.26%
All schemes 10% limit over 10 years	22,010,864	4.15%	4.48%

None of the schemes with any options currently outstanding require the payment of any consideration for the grant of options. Adjustments to both numbers of shares under option and exercise prices were made in 2002 to the options under all schemes which were then outstanding to take account of share issues made that year and a further adjustment was made as at 4 November 2005 to take account of the Company's rights issue announced on 1 November 2005.

Performance Conditions of the Amlin Executive Share Option Schemes (the Amlin Schemes)
The Amlin Schemes are the only schemes operated by the Group under which options continue to be granted to executive directors (other than under the Performance Share Plan, which uses the ESOT, and the Sharesave scheme). The Amlin Schemes comprise both an Inland Revenue approved and an unapproved executive share option scheme. Both were approved by the Company's shareholders in 1997 and options have been granted in that and each subsequent year. On 21 March 2005, options were granted at an exercise price of 172.25p per share over a total of 2,441,903 new shares (2004: 2,864,566 new shares at 162.75p). This exercise price and number of shares were subsequently adjusted for the rights issue, as referred to above, to 161.77p and 2,598,264 shares respectively.

The options granted in 1997 and 1998 were only exercisable if the total shareholder return of the Company, over a three year period, exceeded that of the FTSE 100 index. Additionally, there were secondary targets based on achievement of levels of financial performance. For directors of the Company, these targets related to average returns on capital employed.

The options granted in 1999 to 2003 inclusive may only be exercised if (a) the total shareholder return of the Company, over a three year period, exceeds that of the median member of a comparator group of insurance companies and (b) the Remuneration Committee is satisfied that the underlying financial performance of the Company has been satisfactory. The 2004 and 2005 grants had the same conditions except that full vesting can only take place on upper quartile total shareholder return for any proportion of an award in excess of 50% of salary, as set out in more detail in 'Remuneration policies' above. The comparator groups of companies is agreed by the Committee at the time of each of the grants. In respect of the grants made in 2005 the comparator group, in addition to Amlin, was: Alea Group Holdings, Atrium Underwriting, Beazley, BRIT Insurance Holdings, Catlin Group, Chaucer Holdings, Cox Insurance Holdings, Domestic & General Group, GoshawK Insurance Holdings, Hardy Underwriting Group, Highway Insurance Holdings, Hiscox, Kiln, Royal & Sun Alliance Insurance Group, SVB Holdings and Wellington Underwriting.

The changes in performance conditions set under these schemes have been made to reflect the Company's development from an investment trust structure in 1997 to an insurance group by 1999. All of the secondary performance conditions have been intended to provide a measure of absolute financial performance alongside the relative performance measures of the primary conditions.

Measurement of performance conditions of the Amlin Schemes to date
Performance is first measured against the relevant conditions three years after grant and, for all option grants prior to 2004, if the conditions are not fulfilled may be re-measured over subsequent rolling three year periods.

With regard to the options granted in May 1997 and September 1998, the Company's total shareholder return exceeded that of the FTSE 100 index over the three years to May 2002 and September 2002 respectively and accordingly all of such options have met their primary performance conditions. The secondary condition in respect of the 1997 and 1998 grants for holding company executives, including one director of the Company serving during 2005, Mr Philipps, was related to returns on capital employed, adjusted for certain factors relevant to the then structure of the Group. In respect of both the 1997 and 1998 options of Mr Philipps and other continuing holding company executives, the Committee determined that this condition was fully satisfied on the basis of the returns over the three years to 31 December 2004 and accordingly all such options have been exercisable since March 2005.

The performance against the primary conditions of those grants from 1999 onwards which have reached the end of their first three measurement periods have been as follows, in each case after the first three year measurement period and as calculated by NBSC:

Grant	First nominal exercise date	Total shareholder return after three years	Ranking against return performance
1999 grants	Oct 2002	16%	4th out of 18
2000 grants	Jun 2003	47%	2nd out of 12
2001 grants	May 2004	36%	3rd out of 14
2002 grants	May 2005	77%	3rd out of 14
2003 grants	April 2006	152%	1st out of 15

Accordingly, the Committee has confirmed that the primary conditions of each of the above grants of options have been satisfied. Although the conditions of all of these only required median performance, it can be seen that top quartile performance was achieved in all cases over the initial measurement period.
The Committee concluded during 2005 that the secondary condition in respect of the 2002 grant, measured over the three year period to 31 December 2004, had been satisfied on first testing. The latter options were therefore exercisable from their third anniversary of grant, 2 May 2005. Similarly the Committee concluded in March 2006 that the secondary condition of the 2003 grant had also been satisfied on first testing. These options will accordingly be exercisable from the third anniversary of grant, 23 April 2006. In reaching these conclusions the Committee had regard, amongst other factors, to the underlying earnings, returns on equity, and increases in net tangible assets per share, over the relevant periods.

The Murray Lawrence 1998 Scheme
The Murray Lawrence Discretionary Share Option Scheme 1998 ('ML 1998 Scheme') is not an Inland Revenue approved scheme. Options were granted to selected employees and directors of the Murray Lawrence group in 1998 prior to the merger of the Company with ML (Bermuda) Limited that year. The options became options over the Company's shares following the merger and expire in August 2008. No further options will be granted under the scheme.

Measurement of performance conditions of the ML 1998 Scheme to date
Exercise is conditional on Amlin's share price attaining specified prices per share. The prices required for the first half of each holder's option had been attained prior to 2005, but not the target prices for the second half. Such target prices which, for the only director with these options, Mr Carpenter, was 201.3p per share, were all attained during 2005.

Amlin Savings-Related Share Option Scheme 1998 (Sharesave scheme)
A Sharesave option scheme was adopted by the Company in September 1998 and five offers and grants of options under this scheme have been made to date, in each case entirely over new shares to be issued in the future. On 7 October 2005 options were granted over 690,234 shares at an exercise price of 155.98p per share (subseqently adjusted as a result of the rights issue referred to above to 734,981 shares and 146.46p respectively). This scheme is open to all Group employees, including executive directors, who have been employed for more than a number of months which is specified at each grant. Exercises of options under the Sharesave scheme are not subject to any performance condition.

Total shareholder return performance
As background to the position regarding options performance conditions, the graphs below illustrate the total shareholder return performance of the Company's ordinary shares relative to two indices of which Amlin's shares are a constituent, the FTSE 350 index and the FTSE All Share Insurance index, over the five years to 31 December 2005. Comparisons are shown with both these indices (as they were in previous years' reports) as the performance of Amlin's shares is affected both by the general UK stock market in companies of its size and by its insurance sector.

The graphs show the values, at each year end from 2001 to 2005 inclusive, of £100 invested in the Company's shares on 31 December 2000 compared with the values of £100 invested in the relevant index on the same date. To produce a 'fair value', each point on the graphs is the average of the relevant return index over the 30 days preceding the relevant year end.






Executive directors' share options
Options held over shares in the Company as at 31 December 2005 by executive directors serving at the year end (non-executive directors not being eligible), all of whom were directors throughout the year, and the changes during the year, are set out in the following two tables:

Options held

Note: Where two tranches of options with the same exercise dates are listed, the tranches have differing performance conditions, as described earlier in this report.

Options exercised during 2005

	Scheme	Over new or ESOT shares	No. of shares exercised	Exercise price per share	Date of exercise	Share price on exercise	Profit on exercise (£)
B D Carpenter	Amlin	ESOT	125,123	77.68p	16 Mar2005	176.00p	123,021
	Amlin	ESOT	156,406	85.35p	16 Mar2005	176.00p	141,782
	ML 1998	ESOT	37,716	96.03p	16 Mar2005	176.00p	30,161
	Amlin	New	72,989	115.09p	17 Mar2005	170.25p	40,261
	Total		392,234				335,225
R A Hextall	Amlin	New	135,552	81.04p	14 Mar2005	177.00p	130,076
	Amlin	ESOT	86,505	77.68p	14 Mar2005	177.00p	85,917
	Amlin	ESOT	72,989	115.09p	14 Mar2005	177.00p	45,187
	Total		295,046				261,180
C E L Philipps	Amlin	New	26,735	112.21p	14 Mar2005	177.00p	17,322
	Amlin	ESOT	229,396	77.68p	15 Mar2005	175.50p	224,395
	Amlin	ESOT	218,968	85.35p	15 Mar2005	175.50p	197,400
	Sharesave	New	11,978	78.89p	1 Dec2005	240.00p	19,298
	Total		487,077				458,415

The calculations in the Executive directors' share options table of potential profit on exercise as at 31 December 2005 are based on a year end share price of 248.5p (2004: 141.5p). The high and low during the year were 250.5p and 141.5p respectively. These calculations are before tax and are theoretical as in many cases the options were not exercisable at the relevant date because they had not reached their earliest exercise date. The performance conditions applying to each grant of options, and more details of their current status, are summarised above in 'Details of share option schemes'.

Other than grants of options, the other directors' changes during the year resulted from the exercises of options set out above and from the adjustments referred to above to take account of the November 2005 rights issue. No directors' options lapsed during the year.

Valuation of options and Performance Share Plan awards granted in 2005
The unrealised profits and the profits on exercise shown in the two previous tables are heavily dependent on share price changes over the years and on the Directors' decisions on when to exercise. In terms of the decisions made by the Committee during the year regarding individual directors' remuneration, the most important measure relating to options is the value, at the date of grant, of the executive options granted to each director during the year. Using the same Black Scholes valuation method as used in the Company's financial statements (as summarised in note 22 to the Accounts) and, in the case of executive directors, assuming their continuing employment, the theoretical values of the executive options granted are estimated as follows:

Theoretical values of executive options granted in 2005

	Number of shares over which options granted in 2005*	Exercise price per share*	Theoretical value on date of grant (£000)
B D Carpenter	74,194	172.25	13.1
R A Hextall	78,374	172.25	13.9
A W Holt	91,437	172.25	16.2
C E L Philipps	107,112	172.25	18.9

*at date of grant: amounts and exercise price subsequently adjusted for the rights issue

Theoretical values at the date of the awards of the two participating directors' Performance Share Plan awards made in 2005, details of which are set out on here, have also been calculated on the same basis as used in the Company's financial statements, which in this case includes assumptions of directors' continuing employment and that a 15% average ROE is achieved over the five year performance period. Such estimates are as follows:

Theoretical values of PSP awards made in 2005

	Number of shares over which options granted in 2005*	Share price on date of grant*	Theoretical value on date of grant (£000)
R A Hextall	91,437	171.00	97.0
C E L Philipps	178,519	171.00	189.4

*at date of grant: amounts subsequently adjusted for the rights issue

Non-executive directors' fees, appointment and removal
In line with the recommendations of the Combined Code, the fees paid to non-executive directors of the Company, other than the Chairman, are determined by the full Board. The Board receives recommendations in this respect from a special committee chaired by the Chairman, with the Chief Executive and two other directors (one executive and one non-executive, each of which changes each year) as the other members. Recommendations and decisions are made taking account of professional advice and other information on the level of such fees paid by comparable companies for comparable services.

The Chairman's remuneration is determined by similar criteria, but by the Remuneration Committee. The minimum time commitments given by each director, as detailed in the Board corporate governance statement, are also taken into account. The policy recommended by the special committee and adopted by the Board in 2004 is that the non-executive fees within its responsibility should be set by reference to the upper quartile of such fees paid by companies of similar size, on account of the well above average complexity and regulatory responsibilities involved.

Each non-executive director is paid a basic fee and may be paid further for additional services, including for acting as Deputy Chairman of the Company, or serving as chairman of a committee or as members of more than one committee or of certain subsidiary boards. Non-executive directors have contracts for services rather than employment contracts. Their terms of appointment are formalised in letters of appointment which are updated from time to time. Non-executive directors, as is the case with executive directors, are appointed on the recommendation of the Nomination Committee, usually for a three year term. Non-executive directors may be removed, or not nominated for re-election at the end of their term, in each case in accordance with the Articles of Association of the Company. The commencement and expected year of expiry of each of the non-executive directors' current terms are as follows:

	Current term commenced	Date of most recently amended letter of appointment	Expected date of expiry of current term
N J C Buchanan	19 May 2004	22 September 2005	25 May 2006
R H Davey	15 December 2005*	14 December 2005	25 May 2006
R S Joslin	18 May 2005	15 September 2005	AGM in 2008
K T Kemp	18 May 2005	15 September 2005	AGM in 2008
R W Mylvaganam	18 May 2005	15 September 2005	AGM in 2008
Lord Stewartby	18 May 2005	15 September 2005	25 May 2006
R J Taylor	18 May 2005	15 September 2005	AGM in 2008

* appointed by the Board on that date. All other term commencements were elections or re-elections by shareholders

Details of nominations of directors at the 2006 Annual General Meeting, where applicable, are contained in the circular including the notice of the meeting being mailed to shareholders.

If a non-executive director is not nominated or re-elected at the end of a term of office, the director is not entitled to any extra payment on termination. In other circumstances three months' notice of termination may be given by either side.

Copies of the letters of appointment of non-executive directors are available for inspection at the Company's registered office.

By Order of the Board, on the recommendation of its Remuneration Committee

C C T Pender Secretary
9 March 2006