Aviation
The aviation division accounted for 8% of gross premium written in 2005 (2004: 10%). The division writes a mix of aviation related classes including airline, general aviation, airport and product liabilities and satellite risks. All classes are exposed to large event losses and the purchase of a comprehensive reinsurance programme is fundamental to our ability to underwrite this class. In 2005, 29% of business written was ceded to reinsurers.

Underwriting performance - Aviation

**2001 £m **2002 £m **2003 £m *2004 £m *2005 £m Gross premium 124.8 126.1 106.7 91.1 83.1 Net earned premium 46.8 85.9 83.1 71.3 69.9 Claims ratio % 91 61 47 51 49 Expense ratio % 29 24 44 33 21 Combined ratio % 120 85 91 84 70 Underwriting contribution -9.6 12.7 7.2 11.6 21.0 (*/** see Financial Highlights for basis of preparation)

The airline portfolio, which renews in the final quarter of the year, has reduced again as rates have continued to decline from their peak in 2002. Average airline renewal rates in 2005 were 11% below those in 2004. The lack of major airline losses has caused this decline but we believe that the risk exposure has risen as air traffic continues to increase.

We achieved stable or positive renewal rate movements on other aviation classes, and overall, the divisional renewal rate reduction was 2%. However the renewal retention rate has fallen to 69%
(2004: 73%) reflecting the changes to the composition of the airline account.

There were a number of airline losses during 2005, but the aggregate expected loss cost was a modest US$1.2 billion and Amlin had little exposure to them. The combined ratio
was a very respectable 70% (2004: 84%).