Marine
The marine division accounted for 18% of gross premiums written in 2005 (2004: 17%). Business written includes volatile classes, such as energy, specie and war, and attritional classes such as
hull, cargo and yacht.

Underwriting performance - Marine

**2001 £m **2002 £m **2003 £m *2004 £m *2005 £m Gross premium 124.9 152.4 188.1 158.0 172.7 Net earned premium 94.2 106.6 150.4 140.2 141.0 Claims ratio % 66 55 45 49 34 Expense ratio % 39 35 40 38 29 Combined ratio % 105 91 85 87 63 Underwriting contribution -5.0 9.9 22.2 18.6 52.6 (*/** see Financial Highlights for basis of preparation)

The business is written worldwide reflecting the nature of much of the marine business underwritten. However the yacht and bloodstock accounts have a UK bias.

During 2005 renewal rates across the division were stable (2004: stable). As with the previous year this masked a shifting rating environment between classes. Encouragingly attritional classes such as hull, bloodstock and yacht experienced modest improvements to overall rates. The energy account experienced modest increases and strengthened further in the fourth quarter as the impact of the 2005 windstorms on the energy market was rapidly felt. However the war account, which has experienced low loss incidence in recent years, became increasingly competitive with rates falling by 8% for the year.

In this environment the gross premium written increased by 9% to £172.7 million.

The combined ratio was an excellent 63%(2004: 87%). The only significant catastrophe losses incurred in 2005 were hurricane related. The division's 2005 gross windstorm losses were US$96 million (2004: US$9 million). This is a reflection of two severe storms, Katrina and Rita, hitting concentrations of rigs in the Gulf of Mexico, compared to just Hurricane Ivan in 2004. Offsetting this were reserve releases of £29.5 million (2004: £9.4 million).