UK Commercial
Gross premium written by our UK commercial divisions represented 18% of 2005 income (2004: 18%). Business written in this area is largely for UK based clients, with incidental overseas exposures, and unlike in Amlin's other divisions which operate in the London subscription market, each risk is written
entirely by the division.

Underwriting performance - UK Commercial

**2001 £m **2002 £m **2003 £m *2004 £m *2005 £m Gross premium 144.1 173.9 222.4 171.4 177.1 Net earned premium 122.3 139.0 191.2 151.4 169.1 Claims ratio % 76 74 66 58 50 Expense ratio % 20 20 27 25 22 Combined ratio % 96 94 93 83 72 Underwriting contribution 4.9 8.4 13.9 25.3 46.7 (*/** see Financial Highlights for basis of preparation)

Whilst the business written is exposed to catastrophe risk, particularly the UK motor and property accounts, this element is reinsured. Inherently this division is attritional in nature.

Over recent years the level of liability business written has increased. This provides balance to the UK commercial motor account which has been the longstanding core of the division's business. Importantly it allows costs, particularly claims handling costs, to be spread over a broader income base with classes that have different rating cycles.

The UK commercial motor account continued to experience strong competition with rates reducing by 5%. The liability business began to witness greater competition in 2005, particularly for professional indemnity risks as new entrants increased competition. However, overall liability rates reduced by 6.5%. Consequently gross premium written, net of brokerage, reduced by around £9 million to £63 million. Overall the retention rates were 78% (2004: 82%).

The combined ratio was strong at 72%. Reserve releases of £27.8 million (2004: £13.1 million) again bolstered the result. This reflects strong reserving on a claim by claim basis as well as a reduction in caution applied to the liability account as the claims development continued to be good and claims patterns became more mature.