21 Share capital

Group and Company Authorised ordinary shares of 25p each	2005 Number	2005 £m	2004 Number	2004 £m
At 1 January and 31 December	562,000,000	140.5	562,000,000	140.5

Allotted, called up and fully paid	2005 Number	2005 £m	2004 Number	2004 £m
At 1 January	395,089,608	98.8	390,871,916	97.7
Scrip dividend alternative shares issued	3,070,054	0.8	1,765,318	0.5
Shares issued on exercise of options	4,148,392	1.0	2,452,374	0.6
Rights issue	127,805,073	31.9	-	-
At 31 December	530,113,127	132.5	395,089,608	98.8

The scrip dividend shares were issued on 24 May 2005 in respect of the 2004 final dividend at a reference share price of 165.92 pence per share.

The interim dividend paid on the 7 October 2005 did not offer a scrip dividend alternative. The shares issued on exercise of options were issued for a total consideration of £3.5 million at an average price of 84.11p per share.

127,805,073 new shares were issued via a 7 for 22 rights issue which closed on 25 November 2005 with the new shares being issued on the following trading day, 28 November 2005. The rights issue raised £223.7 million gross, and £214.7 million net of expenses. The balance of the capital raised not including the share capital, £182.8 million, is included in the share premium reserve, analysed as gross £191.8 million and expenses of £9.0 million.


22 Share options

Details of the Amlin Executive Share Option Schemes are set out in the Directors' remuneration report. At 31 December 2005 the following options over new shares, which are potentially exercisable between three and ten years after grant, or earlier in special circumstances such as redundancy, were outstanding under these executive schemes:

Usual first month of exercise	Option price per share	Number of shares
June 2003	72.95p	73,417
May 2005	76.33p	1,424,526
October 2002	80.16p	271,162
May 2000	105.38p	438,890
May 2004	108.09p	329,703
September 2001	108.54p	388,261
April 2006	110.82p	2,370,674
March 2007	152.85p	2,882,953
March 2008	161.77p	2,571,509
		10,751,095

The following changes in new shares under option pursuant to these executive schemes took place during the year:

	Number of shares 2005	Weighted average exercise price 2005 pence	Number of shares 2004	Weighted average exercise price 2004 pence
At 1 January	11,342,736	114.83	10,577,840	98.78
Granted during the year	2,441,903	161.77	2,864,566	162.75
Exercised during the year	(3,591,499)	86.48	(1,898,497)	97.81
Lapsed during the year	(107,858)	129.19	(201,173)	85.23
Adjustments during the year	665,813	127.41
At 31 December	10,751,095	128.29	11,342,736	114.83

The weighted average remaining contractual life of the executive options outstanding at 31 December 2005 was 7.4 years (2004: 7.4 years).

In addition to these executive options, the following employee Sharesave options over new shares were outstanding at 31 December 2005:

Savings period	Usual first month of exercise	Option price per share	Number of shares
3 years	December 2005	78.89p	125,529
5 years	December 2007	78.89p	174,471
5 years	July 2006	91.87p	67,587
3 years	July 2007	134.11p	354,424
5 years	July 2009	134.11p	154,335
3 years	December 2008	146.49p	522,879
5 years	December 2010	146.49p	212,102
			1,611,327

The following changes in new shares under option pursuant to the Sharesave scheme took place during the year:

	Number of shares 2005	Weighted average exercise price 2005 pence	Number of shares 2004	Weighted average exercise price 2004 pence
At 1 January	1,417,195	106.01	1,468,523	87.25
Granted during the year	690,234	146.49	546,791	142.80
Exercised during the year	(556,893)	80.26	(497,303)	91.08
Lapsed during the year	(63,721)	107.01	(100,816)	106.62
Adjustments during the year	124,512	117.42	-	-
At 31 December	1,611,327	127.70	1,417,195	106.01

The weighted average remaining contractual life of the Sharesave options outstanding at 31 December 2005 was 3.0 years (2004: 2.5 years).

The trustee of the Group's Employee Share Ownership Trust ('ESOT') held 2,227,489 ordinary shares as at 31 December (2004: 4,229,734), of which 1,654,869 shares (2004: 4,095,924) were reserved to meet potential future exercises of executive options, in addition to the options over new shares detailed above. In addition, there are arrangements whereby the ESOT will provide up to 1,136,588 Performance Share Plan ("PSP") shares, normally not until 2009 or 2010. The ESOT shares are valued at the lower of cost and net realisable value. The market value of Amlin plc ordinary shares at 31 December 2005 was 248.5p per share (2004: 141.5p).

The assets, liabilities, income and costs of the ESOT are incorporated into the consolidated financial statements. The ESOT waives the right to dividends in excess of 0.01p per each share ranking for an interim or final dividend.

A charge has been made to the income statement for options granted after 7 November 2002 pursuant to the executive and Sharesave option schemes and the PSP the details of which are here.
The weighted average share price of Amlin plc throughout the period was 186.3p (2004: 153.2p)

The "Black Scholes" option pricing model has been used to determine the fair value of the option grants listed above. The assumptions used in the model are as follows:

	2005	2004
Weighted average share price	156.64p	148.23p
Weighted average exercise price	134.73p	120.28p
Expected volatility	30.0%	30.0%
Expected life (years)	3.25-7.5	3.25-7.5
Risk free rate of return	4.30%-4.50%	4.35%-4.50%
Expected dividend yield	2.00%-5.00%	2.00%-5.00%

Volatility
The volatility of the Amlin share price is calculated as a normalised standard deviation of the log of the daily return on the share price over rolling periods of six, 12 and 36 months. In estimating a 30% volatility the volatility of return for six months, one year and three year intervals is considered. As a guide to the reasonableness of the volatility estimate, similar calculations are performed on a selection of Amlin's peer group.

Interest rate
The risk fee interest rate is consistent with government bond yields.

Dividend yield
The assumptions are consistent with the information given in the report and accounts for each relevant valuation year.

Staff turnover
The option pricing calculations are split by staffing grades as staff turnover is higher for more junior grades. Furthermore, historical evidence suggests that senior employees tend to hold their options for longer whereas more junior levels within the organisation appear to exercise earlier. In addition senior employees hold a larger proportion of the options but represent a smaller group of individuals.

Market conditions
Amlin issues options that include targets for the Group's performance against a number of market and non-market conditions. Failure to meet these targets can reduce the number of options exercisable. In some circumstances no options may be exercised. Assumptions are made about the likelihood of meeting the market and non-market conditions based on the outlook at the time of each option grant.

23 Reserves

Group	Share premium account £m	Other reserves £m	Treasury shares £m	Retained earnings £m
At 1 January 2005	154.2	45.1	(1.6)	163.3
Issues of share capital for scrip dividend	4.7	-	-	-
Issues of share capital on exercise of options over new shares	2.3	-	-	-
Exercise of options over shares held by ESOT	-	-	1.3	-
Rights issue proceeds, net of issue costs (note 21)	182.8	-	-	-
Share option charge	-	0.7	-	-
Deferred tax	-	1.7	-	-
Currency translation differences on overseas operations	-	3.8	-	-
Profit for the financial year	-	-	-	137.4
Dividends (note 28)	-	-	-	(35.6)
At 31 December 2005	344.0	51.3	(0.3)	265.1

Other reserves is comprised of £45.7 million (2004: £45.7 million) being the cumulative amount of goodwill written off to reserves on acquisitions prior to 1 January 1999, a capital redemption reserve, charges for share options issued, deferred tax in respect of share options and the cumulative foreign exchange gains on investments in overseas operations (£3.8 million, 2004 £nil).

Group	Share premium account £m	Other reserves £m	Treasury shares £m	Retained earnings £m
At 1 January 2005	154.2	3.2	(1.6)	98.0
Issues of share capital for scrip dividend	4.7	-	-	-
Issues of share capital on exercise of options over new shares	2.3	-	-	-
Exercise of options over shares held by ESOT	-	-	1.3	-
Rights issue proceeds, net of issue costs (note 21)	182.8	-	-	-
Share option charge	-	0.7	-	-
Profit for the financial year	-	-	-	66.1
Dividends (note 28)	-	-	-	(35.6)
At 31 December 2005	344.0	3.9	(0.3)	128.5

24 Trade and other payables and deferred income

	2005 £m	2004 £m
Trade payables and accrued expenses	66.1	70.8
Social security and other tax payables	1.0	0.8
	67.1	71.6
	2005 £m	2004 £m
Current portion	56.4	53.3
Non current portion	10.7	18.3
	67.1	71.6

25 Financial liabilities: borrowings

	2005 £m	2004 £m
Bank loans	241.0	32.9
Finance lease creditors	0.1	0.2
Subordinated bond	57.1	25.6
	298.2	58.7
	2005 £m	2004 £m
Current portion	148.8	30.3
Non current portion	149.4	28.4
	298.2	58.7

The directors' estimation of the fair value of the Group's borrowings is £299.1 million (2004: £59.1 million).

A secured term facility of £30 million was arranged on 24 November 2004 for the Company with a group of banks led by Lloyds TSB Bank plc for a period of 12 months, with the first interest period being 25 November 2004 to 25 February 2005. The rate of interest was the aggregate of the LIBOR on the first day of the interest period, plus margin (fixed at 2.25%) and mandatory cost if any, the last of which is calculated by reference to banks' minimum reserve requirements. The Company repaid the loan in two tranches on 25 May 2005 (£20 million) and 1 July 2005 (£10 million).

The Group's Employee Share Ownership Trust (ESOT) had no outstanding loans from outside the Group at the year end (2004: £3.0 million). The previous bank loan was repaid by the ESOT on 28 July 2005 from the proceeds of options exercised and by the use of a replacement loan from the Company of £2.0 million. The bank loan had been secured by a fixed charge over a proportion of the Company's shares held by the ESOT and was pursuant to a facility agreed in September 2003, which was guaranteed by the Company. It is intended that the Company loan will be repaid from the proceeds of exercises of options over Amlin plc ordinary shares held by the ESOT.

Two US$50 million subordinated bonds have been issued by the Company. The first bond was issued on 23 November 2004 and bears an interest rate of 7.11% from the issue date to its reset date of 23 November 2014. The second bond was issued on 15 March 2005 and bears an interest rate of 7.28% from the issue date to its reset date of 15 March 2015. Both bonds have a maturity date on the fifteenth anniversary of their issue. Interest between the reset dates and the maturity dates is paid quarterly at the rate of the three month US dollar LIBOR plus 3.48% for the first bond and 3.32% for the second. The bonds must be redeemed by no later than the maturity dates at the principal amounts together with accrued interest. The Company has the option to redeem the whole of each bond issue, subject to certain requirements, on the reset date or any interest payment date thereafter at the principal amount plus accrued interest.

The Company entered into a new debt facility with its banks on 1 November 2005 consisting of the following arrangements:

• A £170 million term loan bridge facility to be repaid in equal repayments on or before 30 June and 31 December 2006. To date only £150 million of the facility had been utilised. The rate of interest is the aggregate of the LIBOR for a period comparable to each relevant interest period selected by the Company, plus a margin of 0.75% per annum to 30 June 2006 and then 1.00% per annum, plus any mandatory costs;
  
• A £20 million term loan to be repaid by 31 December 2007. The rate of interest is the aggregate of the LIBOR (as determined for the loan bridge facility), plus margin of 1.50% per annum, plus any mandatory costs;
  
• A US$125 million (£72.6 million as at 31 December 2005) multi-currency revolving credit facility terminating on 1 November 2010. The rate of interest is the aggregate of the LIBOR of the relevant currency (for a period as determined for the loan bridge facility), plus a margin of 1.50% per annum, plus any mandatory costs; and
  
• A £150 million Letter of Credit facility which is detailed in note 30 below.

	2005 £m	2005 £m
Within one year	0.1	0.1
Within two to five years	0.1	0.1
	0.2	0.2

	Total charge 100%		Group share %
	2005 £m	2004 £m	2005 £m	2004 £m
Defined benefit schemes
Lloyd's Superannuation Fund scheme	6.0	8.1	5.5	6.8
J E Mumford (Underwriting Agencies) Ltd retirement benefit scheme	(0.2)	0.3	(0.2)	0.3
	5.8	8.4	5.3	7.1
Defined contribution schemes	2.4	1.7	2.4	1.6
	8.2	10.1	7.7	8.7

	2005 £m	Total charge	2004 £m
Contributions relating to:
2001 valuation deficit - Amlin scheme	-	2.0
2004 valuation deficit - Amlin scheme	1.2	1.2
2004 valuation deficit - Orphan scheme	3.5	3.5
Ongoing funding	1.3	1.4
	6.0	8.1
Group share of total charge	5.5	6.8

	2005 % pa	2004 % pa
Price inflation	2.8	2.9
Rate of increase in pay	4.8	4.9
Rate of increase in pensions payment
- LPI (maximum 5% pa)	2.8	2.8
- LPI (minimum 3% pa, maximum 5% pa)	3.25	3.25
- LPI (maximum 3% pa)	2.8	2.8
Rate of increase of statutory revaluation on deferred pension	2.8	2.9
Discount rate	4.7	5.3

	Female Years	Male Years
Expectation of life for a member age 65 at 31 December 2005	22.6	19.5
Expectation of life for a member age 65 at 31 December 2015	23.3	20.3

	Asset mix 31 December 2005		Asset mix 31 December 2004		Long term rate of return
	Amlin section	Orphans section	Amlin section	Orphans section	31 December 2005	31 December 2004
Equities	50%	20%	65%	20%	7.5% pa	7.0% pa
Bonds	50%	80%	35%	80%	4.5% pa	5.1% pa

	2005 % pa	2004 % pa
Price inflation	2.8	2.9
Rate of increase in pay	4.8	4.9
Rate of increase of pensions in payment	2.8	2.8
Rate of increase of pensions in payment	2.8	2.9
Discount rate	4.7	5.3
Expected long-term return on plan assets	6.48	6.5

Components of pension costs	2005 £m	2004 £m
Current service cost	0.1	0.1
Interest cost	0.1	0.1
Expected return on plan assets	(0.1)	(0.1)
Amortisation of past service costs	-	0.1
Actuarial loss recognised immediately	0.4	0.1
Total pension cost recognised in the income statement	0.5	0.2

	2005 £m	2004 £m
Present value of defined benefit obligations	3.3	2.8
Fair value of scheme assets	2.0	1.3
Liability recognised in the balance sheet	1.3	1.5

Movements in benefit obligation	2005 £m	2004 £m
Benefit obligation at beginning of the year	2.8	2.3
Current service cost	0.1	0.1
Interest cost	0.1	0.1
Members' contributions	0.1	0.1
Past service costs	-	0.0
Actuarial loss	0.6	0.3
Benefits paid	(0.4)	(0.1)
Benefit obligation at end of year	3.3	2.8

Movements in scheme assets	2005 £m	2004 £m
Fair value of plan assets at beginning of the year	1.3	1.0
Expected return on plan assets	0.1	0.1
Actuarial gain	0.2	0.1
Employer contribution	0.6	0.1
Members' contributions	0.1	0.1
Benefits paid	(0.3)	(0.1)
Fair value of plan assets at end of year	2.0	1.3

The analysis of the Fund's assets and the expected rate of return at the balance sheet date was as follows:

	Asset mix		Long-term rate of return
	2005	2004	2005	2004
Equities	99%	99%	7.5%	6.5%
Cash	1%	1%	4.0%	4.75%

The long-term rates of return are estimated by the directors based on their current expectations of future investment performance.

The recent history of experience gains and losses is as follows:

	2005	2004
Difference between the expected and actual return on scheme assets:
Amount (£ million)	0.2	0.1
Percentage of scheme assets	12%	8%
Experience losses on scheme liabilities:
Amount (£ million)	0.6	0.3
Percentage of scheme assets	18%	11%

The estimated contributions expected to be paid into the scheme during the current financial year are £0.6 million.

c) The defined contribution scheme
Between 1998 and 31 August 2004, all new employees were invited to join the Amlin Group Money Purchase Scheme (AGMPS), which was part of the Lloyd's Superannuation Fund. Contributions made by the Group varied by age, seniority and the level of contribution that employees voluntarily made to the scheme. Employer contributions ranged from 4% to 21% and were fully expensed to the profit and loss account when due and payable. With effect from 1 September 2004, the scheme was replaced with a new stakeholder scheme (see d) below). Contributions to the old scheme ceased with effect from 31 August 2004 and the Lloyd's Superannuation Fund decided to wind up the scheme and secure pension rights via a transfer to Section 32A policies with Merrill Lynch Investment Management, which was the investment manager for the AGMPS. All staff members of the scheme have been given the option to retain benefits with Merrill Lynch or alternately transfer their fund value to another approved arrangement, which includes the Amlin Retirement Investment Scheme (ARIS).

d) The stakeholder defined contribution scheme
With effect from 1 September 2004, the Amlin Retirement Investment Scheme (ARIS) replaced the AGMPS. The ARIS is a stakeholder arrangement, which provides staff with greater choice and flexibility on contributions and investments, improved security of benefits, better information and administrative support, and improved portability. The employer contributions paid by Amlin have not changed as a result of these new arrangements, nor has the level of lump sum life assurance benefits. Winterthur Life is the chosen as the stakeholder provider.
The total contributions for the year ended 31 December 2005 to the AGMPS and ARIS schemes were £2.4million (2004: £1.6 million).

e) Other arrangements
Other pension arrangements include an occupational money purchase scheme which provides Death In Service protection for all employees. Regular contributions, expressed as a percentage of employees' earnings, are paid into this scheme and are allocated to accounts in the names of the individual members, which are independent of the Group's finances. There were no outstanding contributions at 31 December 2005 (2004: £nil).

27 Earnings and net assets per share

Earnings per share are based on the profit attributable to shareholders and the weighted average number of shares in issue during the period. Shares held by the Employee Share Ownership Trust ('ESOT') are excluded from the weighted average number of shares.

Basic and diluted earnings per share are as follows:	2005	2004
Profit for the period	£137.4m	£91.0m
Weighted average number of shares in issue	408.8m	388.4m
Dilutive shares	6.6m	6.0m
Adjusted average number of shares in issue	415.4m	394.4m
Basic earnings per share	33.6p	23.4p
Diluted earnings per share	33.1p	23.1p
Basic and tangible net assets per share are as follows:
Net assets	£792.6m	£459.8m
Adjustments for intangible assets	£(66.0m)	£(66.0m)
Tangible net assets	£726.6m	£393.8m
Number of shares in issue at end of period	530.1m	395.1m
Adjustment for ESOT shares	(2.2m)	(4.2m)
Basic number of shares after ESOT adjustment	527.9m	390.9m
Net assets per share	150.2p	117.6p
Tangible net assets per share	137.7p	100.8p

28 Dividends

The amounts recognised as distributions to equity holders are as follows:

Group and Company	2005 £m	2004 £m
Final dividend for the year ended:
- 31 December 2003 of 1.65 pence per ordinary share	-	6.4
- 31 December 2004 of 5.0 pence per ordinary share	19.7	-
Interim dividend for the year ended:
- 31 December 2004 of 3.0 pence per ordinary share	-	11.6
- 31 December 2005 of 4.0 pence per ordinary share	15.9	-
	35.6	18.0

The dividends for 2003 and 2004 were paid in a combination of cash and scrip dividend shares. The 2005 interim dividend was paid solely in cash.

The amounts paid in cash and scrip dividend shares were as follows:

Group and Company	2005 £m	2004 £m
Cash	30.5	15.3
Scrip dividend	5.1	2.7
	35.6	18.0

The final dividend of 6.2 pence per ordinary share for 2005, amounting to £24.9 million, payable in cash, was approved by the Board on 9 March 2006 and has not been included as a liability as at 31 December 2005.

29 Principal exchange rates

The principal exchange rates used in translating foreign currency assets, liabilities, income and expenditure in the production of these financial statements were:

	Average rate		Year end rate
Group and Company	2005 £m	2004 £m	2005 £m	2004 £m
US dollar	1.82	1.38	1.72	1.92
Can dollar	2.21	2.38	2.01	2.30
Euro	1.46	1.47	1.46	1.41

30 Contingent liabilities

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 2005 the total guarantee given by the Group under these deeds of covenant (subject to limited exceptions) amounted to £276.7 million (2004: £252.2 million). The obligations under the deeds of covenant are secured by a fixed charge over investments of the same value at the relevant valuation date, and a floating charge over the investments and, in respect of the obligations of certain of the corporate members, 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's Lloyd's underwriting.

The Group has also entered into Lloyd's deposit trust deeds for Funds at Lloyd's by which letters of credit ("LOCs") for a total amount of £150 million (2004: £130 million) have been deposited. The LOCs in place at the year end were deposited at Lloyd's in November 2005 pursuant to the new debt facility dated 1 November 2005 referred to in note 25 above. The LOCs deposited at Lloyd's prior to the new facility were provided pursuant to an earlier bank facility dated September 2005, which itself superseded an earlier facility dated September 2003. As also referred to in note 25, the new debt facility is guaranteed by the Company and four of its subsidiaries.

31 Commitments

There were no capital commitments at the end of the financial year (2004: £nil). At 31 December 2005 the board of Amlin Bermuda Ltd had authorised the leasing of premises in Bermuda. However, no contractual or non-contractual commitments had been made as at 31 December 2005. The Group had no other authorised but uncontracted capital commitments at the end of the year.

Throughout the year the Group leased certain land and buildings on short-term operating leases, under which the minimum annual commitments were £2.3 million (2004: £2.3 million). The leases expire in over five years. In addition, in December 2005 the Group leased additional office space in its main head office building. The annual rent on the new accommodation is £0.2 million (net of subsidies from the landlord). The lease expires in 2009.

32 Related party transactions

Amlin plc is a publicly owned company listed on the London Stock Exchange. Major shareholders are presented in the Directors' Report. The following transactions were carried out with related parties:

Transactions with shareholders
On 5 September 2005 the Company and certain of its subsidiaries agreed amendments to a Letter of Credit facility agreement, originally dated 3 September 2003, whereby a group of banks including Barclays Bank PLC (Barclays) had deposited letters of credit (LOCs) to the value of £130 million with the Society of Lloyd's as part of the Funds at Lloyd's required to support certain corporate member subsidiaries' underwriting. At the time the amendment agreement was entered into the Barclays group was a related party of the Company for the purposes of the Listing Rules, because subsidiary undertakings of Barclays had been entitled to exercise, or control the exercise of, more than 10% of the votes to be cast at general meetings of the Company in the 12 months preceding the transaction. The transaction fell within the definition of a 'smaller related party transaction' in Chapter 11 of the Listing Rules. The shareholding of the Barclays group was reduced to below 10% in January 2005.

The amendment agreement reduced the overall facility to £100 million, of which Barclays' participation was reduced from £27.8 million to £24 million. Barclays Capital also acted as one of three Mandated Lead Arrangers of the amended facility. In the event the facility was replaced on 1 November 2005 by a new LOC facility provided as one element of the new debt facility, to which Barclays was not a party, referred to in note 25 to these Accounts. The total fees and commissions paid to Barclays in respect of the amended facility was approximately £168,000.

Transactions with directors
During the period under review Mr B D Carpenter, a director, was a member of Syndicate 2001, managed by the Group. 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 with a participation of £181,875 which was 50% of his 2002 capacity before taking account of any capacity pre-emption. He participated on the same terms as the other members of the Syndicate, which included profit commission payable to the Group being waived. As a result of the offer, Mr Carpenter does not participate in the Syndicate for the 2004 or subsequent years of account.

The aggregate of fees and profit commission paid by Mr Carpenter was £12,059 (2004: £1,200), of which none was overdue at 31 December 2005 (2004: £nil).

Key management compensation
Key management personnel are those directors and senior managers responsible for planning and control of the activities of the Group.

Key management comprises 10 executive directors and employees and seven non-executive directors (2004: 10 and nine respectively).

Compensation paid during the year to key management personnel is analysed below

	2005 £m	2004 £m
Short term employee benefits	8.3	7.4
Post-employment benefits	0.5	0.5
Share-based payments	0.3	0.3
	9.1	8.2

Sale of goods and services
The Group, through its wholly owned subsidiary Amlin Corporate Services Limited, purchases goods and services on behalf of all Group companies and Syndicate 2001. In addition, Amlin plc, the ultimate parent company of the Group, procures certain services.

The value of the services provided during the year by Amlin plc to fellow Group companies is shown below, together with the value of goods and services provided to related parties by other Group companies.

	2005 £m	2004 £m	2005 £m	2004 £m
Short term employee benefits
Post-employment benefits	0.3	-	-	-
	0.3	-	-	-

The ultimate parent company, Amlin plc, charges SBA Underwriting Limited £15,000 per annum for accounting and administration services which is collected on a quarterly basis throughout the year. AUT Holdings Limited, a subsidiary of Amlin plc, holds a 30% interest in the parent company and underwriting of SBA Underwriting Limited.

Purchases of goods and sales
Amlin plc, the ultimate parent company within the Group, purchased goods and services from fellow Group companies. The values of these are disclosed below. All goods and services were purchased at cost.

	Company
	2005 £m	2004 £m
Purchases of goods and services:
- Syndicate 2001	0.1	0.3
- Amlin Corporate Services Limited	5.2	4.8
	5.3	5.1

	Balances during 2005
	Highest £m	Lowest £m	2005 £m	2004 £m
Balances outstanding at the year end:
- Syndicate 2001	(3.0)	(3.1)	(3.1)	(3.0)
- Amlin Underwriting Group plc	40.2	40.1	40.1	40.2
- AUT Holdings Ltd	(12.4)	(12.7)	(12.4)	(12.7)
- Amlin Investments Ltd	106.2	89.0	93.3	92.4
- Angerstein Underwriting Ltd	(0.5)	(0.5)	(0.5)	(0.5)
- Amlin Corporate Services Ltd	3.3	(5.7)	(5.7)	2.6
- Amlin Dedicated plc	(0.1)	(0.1)	(0.1)	(0.1)
- Amlin Corporate Member Ltd	75.4	(24.0)	(24.0)	74.4
- AUT (1 - 10) Ltd companies	48.2	(2.8)	(2.8)	48.2
- Delian A - L Ltd companies	9.8	1.6	1.6	9.8
- Amlin Overseas Holdings Limited	1.0	-	1.0	-
			87.4	251.3

All of the above intra Group debt is repayable on demand and corporation tax provisions reflect arms-length prices for the transactions between the Company and its subsidiaries.

33 Group owned net assets

The assets and liabilities attributable to Group owned companies, as opposed to the Group's syndicate participations, are summarised here.

The assets of the Syndicate included above are held in regulated trust funds and are only available to pay syndicate related expenditure.

The table below sets out the Group's share of the Syndicate assets and liabilities by currency at 31 December:

	Assets £m	Liabilities £m	Net 2005 £m	Net 2004 £m
US dollar	1,458.6	1,509.0	(50.4)	9.5
Can dollar	65.1	47.4	17.7	10.7
Euro	102.6	90.3	12.3	8.7
	1,626.3	1,646.7	(20.4)	28.9

34 Explanation of transition to International Financial Reporting Standards (IFRS)

This is the first year that the Group has presented its financial statements under IFRS. The following disclosures show the impact of the transition to IFRS on the Group's consolidated balance sheet as at 1 January 2004, the date of transition to IFRS, and 31 December 2004, the last date at which the Group's financial statements were prepared under UK GAAP. Also shown is the impact on the Group's consolidated income statement for the year ended 31 December 2004. The ultimate parent company of the Group, Amlin plc, has also adopted IFRS for its own individual company accounts and the same balance sheet disclosures as provided for the Group are provided for Amlin plc, as a stand alone entity, at the end of this note. A reconciliation is not presented to show the impact of the implementation of IFRS on the Company's income statement. The Company's profit for 2004 was reduced by £64.4 million from £59.1 million to a loss of £5.3 million as a result of the transition to IFRS. The differences comprise £64.0 million in respect of dividend income from subsidiary companies, which is now recognised in 2005 under IFRS and £0.4 million in respect of share based payments.

Detailed reconciliation of the consolidated balance sheet
as at 1 January 2004 from UK GAAP to IFRS


Detailed reconciliation of the consolidated balance sheet
as at 31 December from UK GAAP to IFRS


Detailed reconciliation for the year ended 31 December 2004
from UK GAAP to IFRS

a) Foreign exchange accounting for non-monetary assets and liabilities
IAS 21, The effects of changes in foreign exchange rates, requires foreign currency denominated non-monetary assets, liabilities and transactions
(i.e. those without a corresponding cash flow, being principally the unearned premium reserve, the reinsurers' share of the unearned premium reserve and deferred acquisition costs) to be converted to the functional currency using the exchange rate prevailing at the date of the original transaction (or an average rate for the period of the transaction) even when accounted for in subsequent periods.

Prior to the adoption of IFRS the Group converted non-monetary assets and liabilities at the rate of exchange at the balance sheet date at which they were reported, regardless of the period in which the asset or liability first arose. Furthermore, any movement in a non-monetary asset or liability that was recognised through the profit and loss account was converted using the average exchange rate for the period in which it was recognised in the profit and loss account.

b) Accounting for reinsurance to close (RITC)
Prior to the adoption of IFRS the RITC contract was accrued for at the year end, even though it was normally not finalised until after the year end. To the extent that Amlin's share of capacity increases from one year to the next this gave rise to a debtor and an equal increase in liabilities.
Following the transfer to IFRS the RITC is accounted for in the period in which the contract is finalised. The debtor and the increase in liabilities that previously existed is therefore now eliminated. In addition, the Group is now disclosing as premium income the amount of the RITC received relating to the increase in capacity for one year of account to the next. An equivalent increase in claims is also recorded.
These adjustments have no net effect on reported profits and net assets.

c) Dividend accrual
Under UK GAAP the Group accrued for the final dividend in the period in which the profits to which it related were recognised. Under IAS 10, Events after the balance sheet date, a dividend should only be recognised in the period in which it is declared and becomes a present obligation of the Group.

d) Syndicate capacity
Under UK GAAP, syndicate capacity purchased by the Group is capitalised at cost in the balance sheet and amortised over its useful economic life, which the directors considered to be 20 years. An impairment review is performed annually to ensure that the carrying value is appropriate.

Accounting for syndicate capacity changes under IFRS. IAS 38, Intangible assets, permits syndicate capacity to be classified as an indefinite life intangible asset. As such it is recognised at cost and is not amortised but is subject to an annual review to ensure that its value is not impaired and to determine whether events and circumstances continue to support an indefinite useful life assessment.

In adopting IAS 38 the Group has reinstated all syndicate capacity amortised up to 1 January 2004 to original cost.

e) Employee benefits - pensions
Within the Group there are a number of different pension schemes, including two defined benefit schemes, one of which is a multi-employer scheme. Under UK GAAP the Group accounts for its defined benefit pension schemes in accordance with SSAP 24, Accounting for pension costs. Both SSAP 24 and IAS 19, Employee benefits, permit the multi-employer scheme to be accounted for as a defined contribution scheme subject to satisfying certain conditions. The Group believes these conditions are satisfied. Accounting for defined contribution schemes does not change under IFRS.

Under SSAP 24 the assets and projected liabilities of the remaining defined benefit scheme are not recognised on the Group's balance sheet. Instead the costs of the schemes are charged to operating profit so as to spread the expense of providing future pensions to employees over the remaining average service lives of current employees in the scheme. Adjustments are made for surpluses or deficits that arise under the SSAP 24 basis of valuation. An accrual or prepayment will arise to the extent that the charge in the profit and loss account does not equate to the cash contributions made into the scheme.

Under IAS 19 the projected liabilities of the defined benefit pension schemes are matched against the fair value of the underlying assets and other unrecognised actuarial gains and losses in determining the pension liabilities for the year. Any pension asset or liability must be recorded on the balance sheet. IAS 19 does permit cumulative gains or losses that lie within a defined 'corridor' to not be recognised. However, Amlin plc does not currently intend to apply this 'corridor approach' to valuing pension deficits.

An amendment was issued to IAS 19 in December 2004 which, subject to endorsement by the EC, requires that if there is a contractual agreement between employers in a multi-employer defined benefit scheme, that is accounted for as a defined contribution scheme, as to how a surplus should be distributed or a deficit funded, then that surplus or deficit shall be recognised as an asset or a liability. This requirement will be mandatory for accounting periods commencing on or after 1 January 2006, if endorsed by the EC. The Group has decided that it will not early adopt any of the amendments to IAS 19.

f) Employee benefits - other long-term employee benefits
IAS 19, Employee benefits, requires recognition of the costs of providing for long-term compensated absences. There is no requirement under UKGAAP to recognise such provisions.

g) Reclassifications between financial investments and cash and cash equivalents
Certain investments of the Group meet the definition of cash equivalents included in IAS 7, Cash flow statements, and have therefore been reclassified from 'financial investments' to 'cash and cash equivalents'.

h) Valuation of financial investments
Under UK GAAP, the Group's financial investments have been carried at the mid-price quoted on the balance sheet date. IAS 39, Financial investments: recognition and measurement, requires the Group's financial investments to be valued at fair value which is deemed to be the bid-price.
Under IFRS the Group's financial investments are categorised as fair value through profit and loss. Accordingly, all gains (realised and unrealised) will be passed through the income statement.

i) Share-based payments
Under UK GAAP the Group is not required to expense the costs of share-based payments made to directors and employees in the profit and loss account. IFRS 2, Share-based payments, requires the cost of all share-based payments to be charged against profits over their respective vesting periods.

j) Discounting of debtors and creditors due after more than one year
Under IFRS debtors and creditors that fall due outside of one year from the balance sheet date (excluding deferred tax assets and liabilities) must be discounted to their net present value at the balance sheet date using an appropriate discount rate. Discounting of such items is not required under UK GAAP.

k) Service companies
Prior to the adoption of IFRS the Group did not consolidate all of its service companies. Instead net transactions were processed through the syndicate profit and loss account. IAS27, Consolidated and separate financial statements, requires that the service companies are consolidated on the basis that they are controlled by the Group.

Detailed reconciliation of the Amlin plc parent company balance sheet as at 1 January 2004 from UK GAAP to IFRS

	UK GAAP £m	Dividend accrual (IAS10) £m (note c)	Share based payments (IFRS2) £m (note i)	IFRS £m
Cash and cash equivalents	0.4			0.4
Financial investments at fair value through income	12.2			12.2
Loans and receivables	181.9			181.9
Deferred tax asset	0.2			0.2
Investments in subsidiary undertakings	205.4			205.4
Property and equipment	1.8			1.8
Total assets	401.9		-	401.9
Share capital	97.7			97.7
Share premium account	150.2			150.2
Other reserves	2.7			2.7
Treasury shares	(2.4)		0.2	(2.2)
Retained earnings	115.0	6.4	(0.2)	121.2
Total shareholders' equity	363.2	6.4	-	369.6
Current income tax liabilities	0.1			0.1
Trade and other payables	35.2	(6.4)		28.8
Financial liabilities - borrowings	3.4			3.4
Total liabilities	38.7	(6.4)	-	32.3
Total equity and liabilities	401.9	-	-	401.9

Detailed reconciliation of the Amlin plc parent company balance sheet as at 31 December 2004 from UK GAAP to IFRS

	UK GAAP £m	Dividend accrual (IAS10) £m (note c)	Share based payments (IFRS2) £m (note i)	IFRS £m
Cash and cash equivalents	0.9			0.9
Financial investments at fair value through income	12.5			12.5
Loans and receivables	275.3	(64.0)		211.3
Deferred tax asset	0.2			0.2
Investments in subsidiary undertakings	208.6			208.6
Property and equipment	1.8			1.8
Total assets	499.3	(64.0)	-	435.3
Share capital	98.8			98.8
Share premium account	154.2			154.2
Other reserves	2.7		0.5	3.2
Treasury shares	(1.6)			(1.6)
Retained earnings	142.9	(44.4)	(0.5)	98.8
Total shareholders' equity	397.0	(44.4)	-	352.6
Current income tax liabilities	5.7			5.7
Deferred tax liabilities
Trade and other payables	37.9	(19.6)		18.3
Financial liabilities - borrowings	58.7			58.7
Total liabilities	102.3	(19.6)	-	82.7
Total equity and liabilities	499.3	(64.0)	-	435.3

The following five year summary is provided as additional information. It has been prepared from the accounting and/or statutory records of the Group together with adjustments, as described in the notes, for changes in accounting policies made after the date on which the original data was published. This information does not form part of the statutory financial statements but it should be read in conjunction with them and the responsibilities section of the auditors' report thereon.

	2005 £m	**2004 £m	***2003 £m	***2002 £m	***2001 £m
Managed capacity (year of account)	850	1,000.0	999.6	799.7	574.5
Amlin capacity	850	1,000.0	861.4	578.3	400.1
Gross premiums written	993.5	945.6	937.4	717.1	587.4
Net premiums written (i)	829.3	790.2	787.6	573.0	486.5
Net earned premium (i)	822.1	722.4	701.1	493.3	339.1
Profit attributable to underwriting
Profit (loss) before tax	182.7	128.9	117.8	44.8	(83.4)
Equity dividend	35.6	18.0	8.0	2.9	-
Intangible assets	66.0	66.0	63.2	63.2	17.2
Other financial investments
Total assets*	3,603.9	2,336.2	1,977.8	1,755.7	1,573.4
Total liabilities	2,811.3	1,876.4	1,597.3	1,452.3	1,438.9
Equity shareholders funds*	792.6	459.8	380.5	303.4	134.5
Earnings per share
- basic	33.6p	23.4p	21.0p	11.8p	(34.2)p
- diluted	33.1p	23.1p
Dividends per shar	9.0p	4.7p	2.1p	0.8p	-
Net assets per share*	150.2p	117.6p	98.7p	80.3p	68.0p
Tangible net assets per share*	137.7p	100.8	82.3p	63.7p	59.5p
Share price (at 31 December)	248.5p	141.5p	128.0p	119.0p	86.5p

* The indicated amounts have been restated to the current policy whereby 'Own shares' are deducted from equity, where they were previously classed as an asset. The per share amounts have been restated taking account of this change.
** The indicated columns above are restated under International Accounting Standards.
*** The indicated columns above have been restated for the following material changes under International Accounting Standards
  Write back of amortisation on syndicate capacity
  Non-monetary assets foreign exchange adjustment
  Retirement benefit obligation recognition
  Mid to bid market valuation of financial assets
(i) Net premiums written and net earned premiums exclude premium received by Amlin for the reinsurance to close of non-aligned members of 2001.