Final Results

Amlin PLC
10 March 2006

AMLIN PLC


PRESS RELEASE
For immediate release
10 March 2006


                     PRELIMINARY RESULTS FOR THE YEAR ENDED
                          31 DECEMBER 2005 (UNAUDITED)


          RECORD PROFITS DESPITE WORST NATURAL CATASTROPHES IN HISTORY


Financial highlights


   •Record profit before tax of £182.7 million (2004: £128.9 million), after
    absorbing 2005 hurricane losses of £130.1 million (2004: £74.0 million)

   •Combined ratio stable at a healthy 82%

   •Record return on equity of 28.4%

   •Dividends (interim and proposed final) increased 27.5% to 10.2p per share

   •Rights issue successfully raised £215 million

   •$175 million of longer term debt raised

   •Net assets of the Group increased 72% to £792.6 million


Operational highlights


   • Amlin Bermuda launched with US$1 billion of capital

   • Strong insurance financial strength ratings assigned to Syndicate 2001
     and Amlin Bermuda

   • London market brokers rank Amlin as leading business for claims service

   • Continued leadership of process improvements for London market
     underwriting and claims

   • Turnover among senior underwriters was below 5% for fifth year in
     succession


Outlook for 2006


   • Strong opening position with unearned premium reserve of £523.8 million
     carried forward to 2006

   • Stronger pricing in key classes, including reinsurance, property and
     energy

   • Good start to year with gross premiums up 26% in first two months

   • Higher cash and investments, totalling £2.1 billion, increases potential
     return from investments


Enquiries:
Charles Philipps, Amlin plc                     0207 746 1000
Richard Hextall, Amlin plc                      0207 746 1000
Hannah Bale, Head of Communication, Amlin plc   0207 746 1118
David Haggie, Haggie Financial                  0207 417 8989/07768 332486
Peter Rigby, Haggie Financial                   0207 417 8989/07803 851426




FINANCIAL
HIGHLIGHTS
                       *2005       *2004     **2003     **2002     **2001
                          £m          £m         £m         £m         £m
--------------       ---------   ---------   --------   --------   ---------
Gross premiums         
written                993.5       945.6      937.4      717.1       587.4
Net premiums           
written (1)            829.3       790.2      787.6      573.0       486.5
Net earned             
premiums (1)           822.1       722.4      701.1      493.3       339.1
--------------       ---------   ---------   --------   --------   ---------
Profit (loss)          
before tax             182.7       128.9      117.8       44.8       (83.4)
Return on equity        28.4%       24.1%      26.6%      16.7%      (33.7)%
--------------       ---------   ---------   --------   --------   ---------
Per share amounts
(in pence)
Earnings                33.6        23.4       21.0       11.8       (34.2)
Net assets             150.2       117.6       98.7       80.3        68.0
Net tangible           
assets                 137.7       100.8       82.3       63.7        59.5
Dividends under          
IFRS                     9.0         4.7        2.1        0.8           -
Dividends (paid and
proposed final) in
respect of the          
calendar year           10.2         8.0        2.5        2.0           -
--------------       ---------   ---------   --------   --------   ---------
Syndicate 2001
operating ratios
Claims ratio              57%         50%        50%        63%         89%
Expense ratio             25%         32%        36%        33%         33%
Combined ratio            82%         82%        86%        96%        122%
--------------       ---------   ---------   --------   --------   ---------


* The indicated column 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
   • Accounting for dividends

(1) Net premiums written and net earned premiums exclude premiums received by
Amlin for reinsurance to close of non-aligned members of 2001.







CHAIRMAN'S STATEMENT


Hurricane losses reached an unprecedented level in 2005 and challenged the
insurance industry. Amlin absorbed some large losses but, due to its approach to
risk management and diverse portfolio, still produced excellent results. Our
return on equity of 28.4% in 2005 brings our weighted average five year return
to 17.4%.


Our 2005 profit before tax, of £182.7 million, was up 42% on 2004 (£128.9
million) which, after losses of £130.1 million (2004: £74 million) from major
catastrophes, highlights the strength of the underlying performance across the
Group. The underwriting contribution increased by 29% to £137.1 million (2004:
£106.6 million), with a combined ratio of 82% (2004: 82%), and investments
contributed £90.9 million, up 74% (2004: £52.1 million). £16 million of the
profit earned in 2005 was one off in nature, largely consisting of foreign
exchange gains. Compared to our previous accounting treatment, a further £26
million has been recognised on foreign exchange translation of premium.


Dividend

The Board proposes a final dividend of 6.2p per share, making total dividends
for 2005 of 10.2p per share (2004: 8p). This equates to 30% of earnings and is
consistent with our commitment made two years ago to distribute at least the
higher of 8p per share, adjusted for inflation, or 30% of earnings for each of
2005 and 2006.


The 2005 final dividend is to be paid on 31 May 2006, subject to shareholder
approval at the Annual General Meeting to be held on 25 May 2006, in respect of
shares on the register on 31 March 2006 (other than shares issued in the rights
issue in November 2005, which were issued on the basis that they do not rank for
the 2005 final dividend). There will be no scrip dividend alternative but a
dividend reinvestment plan is to be offered to shareholders for the first time.


Strategy

Having taken stock of the likely effect of the 2005 hurricane activity on the
shape of the insurance cycle for many of our business areas, we accelerated our
long term strategic plan to diversify beyond the Lloyd's market and set up Amlin
Bermuda which opened for business on 1 December 2005. Our ability to react so
quickly and to be up and running with a high quality team supported by proper
systems is a testimony to both the depth of our underwriting skill base, as we
transferred existing employees from London to Bermuda, the quality of
operational management, and the successful development of our administrative
processes and systems.


Our strategy in Bermuda is to grow the premium in selected classes, with target
new business to the Group of $350 million and $500 million for 2006 and 2007
respectively.


We are making good progress in working towards our Vision of becoming the
'global reference point for quality' in our markets. The dynamics forcing change
in our markets are accelerating and we believe that our focus on quality
reinforces our ability to seize opportunities which will enable us to accelerate
our progress towards our overall strategic goals.


Outlook

Property insurance and reinsurance markets have been badly shaken by the size of
hurricane losses in 2005, particularly from Katrina and Wilma, with many
companies forced to re-examine their business models and reduce risk exposures,
particularly in major catastrophe zones.


Consequently, rates today are considerably better in our non-marine and marine
businesses than we had expected they would be this time last year and for US
catastrophe exposed risk, in particular, we are experiencing significant price
increases.


Retrocessional reinsurance, which is the reinsurance of reinsurance portfolios
and which we have historically purchased to protect against extreme frequency
and severity of loss, has become so expensive that we believe it appropriate to
run more catastrophe risk internally whilst reducing our peak exposures. The
adjustment is being managed through this year.


An unearned premium reserve has been brought forward into 2006 of £523.8
million, broadly equivalent to last year. Substantially all of this will be
earned this year and, with stronger overall pricing, 2006 has the potential to
be another very good year for Amlin.


We expect conditions for our non-marine and marine businesses to remain
favourable through 2006 which would bode well for 2007. Our airline and UK
commercial classes have continued to come under increasing pressure but we
expect that competitors in these areas will realise the need to positively
adjust prices before too long. Amlin Bermuda has made a promising start. All in
all, we look to the future with confidence.


Board

Richard Davey joined the Board as a non-executive director in December 2005 and
brings with him a broad City experience.

At our AGM in May 2006 my deputy Lord Stewartby will not be standing for
re-election. Ian has been involved with the companies that preceded Amlin and
has served as Deputy Chairman since our formation in 1998. The Company has grown
and prospered throughout this period and we owe a great deal to him for his
constant support and valuable contribution.


Michael Davies has been Chairman of our principal subsidiary Amlin Underwriting
Limited since 2000. Now that the last year in which Lloyd's Names participated
has closed, Michael has decided to retire from that Board and I would like to
place on record our warm thanks for his contribution.


The Amlin Team

2005 has been a challenging year yet we have produced records results and
launched an important new company in Bermuda. This is due to the strong
leadership of Charles Philipps and his excellent management team who are
supported by all the employees in Amlin. Sustained progress continues to be made
and this is not achieved without a combination of skill and hard work for which
we owe our thanks.





Roger Taylor

Chairman



FINANCIAL PERFORMANCE

Financial performance
                          *2001      *2002      *2003      *2004      *2005
                             £m         £m         £m         £m         £m
----------------        ---------  ---------   --------   --------   --------
Gross premium             587.4      717.1      937.4      945.6      993.5
Net premium               486.5      573.0      787.6      790.2      829.3
Net earned premium        339.1      493.3      701.1      722.4      822.1
----------------        ---------  ---------   --------   --------   --------
Underwriting              
contribution              (85.5)      17.1      117.1      106.6      137.1
Investment                  
contribution                9.5       43.7       33.5       52.1       90.9
Net other costs             7.4       16.0       32.8       29.8       45.3
----------------        ---------  ---------   --------   --------   --------
Profit before tax         (83.4)      44.8      117.8      128.9      182.7
----------------        ---------  ---------   --------   --------   --------
Return on equity          (33.7)%     16.7%      26.6%      24.1%      28.4%
----------------        ---------  ---------   --------   --------   --------

* see financial highlights for basis of preparation.


The financial performance of the Group has once again been excellent with a
record profit before tax of £182.7 million (2004: £128.9 million) and return on
equity of 28.4%. This includes a one-off accounting gain on foreign exchange of
£16 million arising out of the initial investment in Amlin Bermuda.


This year's performance is particularly notable given the £130.1 million of
hurricane losses incurred for the 2005 storms (2004: £74 million for hurricane
and typhoon losses).


Underwriting contributed £137.1 million (2004: £106.6 million) to the pre tax
result. The hurricane losses noted above increased the claims ratio by 15.1% but
releases from prior period reserves amounted to £79.7 million (for Amlin's share
of the syndicate). However, consistent reserving strength has been maintained
for liabilities assessed at 31 December 2005 when compared to last year.


Investments produced a £90.9 million (2004: £52.1 million) return as investment
balances continued to grow and returns from both bonds and equities were greater
than for the previous year. Net costs amounted to £45.3 million (2004: £29.8
million) after financing costs.


Looking to the longer term, our performance has been strong with the weighted
average return on equity since 2001 of 17.4% against our cross cycle return
target of 15% and our estimated cost of equity of 8.5%. To put this into
context, this period includes three years with the worst cumulative catastrophe
insured losses on record, namely 2001, 2004 and 2005. The weighted average
combined ratio since 2001 for Syndicate 2001 is 91%. At a time when gross
premium income has grown by 69% to £993.5 million.


Underwriting performance

Underwriting performance - 100% Syndicate

                                   *2001      *2002      *2003    *2004    *2005
                                      £m         £m         £m       £m       £m
----------------            ---  ---------   --------   -------- -------- ------
Gross premium                      874.1      988.3   1,097.50    942.2    990.0
Net earned premium                 547.8      699.4      890.6    782.0    827.5
Claims ratio %                        89         63         50       50       57
Expense ratio %                       33         33         36       32       25
Combined ratio %                     122         96         86       82       82
Underwriting                      
contribution                      (118.8)      21.7      134.2    139.3    152.0
----------------            ---  ---------   --------   -------- -------- ------
* see financial highlights for basis of preparation.

Note: This table includes 100% of Syndicate 2001. The commentary until 
divisional performance is for Amlin's share.


Underwriting made a strong contribution to profit despite an extraordinary year
of catastrophe losses. 2005 is estimated to be the costliest on record for
hurricane losses with estimates of the insurance cost ranging from US$60 billion
to $80 billion. For Amlin, the 2005 storms cost US$ 236.7 million, net of
reinsurance.



Reserve releases were again material contributing £79.7 million (2004: £49.7
million) to profit. This is a welcome contribution in a difficult trading year.
Development of prior underwriting years has been considerably better than
expected.


The estimation of outstanding claims that the Group has to settle is a vital
element of overall management of the balance sheet. It is a major factor in
determining profitability and also knocks on to investment management, as very
different approaches are adopted for capital assets and policyholders' funds.


By its nature insurance is an uncertain business and much of Amlin's business is
large commercial insurance which can be volatile. The subjectivities that we
have to deal with when considering the level of outstanding liabilities include
the risk profile of an insurance policy, class of business, timeliness of
notification of claims, validity of the claims made against the policy and
validity of the quantum of the claim. At any time, there are a range of possible
outcomes that the Group faces when considering the population of claims that
remain to be settled.


Therefore we believe that it is appropriate to adopt a cautious stance to the
assessment of liabilities. Consequently reserves carried are in excess of a best
estimate of the likely outcome. As time passes the level of caution in respect
of an underwriting year is reduced to reflect the greater certainty that is
reached. However it should be noted that individual claim estimates may remain
highly subjective until a final settlement is made.


Importantly a consistent reserving strength has been adopted at the end of 2005
compared with the previous year. That said, there are a number of classes, most
notably our UK commercial liability classes, where our actual claims experience
has now provided a better guide to future development than we have had hitherto.
For such classes, we have improved our view of expected performance which does
generate a single year gain.


Gross premiums were up 4.6% despite a fall in renewal rates of 4% during 2005.
Net premiums written increased by 5.5%. The reinsurance premium ceded to
reinsurers was 17%, consistent with 2004. Net earned premium was up 6% at £827.5
million (excluding premiums associated with the reinsurance to close).

Hurricanes
                 Total Cost   Property    Property  Energy   Other
                             insurance reinsurance
                         $m         $m          $m      $m      $m                       
-----------       -----------   --------   --------- ------- -------
Katrina               527.4      218.2       267.4    32.0     9.8
Rita                  160.7       17.8        89.0    51.0     2.9
Wilma                 172.8       16.5       155.9       -     0.4
-----------       -----------   --------   --------- ------- -------
Gross loss            860.9      252.5       512.3    83.0    13.1
Reinsurance
recovery             (619.5)    (214.2)     (319.6)  (73.2)  (12.5)
-----------       -----------   --------   --------- ------- -------
Sub-total             241.4       38.3       192.7     9.8     0.6
Reinstatement
premiums               (4.7)      11.9       (28.8)   10.1     2.1
-----------       -----------   --------   --------- ------- -------
Net loss              236.7       50.2       163.9    19.9     2.7
-----------       -----------   --------   --------- ------- -------


The cost of the storm losses is greater than those experienced in 2004. Gross
estimated ultimate claims were significantly larger at US$860.9 million (2004
storms: US$ 265.0 million) which reflects the severity of the 2005 hurricanes.
This is true of not only Katrina, which is estimated to be the costliest natural
disaster on record, but also Wilma, which is estimated to be the seventh
costliest natural disaster on record since 1970. The resultant claims were
better absorbed by the reinsurance programme purchased by the Group which is
designed to deal with severity of losses. This is illustrated by the retention
rate (ie the net loss to gross loss ratio) which stands at an estimated 27% for
2005 and 53% for 2004.


We estimate the potential losses from large events on a contract by contract
basis rather than relying entirely on computer modelled output. At an early
stage our estimates are subject to material uncertainty as it takes several
months before loss adjusters and assessors can visit every damaged property.
However, by the year end they reflect formally advised claims or good
indications of likely loss received from intermediaries or clients. The
principal uncertainties that remain relate to final determination of the value
of claims, particularly for business interruption on property and energy claims,
and in a few cases, possible disputes.


The reinsurance recoverable from these events is significant. However our
reinsurance credit quality is generally good and our collections to date have
been made quickly. For the 2004 hurricanes we have collected recoveries of
US$171 million, almost 100% of total reinsurance recoveries requested. For 2005
we have already made reinsurance collections of US$148 million, 87% of total
collections requested.


Divisional performance

The following commentary is provided for the Syndicate business across all years
of account irrespective of the identity of the underlying capital support. This
removes any distortion in performance which is attributable to changing levels
of ownership of Syndicate 2001.


Non-marine

The non-marine division is the Group's largest business segment, accounting in
2005 for 56% (2004: 55%) of gross premiums written. The business is a blend of
classes which are exposed to catastrophic loss (eg catastrophe reinsurance),
large claim events (eg aviation reinsurance) and attritional claims (auto or
casualty).


Geographically the division's largest market is the United States with 55% of
business written there for 2005. However, diversity is important. For example,
in the United States our property catastrophe underwriting is focused on
regional insurance companies and regional exposures are closely monitored.
Internationally, our insurance and reinsurance include the provision of cover
for earthquake and wind storm in Japan, windstorm exposure in Europe and
earthquake in New Zealand.


Premiums written increased by £35 million or 6.7%, to £557 million. Overall,
rates fell during 2005 by 5% but renewal retention remained high at 83% (2004:
81%). Experience by class was varied. For example US catastrophe reinsurance
rates remained stable following the hurricane losses of 2004 but international
catastrophe reinsurance rates fell by 10%. However, following the active US
hurricane season rates began to rise again in the final quarter of the year.


The division's combined ratio was 93% (2004: 80%). The division again bore the
brunt of the windstorm losses which increased the combined ratio by 22.7% (2004:
16.7%). This was partially offset by reserve releases of £23.7 million.
Underlying performance remained strong with the limited impact from other
catastrophes in the year and no other major loss events.


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.


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).


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, 42% of business written was ceded to reinsurers.


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. During the 2005 renewal
season we declined to renew 15% of our airline accounts.


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%).


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.


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.


Amlin Bermuda

Amlin Bermuda, which commenced trading on 1 December 2005, underwrote US$5.5
million of income on risks which incepted in 2005. This premium will largely be
earned in 2006.


Amlin's Katrina experience

Hurricane Katrina was a major test of our catastrophe management capabilities.
The hurricane was extraordinary due to its size and severity as well as its
track over New Orleans that eventually led to the breach of levees and
catastrophic flooding of the city.


It affected a number of classes of Amlin's business with claims arising from
damage to energy installations in the Gulf of Mexico, damage from wind and flood
to large commercial property in New Orleans and Mississippi, and claims on
property reinsurance and catastrophe reinsurance programmes for clients with
their own exposures in the area.


The table below illustrates the sources of the loss and compares it to our
modelled US$60 billion Gulf of Mexico hurricane realistic disaster scenario
('RDS').



Class                        Katrina claim    RDS claim   Difference
                                        $m           $m           $m
Catastrophe reinsurance                175          281         (106)
Property reinsurance                    85           38           47
Property insurance                     217           65          152
Energy                                  32           92          (60)
Marine reinsurance                       7           13           (6)
Other                                   11           16           (5)
--------------------           -------------   ----------   ----------
Gross claims                           527          505           22
Reinsurance recoveries                (429)        (392)         (37)
Net reinstatement premiums               6           (9)          15
--------------------           -------------   ----------   ----------
Total                                  104          104            0
--------------------           -------------   ----------   ----------


Overall, the estimated gross loss was remarkably close to our modelled event
loss, although as can be seen above, the property insurance and reinsurance
losses were higher than modelled and other classes were less than modelled.


The loss emanating from the property insurance portfolio was greater than
envisaged due to the severe surge and flood losses to commercial property. The
models employed did not cater well for these eventualities. Conversely our
modelled event had a more severe impact upon the gulf energy installations than
the actual Katrina event because the wind path of the storm passed over a lower
concentration of values.


What is also clear from the loss numbers is the extent of reinsurance protection
that we had last year to reduce the volatility from such extreme events.


Investment performance

The investment contribution of £90.9 million, up 76% on the previous year, was a
strong performance. This reflected improved returns across most asset classes
and increased assets available for investment.


Our investment management approach is consistent with our underwriting based on
experience, diversity, risk management and management of market cycles. We have
in recent years invested in our investment management competencies recruiting a
Chief Investment Officer in 2003 and building a new investment framework which
includes market experts as a sounding board for investment management decisions.


For the purposes of deciding investment strategy we divide the Group's
investments into two distinct parts: first Group capital which supports the
underwriting business and second, policyholders funds where premiums are
received in advance of claim settlement.


The investment strategy of each part is then driven by the returns available on
particular asset classes for a given level of modelled investment risk. The
strategies determined are distinct because the level of risk that we are
prepared to accept for each part is different.


For policyholders' funds we have a relatively low risk appetite. The aim is to
match liability currency and duration with assets. This leads us to invest in
highly liquid short term bonds and cash. Return on short dated sterling bonds
was 5.3% (2004: 5.0%) compared to a total return on dollar assets of 1.6% (2004:
2.1%). This reflects the trend of the interest rate cycles in the UK compared to
the US. UK interest rates peaked at 4.75% followed by a first rate cut of 0.25%
in August as the UK economy slowed. In comparison, US interest rates were raised
by 0.25% eight times in 2005 as the US economy performed strongly and interest
rates were moved back to a more neutral position.


For the Group's capital the investment horizon is longer term and this allows
investment in more volatile asset classes, such as longer duration bonds and
equities. A value at risk ('VaR') asset model is used to determine the most
efficient benchmark for our solvency capital.






In September 2004 a strategic decision was taken to increase our investment
risk. At this point, with underwriting markets becoming more competitive, the
balance sheet growing and debt leverage reducing, we wanted to increase our
exposure to equities, and stock market conditions appeared supportive. During
2005 our average equity to bond/cash ratio was 41% compared to 26% in 2004.


The equity return for 2005 was an excellent return of 26.6% (2004: 14.4%). Cash
remained the asset of choice to balance the volatility of the equity portfolio
for the Group's capital and this generated a return of 4.8% (2004: 4.7%).


Amlin Bermuda holds its assets in US$ and trades predominantly in that currency.
As the Group's Bermuda operations grow and become a more material part of
trading activities, it will be necessary to reconsider the Group's
presentational currency.


Expenses

The expense ratio has decreased by 7%. Of the reduction, 4.9% results from an
exchange gain on the conversion of assets at the balance sheet date compared to
a loss in the comparative period. A further 2% is attributable to increased
premium written on a relatively stable cost base.


After exchange gains have been removed, operating expense increased by £15.7
million, or 17%, in the year.


This includes an increase in performance based employee incentives, to £24.2
million, from £17.2 million. We have accrued a further £8.8 million under the
capital builder plan, with the total accrued now amounting to £18.8 million.


Taxes

The Group tax charge for 2005 is £45.3 million (2004: £37.9 million), which
gives an effective tax rate of 24.8% (2004: 29.4%). This compares to a standard
corporation tax rate of 30%. The lower 2005 tax charge is partly due to the
utilisation of capital gains tax losses incurred in previous years against
investment capital gains, realised and unrealised on the equities held by the
Group.


The potential deferred tax asset from these previous capital losses was not
recognised until it was utilised. During the year, £11 million of the losses
were used with £12.7 million remaining unprovided at 31 December 2005.


In addition, the effective rate was lowered by offsetting US dollar trading
losses against previous US tax provisions.


Balance sheet

Cash and investments increased in the year by £794 million reflecting:

• Further increase in Amlin's share of Syndicate 2001. From 1 January 2006 Amlin
owns 100% of Syndicate assets having closed the 2003 underwriting year as at 31
December 2005;

• Strong organic cash flow as the Syndicate continued to trade profitably; and

• Debt and equity capital raised of £458 million to support the investment of $1
billion in

Amlin Bermuda and the expansion of Syndicate 2001.


Cash and investments now represents a multiple of 2.7 times (2004:3 times)
shareholders' equity.


International Financial Reporting Standards (IFRS)

This is the first year that the Group has reported its financial statements
under IFRS. The impact of the changes on opening net assets at 1 January 2004
was a modest reduction of £2.8 million.


The changes introduced under IFRS are set our in note 25 to the accounts. Most
of the changes are relatively immaterial. The more notable items include
translation of earned premium at historic rates when the transactions arose
rather than the average rate for the period that it is recognised in the income
statement. Compared to the previous accounting treatment, this change increased
profit by £26 million.


Dividends are only recognised when declared or paid. This means that the
proposed final dividend for the year is not recognised in the income statement
or balance sheet until it is approved at the Annual General Meeting.


OUTLOOK FOR 2006


The outlook for 2006 is again strong, although the final out turn will be
influenced by the extent of major catastrophe events.


Strong opening position

Like 2005, 2006 will benefit from a strong opening position with an unearned
premium reserve of £523.8 million, broadly at the same level as last year. With
renewal rates having held up well during 2005, recording an average decline of
only 4%, this unearned reserve is expected to yield a healthy margin in 2006.


Additionally, unless we experience abnormally adverse claims development on
prior year underwriting risks, we would expect further reserve releases in 2006.
2005 experienced exceptionally good claims development on prior year reserving
and the Syndicate result benefited from a release of £90.3 million (2004: £62.7
million), after the consistent application of our reserving policy.


Stronger pricing environment

The US hurricane losses of 2004 and 2005 have led to a reappraisal of risk and
claims costs for affected portfolios. This is having a marked effect on pricing
of catastrophe exposed risks, particularly in the United States. Further, it is
leading to greater stability than we would have otherwise expected in certain
other classes. Margins across the business remain strong in most classes with
much of the business priced at 2001/2 levels and above.

                                               Rating indices
Class                            2000   2001   2002   2003   2004   2005
Airline hull and liabilities      100    296    278    234    215    191
Marine hull                       100    115    148    171    183    188
Employers' liability              100    115    144    158    160    145
Energy                            100    140    172    189    165    171
Professional indemnity            100    110    149    178    180    164
US large property insurance       100    125    180    166    143    139
Non US catastrophe reinsurance    100    120    157    162    146    131
US catastrophe reinsurance        100    115    146    150    143    146
US casualty                       100    125    170    211    230    237
War                               100    250    288    244    220    206
Fleet motor                       100    121    136    142    140    136


For our US catastrophe reinsurance renewals we have achieved 15% increases at 1
January and we expect a continued strengthening as the year progresses. Gulf of
Mexico and Florida risks, which renew in the middle of the year are expected to
see very material increases in price. Competition for international catastrophe
premium is greater and whilst we expect that prices will rise, increases are
expected to be more modest. This is partly due to the behaviour of large
European reinsurers who are seeking to aggressively grow market share and partly
as other reinsurers seek greater diversity to balance their portfolios away from
US catastrophe risk. For our January international catastrophe reinsurance
renewals we achieved average rate rises of 5%.


Property insurance rates remain competitive internationally, but are beginning
to see greater rate increases in the United States. Offshore energy insurance
pricing also continues to be very firm. We also expect that higher marine
reinsurance costs should lead to increases in marine pricing beyond off shore
energy.


The two areas which remain subject to downward pricing pressure are airlines and
UK commercial business. For the latter we believe that some of our competitors'
performance is now poor enough to require a positive pricing response, although
for airlines we expect that it may take a major loss to turn the market. If this
is the case we will continue to increase selectivity, declining risks which we
believe are under priced.


Growth

We have increased the capacity of Syndicate 2001 by 17.6% to £1 billion for 2006
and have started Amlin Bermuda which has a 2006 target of new premium income to
the Group of US$350 million, including an estimated US$70 million of new
business which is expected to be ceded to it by Syndicate 2001.


Growth in premium income is expected to be greatest in those areas where rating
is strongest, so that our exposures increase by less than the growth in income.
Indeed, in some areas exposure will be reduced. Reinsurance, US property and
energy insurance are expected to increase proportionately their share of overall
income, whilst the two areas under pressure, airlines and UK commercial, are
budgeted to reduce.


We believe that our excellent broker relations, combined with the superior
service for which we are becoming known, will help us achieve the growth we
desire for 2006. Additionally, the award to Amlin Bermuda of an 'A' rating from
Standard & Poor's differentiates us from the other start ups in 2005 and should
help that business gain access to the international risks which are part of its
plan.


Growth in net premiums may be more noticeable than growth in gross premiums if,
as we have done to date in 2006, we continue to run the business with less
reinsurance protection. In this event we will seek to reduce peak catastrophe
exposures and this may result in reduced gross premiums as well as a reduction
in our outward reinsurance spend.


Good start to 2006

We have written £337 million of gross premium income across the Group in the
first two months of the year, which is 26% more than in the first two months of
2005. £263 million of this was renewal business for Syndicate 2001 and the
average rate increase was 4.5%. Of this Amlin Bermuda has written new business
of US $73 million.


Improving investment return potential

The Group's cash and investments now total £2.1 billion. Whilst we do not expect
to match last year's equity returns, we believe good returns overall should be
possible in 2006. Importantly US bond yields have risen over the last 2 years
and sterling bonds and cash yields remain adequate.


Increased catastrophe risk

The largest threat to our performance in 2006 is another year of high
catastrophe incidence. With Amlin Bermuda focused on reinsurance, writing an
unprotected account, and with Syndicate 2001's retocessional cover currently
provided by Amlin Bermuda, we are running greater catastrophe downside risk as a
percentage of net assets than in 2005, although until the commencement of the US
and Japanese wind seasons, our main exposure is limited to earthquake risk. We
intend to manage the Group's overall exposures so that they are within a maximum
risk appetite of £320 million for events with a probability of less than 1 in
100 years. This will be achieved by either purchasing more reinsurance for
Syndicate 2001, if the pricing of cover becomes more acceptable, or by reducing
our peak exposures in relevant zones.


Underwriting expertise and a consistent approach to underwriting risk management
and control is critical to the success of Amlin, making the retention of skilled
underwriters a business priority.

Our senior underwriters have on average 23 years' experience in the insurance
industry and an average of 11 years with Amlin.


We aim to keep voluntary turnover, excluding retirements, of our leading class
underwriters below 10% per annum and our overall employee turnover below 15%.
For 2005, Amlin's employee turnover remained within these targets. For senior
underwriters, turnover was below 5% for the fifth year in sccession.


Amlin Bermuda's underwriting team was transferred from our non-marine London
market business, providing the new business with an experienced team who have a
good knowledge of our client distribution networks as well as a thorough
understanding of the Group's underwriting philosophy and controls.


The depth of talent in our London market business enabled us to achieve this
while promoting a number of employees to more senior positions in London.






CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2005
                                                      2005              2004
                                       Notes            £m                £m
----------------------------           -------   ----------- ----   ----------
Gross premiums earned                   1, 2         986.7             883.7
Insurance premium revenue from the
receipt of                                 
reinsurance to close                       2          78.8              15.3
Reinsurance premiums ceded              1, 2        (164.6)           (161.3)
----------------------------           -------   ----------- ----   ----------
Net insurance earned premiums revenue                900.9             737.7
----------------------------           -------   ----------- ----   ----------

Investment return                       1, 6          90.9              52.1
Other operating income                     7           1.4               7.4
----------------------------           -------   ----------- ----   ----------
Net Income                                           993.2             797.2
----------------------------           -------   ----------- ----   ----------

Insurance claims and loss adjustment   
expenses                               1, 3         (912.1)           (542.2)
Insurance claims and loss adjustment
expenses relating to the 
receipt of reinsurance to close           3         (78.8)            (15.3)
Insurance claims and loss adjustment
expenses                               
recoverable from reinsurers            1, 3          436.4             163.0
----------------------------           -------   ----------- ----   ----------
Net insurance claims                                (554.5)           (394.5)
----------------------------           -------   ----------- ----   ----------

Expenses for the acquisition of 
insurance contracts                       4         (170.2)           (161.7)
Expenses for asset management fees                    (2.3)             (1.3)
Other operating expenses                  5          (73.1)           (106.0)
----------------------------           -------   ----------- ----   ----------
Expenses                                            (245.6)           (269.0)
----------------------------           -------   ----------- ----   ----------
----------------------------           -------   ----------- ----   ----------
Results of operating activities                      193.1             133.7
----------------------------           -------   ----------- ----   ----------
Finance costs                              8         (10.4)             (4.8)
----------------------------           -------   ----------- ----   ----------
Profit before tax                                    182.7             128.9
----------------------------           -------   ----------- ----   ----------
Tax                                        9         (45.3)            (37.9)
----------------------------           -------   ----------- ----   ----------
Profit for the financial year
attributable to                                      
equity shareholders                                  137.4              91.0
----------------------------           -------   ----------- ----   ----------

Earnings per share
Basic                                     20          33.6p             23.4p
Diluted                                   20          33.1p             23.1p
----------------------------           -------   ----------- ----   ----------



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2005

                               Notes   Share   Share    Other  Retained  Total
                                     capital Premium reserves  earnings
                                          £m      £m       £m        £m     £m
------------------             ------ ------- --------  -------  ------- -------
At 1 January
2005                                   98.8    154.2     43.5    163.3   459.8
Gains on
revaluation of
employee share
ownership
trust
recognised
directly in
equity                                    -        -      1.3        -     1.3
Currency
translation
differences on
overseas
operations                                -        -      3.8        -     3.8
Deferred tax                              -        -      1.7        -     1.7
Profit for the
financial year                            -        -        -    137.4   137.4
------------------             ------ ------- --------  -------  ------- -------
Total
recognised
income for the
year                                      -        -      6.8    137.4   144.2
Rights issue
proceeds, net
of issue costs                   16    31.9    182.8        -        -   214.7
Employee share option scheme:
- share based payment reserve             -        -      0.7              0.7
- proceeds from shares issued           1.8      7.0        -        -     8.8
Dividends paid                   21       -        -        -    (35.6)  (35.6)
------------------             ------ ------- --------  -------  ------- -------
                                       33.7    189.8      0.7    (35.6)  188.6
------------------             ------ ------- --------  -------  ------- -------
At 31 December
2005                                  132.5    344.0     51.0    265.1   792.6
------------------             ------ ------- --------  -------  ------- -------
------------------             ------ ------- --------  -------  ------- -------
                                      Share    Share    Other Retained    Total
                                    capital  Premium reserves earnings
                                                                         
                                         £m       £m       £m       £m       £m
------------------             ------ ------- --------  -------  ------- -------
At 1 January
2004                                   97.7    150.2     42.3     90.3   380.5
Gains on
revaluation of
employee share
ownership
trust
recognised
directly in
equity                                    -        -      0.8        -     0.8
Profit for the
financial year                            -        -        -     91.0    91.0
------------------             ------ ------- --------  -------  ------- -------
Total
recognised
income for the
year                                      -        -      0.8     91.0    91.8
Employee share option scheme:                      
- share based payment reserve             -        -      0.4        -     0.4
- proceeds from shares issued           1.1      4.0        -              5.1
Dividends paid                   21       -        -        -    (18.0)  (18.0)
------------------             ------ ------- --------  -------  ------- -------
                                        1.1      4.0      0.4    (18.0)  (12.5)
------------------             ------ ------- --------  -------  ------- -------
At 31 December
2004                                   98.8    154.2     43.5    163.3   459.8
------------------             ------ ------- --------  -------  ------- -------





CONSOLIDATED BALANCE SHEET
For the year ended 31 December 2005

                                                              2005         2004
ASSETS                                          Notes           £m           £m
-------------------------------                 ------    ----------   ----------
Cash and cash equivalents                          11         65.6         47.6
Financial investments at fair value through        12
income
- equity securities                                          116.2         90.1
- debt securities and other fixed income assets            1,962.0      1,212.4
Reinsurance assets                                 13
- reinsurers share of outstanding claims                     604.6        318.6
- reinsurers share of unearned premiums                       24.2         24.9
- debtors arising from reinsurance operations                387.3        261.3
Loans and receivables, including insurance         14
receivables
- insurance receivables                                      214.3        214.1
- loans and receivables                                      132.9         67.7
Current income tax assets                                      3.7          4.8
Deferred tax assets                                 9         21.1         22.5
Property and equipment                                         6.0          6.2
Intangible assets                                  15         66.0         66.0
-------------------------------                  ------   ----------   ----------
Total assets                                               3,603.9      2,336.2
-------------------------------                  ------   ----------   ----------

EQUITY
Share capital                                      16        132.5         98.8
Share premium account                              17        344.0        154.2
Other reserves                                     17         51.3         45.1
Treasury shares                                    17         (0.3)        (1.6)
Retained earnings                                  17        265.1        163.3
-------------------------------                  ------   ----------   ----------
Total shareholders' equity                                   792.6        459.8
-------------------------------                  ------   ----------   ----------

LIABILITIES
Insurance contracts                                13
- outstanding claims                                       1,704.3      1,103.3
- unearned premiums                                          523.8        517.3
- creditors arising from insurance operations                114.8         46.0
Trade and other payables                           18         67.1         71.6
Current income tax liabilities                                19.6          5.5
Financial liabilities - borrowings                 19        298.2         58.7
Retirement benefit obligations                                 1.3          1.5
Deferred tax liabilities                            9         82.2         72.5
-------------------------------                 ------    ----------   ----------
Total liabilities                                          2,811.3      1,876.4
-------------------------------                 ------    ----------   ----------

Total liabilities and shareholders' equity                 3,603.9      2,336.2
-------------------------------                 ------    ----------   ----------


The financial statements were approved by the Board of Directors and authorised
for issue on 9 March 2006. They were signed on its behalf by:




Roger Taylor Chairman                           Richard Hextall Finance Director



CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2005

Group cash generated from operations            Notes        2005        2004
                                                               £m          £m
--------------------------------                -------  ----------  ----------
Profit on ordinary activities before taxation               182.7       128.9
Net movement on Premium Trust Funds for non-aligned        
participations                                               (2.9)       (3.0)
Depreciation charge                                           2.1         2.6
Interest paid                                                 9.2         5.1
Interest received                                           (65.3)      (50.8)
Dividends received                                           (2.0)       (1.1)
Unrealised (gains)/losses on investments                    (13.5)        0.1
Net purchases of financial investments                     (757.7)     (252.0)
Increase in loans and receivables                           (64.9)      (12.3)
Increase in reinsurance contract assets                    (411.4)      (84.7)
Increase in insurance contract liabilities                  679.2       172.5
Increase/(decrease) in trade and other payables              (2.7)       33.7
Increase in retirement benefits                              (0.2)        0.3
--------------------------------                -------  ----------  ----------
                                                           (447.4)      (60.7)
Income taxes paid                                           (17.6)       (0.5)
Interest paid                                                (9.2)       (5.1)
--------------------------------                -------  ----------  ----------
Cash generated from operations                             (474.2)      (66.3)
--------------------------------                -------  ----------  ----------

Cash flows from investing activities
Interest received                                            65.3        50.8
Dividends received                                            2.0         1.1
Acquisition of subsidiary, net of cash acquired              (0.2)       (2.5)
Purchase of property, plant and equipment                    (1.9)       (2.4)
--------------------------------                -------  ----------  ----------
Net cash used in investing activities                        65.2        47.0
--------------------------------                -------  ----------  ----------
Cash flows from financing activities
Proceeds from issue of ordinary shares                      223.5         3.2
Proceeds from borrowings                                    266.1        55.6
Repayment of borrowings                                     (32.0)       (7.3)
Dividends paid to shareholders                              (30.6)      (15.3)
--------------------------------                -------  ----------  ----------
Net cash from financing activities                          427.0        36.2
--------------------------------                -------  ----------  ----------

Net increase in cash and cash equivalents                    18.0        16.9
Cash and cash equivalents at beginning of year               47.6        30.7
--------------------------------                -------  ----------  ----------
Cash and cash equivalents at end of year           11        65.6        47.6
--------------------------------                -------  ----------  ----------


Cash flows relating to non-aligned syndicate participations (see note 13) are
included only to the extent that cash is transferred between the Premium Trust
Funds and the Group. As these syndicates are outside of the Group's management
insufficient data is available to analyse the cash flows in any more detail.


The Group classifies the cash flows for the purchase and disposal of financial
assets in its operating cash flows, as the purchases are funded from the cash
flows associated with the origination of insurance contracts or the capital
required to support underwriting, net of the cash flows for payments of
insurance claims. Therefore cash generated from operations is net of £757.7
million (2004: £251.7 million) being cash generated in the period that has been
used to purchase financial investments.

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