Interim Results
Amlin PLC
14 September 2000
AMLIN PLC
Interim results for the six months ended 30 June 2000
Highlights
* Purchase of a further 10% of managed syndicate
capacity in Lloyd's auctions to date - owned
capacity now at 67.5%;
* Managed syndicates continue to outperform the
Lloyd's average;
* Improvement in key ratios of managed syndicates;
- Combined ratio 5% lower at 110%
- Expense ratio 6% lower at 29%
* Premium income increased from £85.8 million to £187.4
million owing to growth in underlying business and
strategy to increase managed syndicate capacity ownership;
* Technical result improved from a loss of £1.5 million
to a profit of £1.5 million;
* Fleet motor rates continue to rise at 27% for second quarter 2000;
* Operating loss and net assets reflect adverse investment
return fluctuation - largely recouped since 30 June;
* Interim dividend of 1.4p per share up 8%.
Six months Six months Twelve months
2000 1999 1999
£m £m £m
------------------------------------------------------------------------
Gross premium written 187.4 85.8 161.4
Net premium written 131.4 57.3 126.8
Earned premium 97.2 46.1 106.4
Continuing technical 1.5 (1.5) 2.4
profit/(loss)
Discontinued technical loss (1.3) (2.2) (1.1)
Operating (loss)/profit (11.4) 5.0 14.2
Earnings per share (pence) (8.4) 2.3 5.9
Dividends per share (pence) 1.4 1.3 3.8
Net assets 209.5 223.6 226.9
Net assets per share (pence) 106.6 108.1 110.0
Enquiries:
Amlin plc : Charles Philipps 020 7746 1059
Richard Hextall 020 7746 1058
Haggie Financial : David Haggie 020 7417 8989
Chairman's and Chief Executive's Joint Statement
Amlin continues to progress towards its strategic goal of
building a specialist commercial insurance company. We
have continued to successfully develop our insurance
operations by acquiring managed syndicate capacity and
growing premium income as we capitalise on the early
stages of improvement in trading conditions.
The Group's reported results belie the improvements in
our core underwriting operations, where the incurred loss
ratios on business incepting in 2000 are approximately
18% better than their 1999 equivalents. The results have
been affected by a number of factors highlighted under
'Interim results' below. The technical result on our
core continuing operations has improved but our strategy
of rapidly increasing our ownership of managed syndicate
capacity leads to a short term strain on our results.
The Group's net assets at 30 June 2000 are £17.4 million
below those at 31 December 1999, reflecting a £7.4
million share buyback and an investment loss of £7.2
million on our FTSE 350 portfolio. The portfolio has
performed better since 30 June and these losses have been
largely recouped.
The Board remains confident of the prospects of the Group
as it continues to align its capital to support its own
managed capacity and, accordingly, it has increased the
dividend by 8% to 1.4p per share (1999: 1.3p) which will
be paid on 2 November 2000 to shareholders on the
register at the close of business on 29 September 2000.
Ownership of managed capacity
The Group has acquired an additional £59.4 million, or
10.3%, of managed syndicate capacity at an average price
of 6.2p per £ in the four auctions held to date. We now
own 67.5% of our managed syndicate capacity and we expect
to make further progress in the remaining 2000 auctions.
Syndicate merger
In May 2000 we obtained overwhelming approval to merge
our three syndicates, Syndicates 902, 1141 and 2001 with
effect from the 2001 year of account. Trading as one
syndicate from 2001 we will have greater operational
flexibility and will generate cost savings in our
reinsurance programmes and in other areas.
Reflecting these benefits and improving market
conditions, we have decided to increase the capacity of
Syndicate 2001 by 6.9% to £575 million for the 2001 year,
to enable us to write 15% more premium income.
E-commerce development
Our principal e-commerce business, Amlin Credit continues
to grow. The merits of the business were endorsed
externally with its nomination for the e-commerce award
at the British Insurance Awards. The team continues to
develop the product and we expect sustained growth during
the latter half of 2000.
We believe that e-commerce provides an added dimension to
our traditional London Market business and our in-house
'e-Group' has been working on a number of fresh
initiatives which we intend to launch over the coming
months.
Managed underwriting
We are pleased to report that our Coles and Amlin
Insurance Services Divisions are performing well, with
improvements in their combined ratios. The Harvey
Bowring Division, however, has performed below
expectations and steps have been taken to restore its
performance.
Our overall underwriting performance, on a 100% owned
basis, is shown below:
Six months Six months Twelve
2000 1999 months
£m £m 1999
£m
---------------------------------------------------------
Gross premium written 348.0 250.2 446.2
Net premium written 237.9 164.2 340.8
Earned premium, net 212.6 168.0 345.3
of reinsurance
------ ------- -------
Claims ratio 81% 80% 71%
Expense ratio 29% 35% 37%
Combined ratio 110% 115% 108%
------- ------- -------
Coles Division
The combined ratio of the Division improved to 101% in
the period (six months ended 30 June 1999: 103%), due to
a better claims ratio. Premium income for the Division
is beginning to expand, reflecting improving market
conditions, but is partially offset by increased
reinsurance costs.
The Division's excess of loss account is benefiting from
a very low loss frequency in the first six months of the
year, but we have taken a cautious view of ultimate loss
ratios given that the windstorm season is not yet over.
On an underwriting year basis, incurred loss ratios stand
at 3.4% compared with 31.8% for 1999 at the same stage of
development. This, combined with hardening rates, should
lead to an improvement in the result for 2000 taken as a
whole.
The direct marine account is starting to see limited rate
improvements. While terms are beginning to tighten, the
Division intends to hold income at low levels until there
is clear evidence of a return to sustainable
profitability.
The aviation account is geared towards the latter part of
the financial year, particularly for airline accounts.
This leads to an artificially high expense ratio in the
first six months which we estimate has impacted the
Group's combined ratio by 2% (six months ended 30 June
1999: 3%). Loss experience has been promising and
renewals to date have shown an increase in both rate and
premium. The heaviest renewal period is in the fourth
quarter which will be a key indicator to the future
profitability of this account.
Harvey Bowring Division
With the exception of its marine and excess of loss
accounts, the results of this Division have been
disappointing. The performance of most lines of non-
marine business has been poor, with the US casualty and
US binding authority accounts proving particularly
unsatisfactory.
The combined ratio in the six months to 30 June 2000
increased to 114% (six months ended 30 June 1999: 110%)
as a result of a worse claims ratio owing to a higher
level of attritional losses in 1999, higher levels of
settlement on our US casualty accounts and a
strengthening of reserves in Syndicate 1141 following a
detailed assessment by our syndicate monitoring team.
The latter reassessment added 6% to the Group's claims
ratio.
Management is focused on restoring performance in this
Division and underwriters have been adopting greater
selectivity in underwriting risks as well as demanding
better terms. Casualty income has been reduced. Binding
authority business is being refocused with a tough line
being taken on those accounts which have been
unsatisfactory.
The Division's short-tail account, which has performed
better, is expected to grow by some £30 million in 2000.
On an underwriting year basis, incurred loss ratios are
25% compared with 43% for 1999 at the same stage of
development. As with the Coles Division we have taken a
cautious view of ultimate loss ratios and, in the absence
of material developments, the result for the full year
should be improved.
Amlin Insurance Services Division
The Division's fleet motor account continues to achieve
renewals with an average rate increase of 27.5% with
renewal retention stable at a healthy 88%. The improving
claims ratio reflects rate increases achieved in 1999 and
the 2000 rate increases will continue this trend.
The combined ratio in the period has improved
significantly to 107% compared to 129% in the
corresponding 1999 period owing to an improved claims
ratio. The result would have been even better were it
not for the private car account which has continued to
perform poorly. Steps have been taken to scale back this
account and to focus on the successful commercial motor
account.
The liability account, which became part of the Division
in 1999, has remained relatively small with premium
income for 2000 forecast to reach just over £20 million.
The account has returned to profitability and is showing
signs of growth as multi-year deals written elsewhere in
the market expire and competitive capacity begins to
shrink.
Interim results
The Group's reported loss on ordinary activities before
tax of £18.2 million (six months ended 30 June 1999:
profit of £5.0 million) is not reflective of the
performance of the Group's core continuing operations
which recorded a technical account profit of £1.5 million
compared to a loss of £1.5 million in the corresponding
1999 period.
The loss on ordinary activities before tax was
particularly affected by two features.
Firstly, the investment return in the six months to 30
June 2000 was £16 million lower than in the period to 30
June 1999. This is due largely to the under-performance
of our indexed FTSE 350 portfolio which contributed a
negative investment return of £7.2 million. Since 30
June 2000 this has largely been recouped by positive
performance from the portfolio.
Secondly, the results include a charge of £9.4 million in
respect of goodwill relating to the members' agency
business sold during the period. Goodwill was previously
written off directly to reserves and accounting standards
now require this to be charged through the profit and
loss account on disposal. This has no impact on net
assets as an equal and opposite adjustment is made in the
balance sheet.
The technical account provides the best indicator of our
managed underwriting operations and in the six months
under review is affected by the performance of policies
predominantly underwritten in 1999 as well as changes to
reserving levels required for business underwritten in
prior years.
At the bottom of the insurance cycle this is a
satisfactory result, particularly as it has been impacted
by new business strain which is a short term phenomenon
resulting from the growth in our share of managed
capacity. In common with insurance companies which are
growing, expenses and reinsurance costs are incurred in
advance of receiving the benefit of underwriting profit
and investment income.
Also, Amlin has one of the larger catastrophe accounts in
the London Market where, in the year to date, loss
frequency has been particularly low, with an incurred
ratio of less than 5%. We have assumed an ultimate loss
ratio of approximately 75%, based on a 'normal' level of
loss experience, on the catastrophe premium income earned
in the first six months of 2000.
The Group's net assets at 30 June 2000 were £209.5
million compared to £226.9 million at 31 December 1999.
This reduction was substantially caused by £7.4 million
spent on buying back shares at an average price of 68p
per share, which has resulted in an enhancement to net
assets per share, and the investment loss (now largely
recouped) described earlier.
Outlook
Incurred loss ratios on business incepting in 2000 are,
on average, 18% better than in 1999 at the same stage
and, if the improvement is maintained, the trend of
improving results will continue for the year as a whole.
We expect this to be reinforced by the continued
improvements in motor rates and by the modest hardening
we have seen in other classes.
The past six months have seen further signs of the recent
adverse underwriting conditions having an impact on
available capacity, which we expect will continue to
reduce over the coming months. Amlin remains in a strong
position to benefit from this and the better market
conditions which we expect to materialise.
Consolidated Profit and Loss Account
for the six months ended 30 June 2000
Restated Restated
Six Six Twelve
months months months
2000 1999 1999
(unaudited) (unaudited) (audited)
Notes £m £m £m
-------------------------------------------------------------------------
Gross premium written
Continuing operations 1 187.4 85.8 161.4
Discontinued operations 1 - - 91.4
-------------------------------------------------------------------------
187.4 85.8 252.8
-------------------------------------------------------------------------
Balance on the technical account
Continuing operations 1 1.5 (1.5) 2.4
Discontinued operations 1 (1.3) (2.2) (1.1)
------- ------- --------
0.2 (3.7) 1.3
Investment return 4 2.8 18.6 35.3
Allocated investment return
included within the
Technical account 4 (10.8) (10.0) (24.7)
-------------------------------------------------------------------------
(7.8) 4.9 11.9
Other income 1.3 14.7 30.0
Other charges (4.9) (14.6) (27.7)
-------------------------------------------------------------------------
Operating (loss)/profit
Continuing operations (10.3) 4.3 8.9
Discontinued operations (1.1) 0.7 5.3
------- ------- -------
(11.4) 5.0 14.2
-------------------------------------------------------------------------
Comprising:
Operating (loss)/profit based (7.2) 2.1 12.0
upon longer term investment
return
Short term fluctuations in (4.2) 2.9 2.2
investment return
-------------------------------------------------------------------------
Profit on sale of syndicate
participations - - 5.0
-------------------------------------------------------------------------
Profit/(loss) on sale of 2 2.6 - (0.3)
subsidiary undertakings
Less: goodwill written off 2 (9.4) - (1.1)
-------------------------------------------------------------------------
(6.8) - (1.4)
-------------------------------------------------------------------------
(Loss)/profit on ordinary (18.2) 5.0 17.8
activities before taxation
Taxation on profit on 7 1.3 (0.3) (5.7)
ordinary activities
-------------------------------------------------------------------------
(Loss)/profit on ordinary (16.9) 4.7 12.1
activities after taxation
Equity dividends 8 (2.5) (2.7) (7.8)
-------------------------------------------------------------------------
Retained (loss)/profit for (19.4) 2.0 4.3
period
-------------------------------------------------------------------------
Earnings per ordinary share 6
- basic (8.4p) 2.3p 5.9p
- diluted (8.2p) 2.2p 5.6p
- before goodwill written (3.7p) 2.2p 6.2p
off on sale of subsidiaries
-------------------------------------------------------------------------
Consolidated Statement of Total Recognised Gains and Losses
for the six months ended 30 June 2000
Restated
Six Six Twelve
months months months
2000 1999 1999
(unaudited)(unaudited) (audited)
Notes £m £m £m
------------------------------------------------------------------------
(Loss)/profit for the period (16.9) 4.7 12.1
------------------------------------------------------------------------
Total recognised gains for (16.9) 4.7 12.1
the period
Prior period adjustment 1 - (9.5) (9.5)
------------------------------------------------------------------------
Total gains and losses recognised (16.9) (4.8) 2.6
------------------------------------------------------------------------
Reconciliation of Movements in Equity Shareholders' Funds
for the six months ended 30 June 2000
Restated
Six Six Twelve
months months months
2000 1999 1999
(unaudited)(unaudited) (audited)
Notes £m £m £m
-------------------------------------------------------------------------
(Loss)/profit attributable to (16.9) 4.7 12.1
shareholders
Less: dividends (2.5) (2.7) (7.8)
-------------------------------------------------------------------------
Retained (loss)/profit for the (19.4) 2.0 4.3
period
Issue of capital - - 0.6
Share repurchase 12 (7.4) - -
Shares to be issued - - (0.5)
Goodwill written back on 2 9.4 - 1.1
disposals
Goodwill charged in the period - - (0.2)
-------------------------------------------------------------------------
Net addition to shareholders' (17.4) 2.0 5.3
funds
Shareholders' funds at 1 226.9 221.6 221.6
January
-------------------------------------------------------------------------
Shareholders' funds at 30 June 209.5 223.6 226.9
/31 December
-------------------------------------------------------------------------
Consolidated Balance Sheet
at 30 June 2000
Restated Restated
30 June 2000 30 June 1999 31 December 1999
(unaudited) (unaudited) (audited)
ASSETS Notes £m £m £m
-----------------------------------------------------------------------------
Intangible assets 10 12.1 4.7 12.4
Investments 9 348.7 316.8 337.5
Reinsurers'share of
technical provisions
Provision for unearned
premiums 31.1 16.1 6.5
Claims outstanding 99.8 49.1 54.2
Debtors 131.5 50.9 69.2
Other assets
Cash at bank & in hand 25.6 34.2 7.2
Tangible assets 2.7 3.1 1.5
Own shares 4.2 2.8 3.9
Prepayments and accrued income 26.2 15.0 16.1
----------------------------------------------------------------------------
Total assets 681.9 492.7 508.5
----------------------------------------------------------------------------
Restated Restated
30 June 2000 30 June 1999 31 December 1999
(unaudited) (unaudited) (audited)
LIABILITIES Notes £m £m £m
---------------------------------------------------------------------------
Equity shareholders' funds 209.5 223.6 226.9
Technical provisions
Provision for unearned premiums 122.9 62.1 64.6
Claims outstanding 274.5 135.2 126.5
Provisions for other risks 7.6 4.7 6.9
and charges
Creditors 57.2 42.2 63.8
Creditors:amounts falling due 5.3 14.6 9.8
after more than one year
Accruals and deferred income 4.9 10.3 10.0
---------------------------------------------------------------------------
Total liabilities 681.9 492.7 508.5
---------------------------------------------------------------------------
Net assets per ordinary share 6
- basic 106.6p 108.1p 110.0p
- diluted 103.3p 104.7p 106.9p
---------------------------------------------------------------------------
Consolidated Cash Flow Statement
for the six months ended 30 June 2000
Restated Restated
Six months Six months Twelve months
2000 1999 1999
(unaudited) (unaudited) (audited)
£m £m £m
----------------------------------------------------------------------------
Net cash inflow from operating 46.5 46.4 61.7
activities
----------------------------------------------------------------------------
Net cash outflow from servicing of (0.2) (0.4) (1.1)
finance
----------------------------------------------------------------------------
Corporation tax paid (0.5) (6.0) (20.9)
----------------------------------------------------------------------------
Net (purchase)/sales of tangible (1.7) 0.1 (0.9)
and intangible assets
----------------------------------------------------------------------------
Net disposals of subsidiary 1.2 - (1.7)
undertakings
----------------------------------------------------------------------------
Equity dividends paid - - (9.9)
----------------------------------------------------------------------------
Net cash (outflow)/inflow from (8.4) (0.4) 0.7
financing activities
----------------------------------------------------------------------------
Net cash flows 36.9 39.7 27.9
----------------------------------------------------------------------------
Cash flows were invested as follows:
Increase/(decrease) in cash holdings 18.0 23.1 (5.7)
Decrease in deposits (3.3) (6.3) (7.0)
Early releases from Lloyd's premium - (0.2) (0.2)
trust funds
----------------------------------------------------------------------------
14.7 16.6 (12.9)
----------------------------------------------------------------------------
Net purchases of investments 22.2 23.1 40.8
----------------------------------------------------------------------------
Net investment of cash flows 36.9 39.7 27.9
----------------------------------------------------------------------------
Cash flows relating to non-aligned participations are included only to the
extent that cash is transferred between the Premium Trust Funds and the
group.
Notes
1. Basis of Preparation of Interim Accounts
a) accounting policies
The unaudited interim financial statements have been
prepared in accordance with the accounting policies set
out in the consolidated financial statements for the year
to 31 December 1999, except as set out below:
* underwriting results for participations on syndicates that are
not managed by Amlin ('non-aligned' participations)are provided by the
managing agents of those syndicates through an information exchange
facility operated by Lloyd's. At 30 June, comprehensive
underwriting information is not available from within the Lloyd's market.
Therefore, the balance on the technical account for non-aligned
participations (reported as discontinued operations) at 30 June 2000 and 30
June 1999 reflects only changes to open years' loss provisions, the
allocation of investment return and for 2000, a credit in respect of the
refund from Lloyd's of members' special contributions.
* the assets and liabilities in respect of non-aligned participations are
excluded from the balance sheets at June 2000 and June 1999 and the audited
balance sheet at 31 December 1999 has been restated onto the same basis.
* Financial Reporting Standard 16, 'Current Tax', was published in
December 1999 and has been reflected in these financial statements. The
principal requirement of the standard is that dividend income should be
reported without any attributable tax credit. Comparatives for the six
months to 30 June 1999 and the twelve months to 31 December 1999 have been
restated. This accounting policy change does not affect the reported
profit after taxation or shareholders' funds.
The impact of the change in accounting policy on operating profit
before taxation and on profit on ordinary activities before taxation,
is a reduction of £0.3 million (six months to 30 June 1999: £0.3 million;
twelve months 1999: £0.5million).
b) restatement of the comparative results for the six months to 30 June
1999
The comparative results to June 1999 have been restated to reflect the
three accounting policy changes that were implemented in the consolidated
financial statements for the year to 31 December 1999, being the adoption of
:
* the annual accounting basis of reporting the results
of the group's managed ('aligned') syndicates rather
than the three year accounting basis.
* longer term investment returns on the investments
supporting managed syndicates.
* average rather than period end rates of exchange for
US and Canadian dollar income and expenditure.
The consolidated profit and loss account for the six months to 30 June
1999 and the consolidated balance sheet at 30 June 1999, reported in
last year's interim statement, have also been restated to include
the underwriting transactions, investments, other assets and liabilities
relating to managed syndicates.
c) status of the interim statement
The statements for the two interim periods are unaudited but have been
reviewed by the auditors, Deloitte & Touche and their report for the six
months to 30 June 2000 is on page 16. The interim accounts do not
constitute statutory accounts as defined in section 240 of the Companies
Act 1985. The results for the year ended 31 December 1999 are based on
the statutory Group accounts which received an unqualified audit report and
have been filed with the Registrar of Companies.
2. Segmental Information
The results and attributable net assets of the Group's principal business
segments are as follows:
Restated Restated
Six months Six months Twelve months
2000 1999 1999
(unaudited) (unaudited) (audited)
£m £m £m
-------------------------------------------------------------------------
Profit before taxation
Underwriting and investment (11.3) 2.2 9.8
Managing agencies (0.1) 0.4 1.6
Members' agencies (6.8) 0.3 3.1
Other insurance services - 2.1 3.3
------------------------------------------------------------------------
Total (18.2) 5.0 17.8
------------------------------------------------------------------------
Net assets
Underwriting and investment 207.1 212.6 221.5
Managing agencies 2.4 7.1 2.0
Members' agencies - 1.9 3.4
Other insurance services - 2.0 -
------------------------------------------------------------------------
Total 209.5 223.6 226.9
------------------------------------------------------------------------
In the profit and loss account, the income and costs of
the managing agencies, members' agencies and other
insurance services are reported separately within 'other
income' and 'other charges'.
The group's members' agency business, Amlin Private
Capital, was sold in March 2000. The profit before
taxation for the six months 2000 includes a break-even
result up to the date of sale. The sale proceeds of £6.2
million represent a premium to net assets of £2.6
million. Goodwill of £9.4 million relating to the
members' agency has been previously written off against
reserves and accounting standards require that this
amount should be charged through the current period's
profit and loss account. The reported loss on sale is
therefore £6.8 million. This goodwill adjustment has no
effect on the group's net assets.
Other insurance services comprise the Whittington Group
which was sold in November 1999.
The results of the members' agency and other insurance
services businesses are reported in the profit and loss
account as discontinued operations.
3. Managed Syndicates' Results
The table below summarises the performance of the group's
managed syndicates 902, 1141 and 2001, on an annual
accounting basis, together with key ratios and the
syndicate investment return on a smoothed basis. The
group has increased its participation on the syndicates
during the period and comparisons of the group's share of
the results is distorted by the change in participation
by year of account. Therefore, to make meaningful
comparisons, the figures represent the results of the
syndicates in total rather than Amlin's share of the
results.
MANAGED SYNDICATES' RESULTS AT
100% LEVEL
Six Six Twelve
months months months
2000 1999 1999
(unaudited)(unaudited) (audited)
£m £m £m
-----------------------------------------------------------------
Gross premium written 348.0 250.2 446.2
Net premium written 237.9 164.2 340.8
Earned premium, net of 212.6 168.0 345.3
reinsurance
-----------------------------------------------------------------
Claims incurred, net of (172.5) (133.7) (246.6)
-----------------------------------------------------------------
Claims ratio (%) 81% 80% 71%
-----------------------------------------------------------------
Brokerage (46.3) (37.8) (76.5)
Syndicate expenses (19.1) (16.1) (39.2)
Lloyd's charges (3.4) (2.9) (7.7)
Increase in deferred 12.4 6.8 0.2
acquisition costs
-----------------------------------------------------------------
Net operating expenses (56.4) (50.0) (123.2)
-----------------------------------------------------------------
Expense ratio (%) 29% 35% 37%
-----------------------------------------------------------------
Combined ratio (%) 110% 115% 108%
-----------------------------------------------------------------
Syndicate investment return 17.9 15.6 33.2
after smoothing1
-----------------------------------------------------------------
1.6 (0.1) 8.7
-----------------------------------------------------------------
1 Excludes allocation of corporate investment return.
The group first reported annually accounted results for
managed syndicates in respect of the year ended 31
December 1998. The combined ratio for 1998 was 117%,
comprising a claims ratio of 78% and expense ratio of
39%.
4. Investment Return
a) Investment return reported in the profit and loss
account is as follows:
Restated Restated
Six Six Twelve
months months months
2000 1999 1999
(unaudited) (unaudited) (audited)
£m £m £m
--------------------------------------------------------------------
Income from investments 11.0 7.7 21.9
(Losses)/gains on realisation of (0.7) (1.1) 4.2
investments
Unrealised (losses)/gains on (6.8) 12.8 10.8
investments
Investment expenses and charges (0.7) (0.8) (1.6)
--------------------------------------------------------------------
2.8 18.6 35.3
--------------------------------------------------------------------
b) Allocation of Investment Return to the technical
account
The group's underwriting result for managed business
within the balance on the technical account includes an
allocation of longer term investment returns on UK
equities and bonds. The longer term rates of return
applied during 1999 and 2000 are 8% for UK equities and
6% for fixed interest securities.
The rates of return are applied to the average, over the
period, of the investments attributable to the
shareholders and insurance technical provisions of the
managed syndicates. The attributable shareholders' funds
are based on the Funds at Lloyd's which represent the
estimated risk based capital supporting the insurance
business. In the profit and loss account, the longer
term return is included within the technical account.
The actual return on investments since 1 June 1995,
compared with the aggregate longer term return over the
same period, is set out below. All figures are gross of
expenses.
1 June 1995 1 June 1995
to 30 June to 31 December
2000 1999
£m £m
-----------------------------------------------------------------
Actual return attributable to the 81.4 75.7
technical account
Longer term return attributable to 84.8 74.0
the technical account
-----------------------------------------------------------------
Effect of short term fluctuations (3.4) 1.7
over the period
-----------------------------------------------------------------
5. Principal Exchange Rates
The principal exchange rates used in the financial
statements are:
Six months Six months Twelve months
2000 1999 1999
-----------------------------------------------------------------------
Period Period Period Period Period Period
Average End Average End Average End
Rate Rate Rate Rate Rate Rate
-----------------------------------------------------------------------
US Dollar 1.59 1.50 1.62 1.59 1.61 1.61
6. Earnings and Net Assets Per Ordinary Share
a) Earnings per share is based on the loss attributable
to shareholders for the six months ended 30 June 2000 of
£16.9 million (six months ended 30 June 1999: profit £4.7
million; twelve months ended 31 December 1999: profit
£12.1 million) 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:
Restated
Six months Six months Twelve months
2000 1999 1999
(unaudited) (unaudited) (audited)
----------------------------------------------------------------------
(Loss)/profit for the period (£16.9m) £4.7m £12.1m
----------------------------------------------------------------------
Weighted average number of 201.0m 206.7m 206.5m
shares in issue
Dilutive shares to be issued 6.1m 8.0m 6.3m
----------------------------------------------------------------------
Adjusted average number of 207.1m 214.7m 212.8m
shares in issue
----------------------------------------------------------------------
----------------------------------------------------------------------
Basic earnings per share (8.4p) 2.3p 5.9p
Diluted earnings per share (8.2p) 2.2p 5.6p
----------------------------------------------------------------------
Excluding the goodwill of £9.4 million written back
through the profit and loss account on the sale of the
members' agency business, both the basic and diluted
earnings per share for the six months ended 30 June 2000
would be (3.7p).
Dilutive shares to be issued represent an adjustment for
shares which are expected to be issued to satisfy
deferred consideration for acquisitions together with
outstanding warrants and options which may be issued,
after taking into account the respective option and
warrant prices and the weighted average market value of
Amlin plc shares during the relevant periods. The last
exercise date for the outstanding warrants was 31 August
2000, on which date most of them lapsed.
b) Basic and diluted net assets per share are as follows:
Restated
30 June 30 June 31 December
2000 1999 1999
(unaudited) (unaudited) (audited)
--------------------------------------------------------------------
Net assets £209.5m £223.6m £226.9m
--------------------------------------------------------------------
Number of shares in issue at 205.6m 215.9m 215.8m
end of period
Adjustment for ESOT shares (9.0m) (9.1m) (9.4m)
--------------------------------------------------------------------
Basic number of shares after 196.6m 206.8m 206.4m
ESOT adjustment
Dilutive shares to be issued 6.4m 6.7m 5.9m
--------------------------------------------------------------------
Adjusted number of shares 203.0m 213.5m 212.3m
--------------------------------------------------------------------
--------------------------------------------------------------------
Basic net assets per share 106.6p 108.1p 110.0p
Diluted net assets per share 103.3p 104.7p 106.9p
--------------------------------------------------------------------
For net assets per share purposes, the number of dilutive
shares is taken as at the balance sheet date.
7. Taxation on (Loss)/Profit on Ordinary Activities
Restated Restated
Six months Six months Twelve months
2000 1999 1999
(unaudited) (unaudited) (audited)
£m £m £m
----------------------------------------------------------------------
UK corporation tax 1.1 3.5 8.8
Overseas taxation - - 0.1
Deferred taxation (2.4) (3.2) (3.2)
----------------------------------------------------------------------
(1.3) 0.3 5.7
----------------------------------------------------------------------
8. Equity Dividends
An interim dividend in respect of the six months to 30
June 2000 of 1.4p per share (30 June 1999 interim: 1.3p
per share; 31 December 1999 final: 2.5p) has been
declared, to be paid to shareholders on the register at
the close of business on 29 September 2000.
9. Investments
At valuation
---------------------------------------------
Restated Restated
30 June 2000 30 June 1999 31 December 1999
(unaudited) (unaudited) (audited)
£m £m £m
----------------------------------------------------------------------------
Shares and other variable 106.3 161.6 117.3
yield securities
Debt securities and other 216.2 130.8 160.5
fixed income securities
Participation in investment pools 1.0 - 11.7
Loans secured by mortgages 4.4 - 0.7
Deposits with credit institutions 18.8 18.1 45.6
Other 2.0 6.3 1.7
----------------------------------------------------------------------------
348.7 316.8 337.5
----------------------------------------------------------------------------
In Group owned companies 230.5 264.4 265.4
In managed syndicates 118.2 52.4 72.1
----------------------------------------------------------------------------
348.7 316.8 337.5
----------------------------------------------------------------------------
As explained in note 11, some of the group investments
are charged to Lloyd's to support the group's
underwriting activities.
10. Intangible Assets
At 30 June 2000, intangible assets of £12.1 million
comprised the cost of purchasing syndicate capacity,
£13.2 million, less the amortisation of capacity over its
estimated useful life of 20 years, £1.1 million.
11. Contingencies and Guarantees
The group has entered into various deeds of covenant in
respect of certain corporate member subsidiaries to meet
their obligations to Lloyd's. The total guarantee given
by the group (subject to limited exceptions) amounts to
£205.4 million and the obligations under these covenants
are secured by a fixed charge of the same amount over
investments and a floating charge over investments and
other assets of the group in favour of Lloyd's.
The group has also entered into a Lloyd's deposit trust
deed for Funds at Lloyd's by which a letter of credit
(LOC) for £5 million has been deposited. The LOC is
secured by a reinsurance contract and, in the event of
this being drawn down by Lloyd's to meet the group's
obligations, the reinsurers would have recourse to the
future profits of the group.
12. Share Repurchase
During the six months ended 30 June 2000, a total of
10,818,885 ordinary shares of 25p each were repurchased
for a total consideration, including expenses, of £7.4
million. This amount has been charged against reserves.
13. Posting of Interim Report to Shareholders
Copies of the Interim Report will be posted to
Shareholders shortly.
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