Notice of AGM

Notice of AGM

Amlin Plc

AMLIN plc (“Amlin”)

RELEASE OF ANNUAL REPORT AND NOTICE OF AGM

The following documents have today been made available to shareholders:

1. 2013 Annual Report

2. Notice of the 2014 Annual General Meeting

3. Form of Proxy for the 2014 Annual General Meeting

Copies of the 2013 Annual Report and Notice of AGM may be viewed on the Company’s website at www.amlin.com under “Investors/Reports” and “Investors/Shareholder-circulars” respectively.

In accordance with Listing Rule 9.6.1, copies have been uploaded to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do.

COMPLIANCE WITH DTR 6.3.5 – EXTRACTS FROM THE 2013 ANNUAL REPORT

The information below, which is extracted from the 2013 Annual Report, is included solely for the purpose of complying with DTR 6.3.5. It should be read in conjunction with the Company’s Preliminary Announcement issued on 3 March 2014 which is available at www.amlin.com. Together these constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text via a Regulatory Information Service. This material is not a substitute for reading the full 2013 Annual Report.

The information contained in this announcement and in the Preliminary Announcement does not constitute the Group’s statutory accounts, but is derived from those accounts.

Principal Risks and Uncertainties

Principal risks   Risk factor
description 		  Amlin’s analysis of impact levels   Risk trend
and measure 		  Mitigation strategies for each underlying
risk exposure are outlined below 		  Executive responsibility   Link to
strategic priorities 		  Risk disclosure link
Enterprise-
level risk 		  Risks associated with one
or more losses from a portfolio of principal risks occurring and providing an aggregated impact on the organisation as a whole. 		  Amlin is exposed to a domino-type event whereby, for example, a major natural catastrophe event not only affects Amlin’s insurance underwriting portfolio but also impacts stock markets, causing significant market and currency movements and a material impact to investments. The combined effect of these risk events could trigger reinsurance counterparty default events and hence a secondary impact on liquidity.  

No major change

Model output of combined simulated results shows
stable picture at
31 December 2014

  
  • The risk management framework ensures that potential risk exposures are considered individually and in aggregation.
  • Corporate Centre Risk produces an aggregated group risk profile providing an enterprise-wide view of risk exposures for the Group Executive and the Board.
  • Stress testing of a combination of material risks is conducted to determine impact on capital.
  • Reverse stress testing of the ultimate impact of combinations of material risks on business model viability and reputation is also performed.
  • The Internal Model produces 100,000 simulated results and combined scenarios which are then measured to ascertain the appropriate level of capital for Amlin.
  Chief Risk Officer   Effective risk management which optimises return for the risks we take    
Strategic risk   Risks associated with the appropriateness of business
strategy in the face of the external environment. 		  It is critically important that Amlin responds effectively
to changes in the external environment which affect
its business. The execution and integration of
acquisitions can carry increased risk which requires
sound management.		   Changing dynamics
in reinsurance markets leading to increased competition

Increased consolidation of capacity by major brokers

 
  • Periodic review of key trends affecting Amlin’s markets is undertaken.
  • Emerging risks are considered and reviewed quarterly.
  • Clear guidelines and procedures exist for the execution and integration of acquisitions. All acquisitions undergo a risk assessment process.
  Chief Executive   Effective risk management which optimises return for the risks we take

Measured expansion of core businesses and geographic footprint

 

 

Underwriting –
Catastrophe risk 		  The risk of material
claims arising from
inherent uncertainties
in the occurrence of
insurance losses
associated with
natural or man-made catastrophic events.		   Amlin has an extensive portfolio of property and marine insurance and reinsurance business that has significant exposure to weather and earthquake exposures as well
as non-elemental perils such as industrial accidents. 		  Catastrophe exposures have increased broadly in line with the growth in net assets during 2013

Increased availability of outwards reinsurance at more attractive rates.

 
  • There is a focus on underlying homogenous risk exposure which is more easily modelled.
  • Maintaining a geographic diversity of exposure.
  • Maintaining pricing discipline and close monitoring of pricing.
  • Setting and managing exposures within appropriate line size, aggregate exposure and probable maximum loss limits.
  • Purchase of outwards reinsurance programme.
  • Modelling and review of deterministic and stochastic loss scenarios.
  Group Chief Underwriting Officer   Effective risk management which optimises return for the risks we take

Profit focused
underwriting excellence

  

 

Underwriting –
Attritional risk 		  The risks of unexpected
or unbudgeted increase
in cost of small or large insurance claims. 		  Amlin is exposed to attritional losses caused by inadequate pricing and/or unexpected claims frequency
as well as systemic change in the nature of claims. 		  No major change  
  • Maintaining pricing discipline and close monitoring of pricing relative to required technical price.
  • Peer review of risks written.
  • Monitoring and review of incurred claims trends and performance.
  • Setting line size and underwriting authority limits.
  • Purchase of outwards reinsurance programme.
  Group Chief Underwriting Officer   Effective risk management which optimises return for the risks we take

Profit focused
underwriting excellence

  

 

Underwriting –
Reserving risk 		  The risk of unexpected
or unbudgeted increase
in claims emanating
from business written
where the result has
been declared. 		  Amlin considers it has some exposure to claims reserving risk. However, due to the short-tail nature of many of its business lines, underwriting outcomes are determined relatively quickly after a loss is notified. All classes are subject to actuarial analysis using development patterns
to establish appropriate reserving provisions. 		  The margin held over the actuarial best estimate of required reserves remains stable at above £160 million (December 2012: £160 million)  
  • Quarterly reserving process involving underwriters and actuaries.
  • Independent review of reserving process and proposed reserving levels by Group Reserving Actuary and Corporate Centre Risk function.
  • Periodic review of adequacy of case reserving.
  • Reserves set in excess of actuarial best estimate with the reserving margin as a percentage of carried reserves tracked as a key metric.
  Group Chief Underwriting Officer

Group Finance
& Operations Director

   Effective risk management which optimises return for the risks we take    
Market risk –
Investment
market volatility 		  The risk arising from fluctuations in values
of investments.		   Amlin seeks to optimise its investment return whilst focusing on ensuring it maintains sufficient capital to
meet solvency requirements and sufficient liquid funds
to meet liabilities when they fall due. Exposure to market risk is therefore limited to prescribed tolerance levels for each entity. 		  Improving economic growth prospects

Continued low interest rate environment. Risks associated with tapering of quantitative easing

 
  • Regular review of strategic and tactical asset allocations.
  • Portfolio diversification and, in the current environment, maintaining short duration in the bond portfolio.
  • Modelling and monitoring of investment risk against agreed
    ‘Value at Risk’ tolerances.
  Group Finance
& Operations Director		   Effective risk management which optimises return for the risks we take    
Market risk –
Currency fluctuation 		  Impact on the value of balance sheet or earnings arising from the movement
in value of sterling against
key non-functional currencies. 		  Amlin has an international business with subsidiaries operating in US dollar and euro currencies as well as significant underwriting activity conducted in US dollars, euro and Japanese yen.   No major change  
  • Assets and liabilities are matched for major currencies.
  • Approximately 50% of Amlin’s US dollar and Amlin’s euro net asset exposures are hedged.
  • Foreign currency profits are sold as they are recognised.
  Group Finance
& Operations Director		   Effective risk management which optimises return for the risks we take    
Credit risk –
Reinsurance
counterparty 		  The risk of loss if a counterparty fails to
perform its obligations
or fails to perform them
in a timely fashion.		   Reinsurance protection is a key aspect of how we
manage underwriting risk. 		  Growth in balance sheet of counterparties  
  • Reinsurers are screened and risk assessed.
  • Exposure limits are set for each reinsurer based on our risk assessment.
  • Reinsurance debtors are controlled and managed.
  • Collateralised reinsurance is used, particularly for retrocessional reinsurance.
  Group Finance
& Operations Director		   Effective risk management which optimises return for the risks we take    
Credit risk –
Intermediary
counterparty 		  The risk of loss if an insurance or treasury intermediary fails to meet credit obligations in a
timely fashion.		   Amlin works with insurance and reinsurance brokers
as well as treasury intermediaries to manage the
transfer of funds.		   Improvement in economic environment

Operational improvement in debt management in Amlin Europe

 
  • Intermediaries are screened and risk assessed.
  • Exposure limits are set for each broker based on our risk assessment.
  • Debtors are controlled and managed.
  Group Finance
& Operations Director		   Effective risk management which optimises return for the risks we take    
Liquidity risk –
(including
asset/liability
matching) 		  The risk of insufficient financial resources being available to meet liabilities as they fall due.   The strength and liquidity of the balance sheet is fundamental to our proposition as an insurer of choice, providing us with the ability to respond quickly to claims, particularly relevant in the event of a large catastrophic loss such as a hurricane or earthquake.   No major change  
  • Liquidity needs arising from major catastrophe events are regularly stress tested.
  • Sufficient liquidity is maintained in investment portfolios to address claims needs.
  Group Finance
& Operations Director		   Effective risk management which optimises return for the risks we take    
Operational risk   Risks resulting from inadequate or failed
internal processes, people and systems, or from external events, including regulatory control failures. 		  Amlin operates a diverse business across a number of offices and jurisdictions and is expected to comply with legal, regulatory and best practice standards. The potential exists for a failure of critical business processes, people or systems resulting in an interruption to normal operations. Dependency on sophisticated stochastic models may introduce operational risk. Additionally natural or man-made disasters could impact Amlin’s operating platform in one or more location.   Separation of the FSA into the PRA and FCA has increased regulatory focus on conduct risk  
  • The risk management framework identifies and evaluates operational risks.
  • Policies and standards are prescribed for each business and function, including for data quality and business continuity management.
  • Procedural controls operate including workflow management of key processes.
  • Compliance with established policies, standards, procedures and processes is monitored.
  • Risk events and ‘near misses’ are reported so lessons can be learned.
  Group Finance
& Operations Director

Group Human Resources Director

  Effective risk management which optimises return for the risks we take

First class client service based on a thorough understanding of their needs.

Develop a culture and employment practices
that make Amlin ‘the place to work’

 

 

             

Directors’ Responsibility Statement pursuant to DTR 4

Pursuant to the Disclosure and Transparency Rules of the Financial Conduct Authority each of the directors, whose names and functions are listed in the section of the Annual Report entitled ‘Board of Directors’ confirm that, to the best of each person’s knowledge and belief:

The financial statements, prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and loss of the Group and Company; and

The directors’ report contained in the annual report includes a fair review of the development and performance of the business and the position of the Company and Group, together with a description of the principal risks and uncertainties that they face.

11 April 2014

Enquiries:

Mark Stevens           020 7746 1000
Group Company Secretary
Amlin plc

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