Interim Results 2012

RNS Number : 3334K

Amlin PLC

20 August 2012

AMLIN PLC

PRESS RELEASE

For immediate release

20 August 2012

Interim Results for the

six months ended 30 June 2012

Strong financial performance in improving markets

Highlights

§ Robust financial performance underlines the strength of Amlin's franchise

§ Profit before tax of £184.5 million (H1 2011: loss of £192.3 million)

§ First half return on equity of 11.9% (H1 2011: (8.8)%), 23.8% annualised

§ Gross written premium up 19.8% at £1,814.7 million (H1 2011: £1,514.6 million)

§ Combined ratio of 84% (H1 2011: 122%), generating an underwriting profit of £153.8 million
(H1 2011: loss of £203.8 million), with limited catastrophe activity in the period

§ No material movement in prior year catastrophe claims

§ Average rate increase of 4.2%, with more than 80% of the book now benefitting from rate improvements

§ Investment return of 2.0% (H1 2011: 1.0%), generating an investment contribution of £84.7 million (H1 2011: £45.3 million)

§ Earnings per share of 34.1 pence (H1 2011: (30.7) pence)

§ Interim dividend increased 4.2% to 7.5 pence per share (H1 2011: 7.2 pence per share)

§ Net tangible assets per share increased 5.9% to 257.4 pence (YE 2011: 243.0 pence)

Charles Philipps, Chief Executive, commented as follows:

"This is a welcome return to profit and the strength of our underwriting result underlines the quality and diversity of our business. The improving trading environment is creating many opportunities for profitable growth, for which we have both the capital and the underwriting capability to take advantage."

Enquiries:
Charles Philipps, Chief Executive, Amlin plc	0207 746 1000
Richard Hextall, Group Finance & Operations Director, Amlin plc	0207 746 1000
Analysts and Investors
Julianne Jessup, Head of Investor Relations, Amlin plc	0207 746 1961
Ed Berry, FTI Consulting	0207 269 7297
Media
Hannah Bale, Head of Communications, Amlin plc	0207 746 1118
John Waples, FTI Consulting	0207 269 7292

Amlin plc

Registered office

St Helen's, 1 Undershaft

London EC3A 8ND
Registered in England

No. 2854310

Financial highlights

Financial highlights⁽¹⁾	H1 2012 £m	H1 2011 £m	YE 2011 £m
Gross written premium	1,814.7	1,514.6	2,304.1
Net written premium	1,488.8	1,314.9	2,013.2
Net earned premium	987.7	919.3	1,927.4
Underwriting contribution	153.8	(203.8)	(146.0)
Investment contribution	84.7	45.3	40.5
Other costs⁽²⁾	54.0	33.8	88.3
Profit/(loss) before tax	184.5	(192.3)	(193.8)
Net assets	1,489.7	1,474.6	1,420.4
Net tangible assets	1,273.5	1,260.7	1,201.5
Per share amounts (in pence)
Earnings	34.1	(30.7)	(30.3)
Dividend under IFRS⁽³⁾	15.8	15.8	23.0
Dividend (paid, declared and proposed in respect of the period/year) ⁽³⁾	7.5	7.2	23.0
Net assets	301.1	298.4	287.2
Net tangible assets	257.4	255.1	243.0
Group operating ratios
Return on equity	11.9%	(8.8)%	(8.6)%
Claims ratio⁽⁴⁾	53%	92%	78%
Expense ratio⁽⁴⁾	31%	30%	30%
Combined ratio⁽⁴⁾	84%	122%	108%

Source: Amlin

(1) The financial information presented on pages 1 to 13, and in the segmental information in note 5 to the interim financial statements, is presented in a manner consistent with the management information presented to the Board of Directors. The balances reported may differ from those contained in the Consolidated Income Statement prepared in accordance with International Financial Reporting Standards. Details of differences, including a reconciliation between the management information and the Consolidated Income Statement, are provided in note 5(c).

(2) Includes non-underwriting foreign exchange gains of £1.0 million (H1 2011: gain of £0.8 million, YE 2011: loss of £4.3 million) and £12.8 million of ACI disentanglement and integration costs (H1 2010: £8.2 million, YE 2011: £16.8 million).

(3) All per share dividends are the actual dividends for each share in issue at the time.

(4) Claims ratio is net claims incurred divided by net earned premium for the period/year. Expense ratio is underwriting expense incurred divided by net earned premium. The expense ratio does not include finance costs or expenses that have not been attributed to underwriting. Combined ratio is the total of the claims and expense ratios.

Interim Results Statement

Amlin's financial performance in the first half of 2012 was strong, with profit before tax of £184.5 million (H1 2011: loss of £192.3 million) and a return on equity of 11.9% (H1 2011: (8.8)%). The underwriting return was excellent, supported by growth in premium, limited catastrophe activity and a low frequency of large losses. Despite continued volatility in investment markets, the investment return was strong at 2.0%.

Amlin retains a robust capital position. At 30 June 2012, available capital was more than £445 million above management's assessed capital requirement, ensuring that Amlin is well capitalised to drive further growth as conditions continue to improve and opportunities arise across the portfolio.

Overview of the results

The Group made a profit before tax in the period of £184.5 million (H1 2011: loss of £192.3 million). The profit after tax was £169.0 million, with an effective tax rate of 8.4% (H1 2011: loss of £151.5 million and 21.2%). Our return on equity for the period was 11.9% (23.8% annualised).

Underwriting conditions in the period were in stark contrast to the prior year, with improvements experienced across much of Amlin's portfolio. More than 80% of our portfolio achieved rate increases in the period to 30 June. The average renewal rate increase for the period was 4.2%, with renewal retention high at 86% (H1 2011: increase of 0.3% and 83% retention).

Compared to the extraordinary losses of 2011, catastrophe activity in the first half of 2012 was limited and the Group incurred no major catastrophe losses. As expected, in the aftermath of 2011 loss activity, reinsurance rates increased significantly at the start of the year although the rate of increase slowed at the end of the period, given limited catastrophe activity and the fact that mid year US rates had already seen an uplift in 2011. Margins for catastrophe reinsurance remain at near peak levels.

Within insurance markets, we continue to see improvement in our UK commercial business, particularly for UK commercial motor. Rates for US commercial property have further strengthened following the modest increases experienced at 1 January, while US liability business has begun to show signs of improvement.

Gross written premium was £1,814.7 million, an increase of 19.8% on the prior half year (H1 2011: £1,514.6 million). At constant rates of exchange, written premium increased by 19.3% (H1 2011: £1,520.7 million). The headline increase includes an uplift of £116.0 million reflecting an improvement to the process for recording premium income within Amlin European Insurance (the newly combined Amlin Corporate Insurance and Amlin France divisions), though the impact on an earned basis is not material. The underlying increase was attributable to growth in Amlin London, Amlin UK and Amlin Re Europe, offset by the impact of further portfolio adjustments in the marine business of Amlin European Insurance that continued into the start of 2012.

Net earned premium increased by 7.4% to £987.7 million (H1 2011: £919.3 million), supported by growth in written income during 2011 and 2012, but impacted by greater levels of reinsurance purchased for 2012 to cover catastrophe events.

Underwriting contributed a profit of £153.8 million to pre-tax profit (H1 2011: loss of £203.8 million). As noted above, relative to the prior year period, no major catastrophe losses were incurred (H1 2011: £314.3 million). Accordingly, Amlin London and Amlin Bermuda generated underwriting profits of £58.4 million (H1 2011: loss of £61.8 million) and £97.1 million or $153.1 million (H1 2011: loss of £82.5 million or $133.6 million) respectively. Within Amlin European Insurance, there are increasing signs that action taken to address performance is bearing fruit. It produced a small underwriting profit of £3.9 million or €4.7 million (H1 2011: loss of £41.4 million or €47.6 million). The underlying performance of the portfolio is improving and, in contrast to the prior year, large claims experience in the period was within expectation.

The Group combined ratio was 84% (H1 2011: 122%) with the claims ratio at 53% (H1 2010: 92%). The prior year claims ratio reflects the impact of major catastrophe losses (including the New Zealand and Japanese earthquakes, with respective impacts of 21% and 11%) and a number of large risk losses in the period.

Releases from reserves amounted to £53.0 million (H1 2011: £36.8 million), improving the combined ratio by 5% (H1 2011: 4%). However, reserving strength has been maintained at broadly similar levels to 2011. Releases were mostly generated from Amlin London and Amlin European Insurance, largely due to favourable claims development.

With interest rates remaining at low levels across much of the developed world, the investment environment remained challenging for the first six months of 2012. Investments contributed £84.7 million in the period (H1 2011: £45.3 million), representing an investment return of 2.0% (H1 2011: 1.0%) on the average funds under management of £4.2 billion (H1 2011: £4.3 billion).

A net foreign exchange gain of £5.2 million was taken to the income statement in the period (H1 2011: loss of £0.8 million) and a net loss of £22.5 million (H1 2011: loss of £13.4 million) taken to reserves.

Earnings per share were 34.1 pence (H1 2011: loss per share of 30.7 pence).

Dividend

The Board has declared an interim dividend of 7.5 pence per share (H1 2011: 7.2 pence per share), an increase of 4.2% over the 2011 interim dividend. The dividend will be paid on 4 October 2012 to shareholders on the register at the close of business on 7 September 2012.

A dividend reinvestment plan, details of which may be obtained from the Company's registrar or from the Company's website, is available to shareholders in respect of this dividend.

Underwriting conditions and premium income

The average renewal rate increase for the Group for the six month period was 4.2%. As anticipated, following the extraordinary catastrophe loss activity of 2011, the period saw a significant increase in catastrophe rates. North American catastrophe reinsurance renewal rates improved by an average of 9.6% and renewal rates for our international account increased by an average of 16.2%. Rate increases were more marked in loss affected territories, such as Australasia and Japan. Although rate increases slowed during the second quarter, reflecting benign catastrophe loss activity and the fact that for a number of contracts rate increases had been achieved in 2011, margins across our catastrophe reinsurance business are strong and our US and international catastrophe portfolios are trading at near peak levels.

Outside catastrophe reinsurance lines, we are seeing a welcome improvement in US property and casualty rates and recorded an average renewal rate increase of 3.9% in the six month period. Greater progress has been made on the US property side than casualty, with an average renewal rate increase of 6.6%. Rates for our London marine business were marginally positive, with some variation across classes. Rates for liability and yacht classes had average rate increases of 3.8% and 1.9% respectively.

The trading environment for our UK commercial book has continued to improve, with an average rate increase of 5.5%. Fleet motor rates continued to climb steadily, with an average increase of 10.0% in the period. Elsewhere, Continental European insurance markets remain competitive, although rating levels are holding steady.

Table 1: Average renewal and retention rates

	Gross written premium H1 2012 £m	Gross written premium H1 2011 £m	Average renewal rate change H1 2012 %	Average renewal retention ratio H1 2012 %	Average renewal rate change H1 2011 %	Average renewal retention ratio H1 2011 %
Amlin London	782.4	679.2	5.5	85	0.4	84
Reinsurance	379.3	323.9	9.3	87	(0.3)	87
Property and Casualty	178.8	147.0	3.9	85	(0.2)	85
Marine	207.1	190.7	0.4	79	2.2	77
Aviation	17.2	17.6	(4.7)	83	1.1	82
Amlin UK	227.0	167.4	5.5	84	3.9	84
Amlin Bermuda⁽⁵⁾	256.0	249.7	8.6	91	(0.9)	91
Amlin Re Europe⁽⁵⁾	155.8	78.7	2.1	89	-	-
Amlin European Insurance⁽⁵⁾	393.5	339.6	(0.2)	85	(0.5)	77
Total/average	1,814.7	1,514.6	4.2	86	0.3	83

Source: Amlin

(5) Excludes the impact of intra-group transactions. Amlin European Insurance represents the combined business of Amlin Corporate Insurance and Amlin France.

Our rating indices table below illustrates the pricing trends for a number of major classes.

Table 2: Rating indices for major classes (based on renewal)⁽⁶⁾

Class	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012
US catastrophe reinsurance	100	115	146	150	143	144	185	188	167	185	175	176	193
International catastrophe reinsurance	100	120	157	161	145	131	138	131	119	124	123	131	153
Property reinsurance	100	122	189	191	170	146	170	144	126	127	115	109	113
Property insurance	100	125	171	163	143	136	165	143	133	142	141	144	153
US casualty	100	123	172	217	234	239	237	223	203	199	197	197	198
Marine hull	100	115	148	171	183	189	191	192	192	205	208	209	209
Offshore energy	100	140	172	189	170	175	262	243	209	256	247	262	262
War	100	250	288	244	220	206	191	175	160	156	153	153	150
Airline hull and liabilities	100	301	283	235	216	201	158	122	127	141	132	124	109
UK fleet motor	100	121	136	143	141	137	135	134	137	144	148	159	175
UK employers' liability	100	115	144	158	159	144	135	123	115	114	115	114	114
UK professional indemnity	100	110	149	178	181	165	154	140	129	128	127	127	126
UK property and commercial combined	100	100	100	127	126	126	117	110	109	107	106	112	112
European marine										100	104	104	105
European property										100	97	96	94
European liability										100	95	95	93
European fleet motor										100	99	99	99

Source: Amlin

(6) This table is completed by our underwriters and covers their assessment of rate movements from year to year, as recorded on Amlin's underwriting systems. Subjective judgement is used to account for subtle changes in exposure or terms and conditions. Claims inflation is not systematically taken into account in the calculation of these rate movements and therefore, particularly in relation to long tail business, some of the benefit of rate increases has been eroded. 2012 rate levels are for the six month period to 30 June 2012.

Outwards reinsurance

Reinsurance expenditure in the period was £325.9 million, an increase of 63.2%, representing 18.0% of gross written premium (H1 2011: £199.7 million and 13.2%). The increase reflects the Group's strategy to modify its risk appetite in 2012, following the major catastrophe claims in 2011. This includes the purchase of additional protection for Amlin Bermuda and Syndicate 2001, together with the issue of a catastrophe bond. The uplift also reflects the increased cost of outwards reinsurance. The additional expenditure has been more than offset by increased premium in the half year and this is expected to be the case for the full year.

Claims

In contrast to 2011, the first six months of 2012 represented a relatively benign period for catastrophe losses and there were few large risk losses in the period. The Group claims ratio decreased to 53% (H1 2011: 92%).

The largest catastrophe event in the period was the tornado activity impacting the mid-western and southern US states during February and early March. The market loss estimate for these events is between $1 billion and $2 billion0F¹.. Amlin's estimated exposure is contained within our attritional loss expectations.

Net claims from 2010 and 2011 catastrophe events, including the New Zealand 'Christchurch' earthquake in February, the Japanese earthquake in March and the Thailand flooding in the second half of the year, remain materially unchanged from those disclosed in our 2011 annual report.

For Amlin European Insurance, there were no new large claims above €5.0m in the six months and attritional claims experience continued to show improvement. This contrasts with the six month period to 30 June 2011, when Amlin European Insurance experienced an unusually high large claims frequency which was inconsistent with previous claims history.

Releases from reserves in the period amounted to £53.0 million (H1 2011: £36.8 million), largely driven by favourable claims development within Amlin London and Amlin European Insurance. There have been no significant changes in our reserving methodology.

We estimate that the Group as a whole holds reserves of at least £160 million in excess of the actuarial best estimate (31 December 2011: at least £170 million).

1 Eqecat press release, 5 March 2012.

Segmental commentary

Table 3: Divisional combined ratios

	Amlin London	Amlin UK	Amlin Bermuda	Amlin Re Europe	Amlin European Insurance	Intra Group/ Other	Total
Gross written premium (£m)	782.4	227.0	397.4	156.8	398.3	(147.2)	1,814.7
Net earned premium (£m)	352.0	140.8	233.1	58.6	208.9	(5.7)	987.7
Release movement (£m)	21.9	5.9	7.7	(0.7)	18.2	-	53.0
Underwriting contribution (£m)	58.4	1.3	97.1	0.2	3.9	(7.1)	153.8
Combined ratio
Claims ratio	47%	61%	39%	75%	61%		53%
Expense ratio	36%	38%	19%	25%	37%		31%
Combined ratio H1 2012	83%	99%	58%	100%	98%		84%
Combined ratio H1 2011	119%	111%	136%	98%	118%		122%

Source: Amlin

Amlin London

Gross written premium increased by 15.2% to £782.4 million (H1 2011: £679.2 million). With an average rate increase of 5.5%, supported by average increases of 10.6% and 17.2% for US and international catastrophe lines respectively, much of the underlying growth was attributable to the Reinsurance business unit. Additional growth came from the Property and Casualty business, which benefited from a combination of new business opportunities and recent strategic investment, including the hire of additional underwriters. Net earned premium was £352.0 million (H1 2011: £325.6 million), benefiting from increased written premium in 2011 and 2012.

The combined ratio was 83% (H1 2011: 119%). The claims ratio of 47% (H1 2010: 84%) reflects the absence of catastrophe activity in the period. Prior period reserve releases were £21.9 million (H1 2011: £23.9 million).

The expense ratio has remained relatively stable at 36% (H1 2011: 35%).Amlin UK

Gross written premium amounted to £227.0 million, an increase of 35.6% on the prior period (H1 2011: £167.4 million). The increase includes £20.5 million of income generated as a result of recent investment in Manchester Underwriting Management. Further growth was achieved through other strategic initiatives, including the addition of a new high net worth property team. The retention ratio was 84% with average rate increases of 5.5%. Net earned premium of £140.8 million was up 32.5% on the prior period, in line with recent growth in written premium.

The trading environment for this business continues to improve. In the six month period, fleet motor income increased by 7.6%, with average rate increases of 10.0%, and new business income of £11.7 million (net of brokerage). Rates for fleet business continue to improve steadily. Elsewhere, property rates increased by 0.6%, although rates for liability business were more mixed.

The combined ratio was 99% (H1 2011: 111%), with a claims ratio of 61% (H1 2010: 78%). Prior period reserves improved by £5.9 million (H1 2011: strengthening of £3.2 million), reflecting improved claims experience on older years.

The expense ratio increased to 38% (H1 2010: 33%), reflecting an increased level of binder business, predominantly on the property account, which attracts higher acquisition costs, alongside underlying growth in the expense base to support business growth plans.

With clear evidence of improving market conditions for our UK commercial business, most notably our motor portfolio, and increased income, written with reasonable margin potential following recent strategic investment, we expect Amlin UK's performance to continue to improve.

Amlin Bermuda

Amlin Bermuda wrote £256.0 million or $403.7 million (H1 2011: £249.7 million or $404.5 million) of direct business in addition to quota share or other reinsurances of Syndicate 2001, Amlin European Insurance and Amlin Re Europe, which increased its overall written premium to £397.4 million or $626.8 million (H1 2011: £365.6 million or $592.3 million). Growth in direct business was supported by an average rate increase of 8.6% for the period, together with new business of £27.1 million (net of brokerage) or $42.7 million generated within US catastrophe, pro-rata and special risk classes. The retention rate was 91%. Net earned premium increased by 2.7% to £233.1 million or $367.6 million (H1 2011: £227.0 million or $367.7 million), reflecting the planned increase in reinsurance spend to broaden the Bermuda reinsurance structure.

The combined ratio was 58% (H1 2011: 136%). The claims ratio of 39% reflects the absence of catastrophe losses in the period (H1 2010: 120%). Reserve releases amounted to £7.7 million (H1 2011: £15.4 million).

The growth in the expense ratio to 19% (H1 2011: 16%) reflects increased acquisition costs, following the increase in ceded premium, and more normal levels of profit commission on intercompany business, which was low last year due to catastrophe losses. Expenses remain low relative to London due to high operational gearing.

Amlin Re Europe

Amlin Re Europe generated £156.8 million or €190.6 million of gross written premium. The retention ratio was 89% with average rate increases of 2.1%. Net earned premium was up 206.8% at £58.6 million or €92.4 million (H1 2011: £19.1 million or €21.9 million).

The business has made a strong start since it launched in October 2010 and is performing in line with original expectations, achieving significant growth in its client base. Motor, catastrophe and proportional reinsurance are the largest classes of business written, but property, engineering and liability business has also been generated. France continues to be a major source of income, accounting for 31.1% of gross written premium in the period. Other territories generating notable income include Switzerland, Italy, Austria and the Nordic countries.

The combined ratio was 100% (H1 2011: 98%). The claims ratio of 75% (H1 2011: 62%) is higher than 2011, mainly due a different business mix resulting from the build up of the portfolio. The expense ratio of 25% (H1 2011: 36%) has improved as expenses associated with the start up fall away and the net earned premium base increases.

The business remains on track to develop into an important longer term earnings stream for the Group.

Amlin European Insurance

Gross written premium was £398.3 million or €484.3 million (H1 2011: £341.9 million or €393.2 million). The increase includes an uplift of £116.0 million reflecting an improvement to the process for recording premium income; the impact to earned premium is not material. On a constant basis, underlying income reduced by £59.6 million, reflecting further portfolio adjustments in the marine business continuing into the start of 2012.

The average rate increase was flat, with the retention ratio at 85%. Net earned premium was £208.9 million or €329.5 million (H1 2011: £239.6 million or €275.5 million).

The contribution to the Group underwriting result was a profit of £3.9 million or €4.7 million, with a combined ratio of 98% for the period (H1 2011: loss of £41.4 million or €47.6 million and 118%). The claims ratio was 61% (H1 2011: 86%), with an improvement in the underlying performance of the portfolio. Importantly, in contrast to the prior year, large claims experience in the period was within expectation. Prior period reserve releases amounted to £18.2 million or €28.7 million (H1 2011: £0.7 million or €0.8 million).

The increased expense ratio of 37% (H1 2011: 32%) reflects additional costs incurred in developing operational capability and lower net earned premium. Costs relating to the system replacement project are not included in the expense ratio.

Looking forward, we believe that the majority of changes to ACI's marine portfolio are largely complete and that, with increased profit focus and direction, it is now well positioned to grow income when market conditions in the Benelux improve.

Investments

Table 4: H1 2012 investment mix and returns

	Average balance in H1 2012				Total assets at 31 Dec 2011 %	H1 2012 Actual return %	H1 2012 Benchmark return %
	Policyholder's assets £m	Capital assets £m	Total assets £m	%	Total assets at 31 Dec 2011 %	H1 2012 Actual return %	H1 2012 Benchmark return %
Bonds	1,874.9	1,030.5	2,905.4	69.3	65.5	2.2	0.8
Other liquid	591.9	336.0	927.9	22.1	26.7	0.2	0.3
Equities	-	228.9	228.9	5.5	5.0	5.4	6.3
Property	-	131.6	131.6	3.1	2.8	4.5	3.4
Total/average	2,466.8	1,727.0	4,193.8	100.0	100.0	2.0	1.0

The above table includes insurance linked securities.

Source: Amlin

The investment return on the £4.2 billion average assets held during the first half of the year was 2.0%, producing an overall investment contribution of £84.7 million (H1 2011: £4.3 billion, 1.0% and £45.3 million).

Politics remains a key factor affecting household, corporate and investor confidence, which in turn impacts economic growth and creates a very challenging investment environment. Against this backdrop we have retained a cautious investment stance. Our portfolios are well diversified, short in duration, to avoid interest rate risk if growth surprises on the upside, and include investment in debt and equity of high quality companies which we believe offer better relative value over the medium term.

The medium term prospects for developed world growth remain muted as countries work off high debt levels. Consequently, recurrent 'growth scares' are to be expected. While not without challenges, the fundamentals in the developing world are stronger and should be supportive for global demand growth. We are therefore cautiously optimistic about the outlook for equities and non-government bonds and believe that our policy of allowing our sub-advisors to look for investment opportunities globally, where permitted by the regulations, remains appropriate.

Expenses

Total expenses increased to £368.0 million from £314.8 million in the prior period. Underwriting expenses, excluding foreign exchange movements, amounted to £315.5 million (H1 2011: £272.9 million). Non-underwriting expenses, excluding foreign exchange movements, were £57.7 million (H1 2011: £41.1 million).

Underwriting expenses include costs relating to the acquisition and administration of insurance business and claims payments. Non-underwriting expenses include employee incentives, investment management fees, finance costs, ACI disentanglement and integration costs and corporate expenses not directly attached to underwriting businesses.

ACI disentanglement and integration costs amounted to £12.8 million (H1 2011: £8.2 million). These are included within non-underwriting expenses, as they are not considered ongoing costs associated with the running of the business. In addition to items expensed in the period, ACI expenditure on the systems replacement programme of £2.9 million has been capitalised (H1 2011: £11.0 million). The new systems platform went live during May 2012 and we expect to see a notable reduction in the related expense in the second half of this year.

Taxation

The effective rate of tax for the period is 8.4% (H1 2011: 21.2%). It is below the UK rate of corporation tax primarily due to Amlin Bermuda, which operates locally with no corporation tax.

Balance sheet strength

Net assets were £1,489.7 million, an increase of 4.9% in the period (31 December 2011: £1,420.4 million). The increase was due to retained profits of £169.0 million, offset by the final 2011 dividend of £78.3 million and £21.4 million of other movements, including £22.5 million of net exchange losses, after hedging, from investments in overseas subsidiaries and £0.8 million of defined benefit pension fund actuarial losses (net of tax).

Intangibles have decreased by £2.7 million to £216.2 million, being the net impact of capitalisation of internally developed software (£2.9 million), foreign exchange losses (£2.8 million) and amortisation (£2.8 million) in the period.

Accordingly, net tangible assets have increased by 6.0% to £1,273.5 million at the period end, equivalent to 257.4 pence per share (31 December 2011: £1,201.5 million and 243.0 pence per share).

Outstanding reinsurance claims now stand at £532.6 million (31 December 2011: £617.0 million) and the credit quality of reinsurance debt remains good.

In the period since 31 December 2011, total borrowings (excluding catastrophe linked instrument of £94.4 million (31 December 2011: £95.7 million)) increased by 24.2% to £363.8 million (31 December 2011: £292.8 million). At 30 June, £71.2 million had been drawn down on the revolving credit facility for working capital purposes (31 December 2011: £nil).

At 30 June 2012, the best estimate of the deficit on the Group's defined benefit schemes had increased to £31.0 million (31 December 2011: £30.8 million). In line with Amlin's accounting policy, all actuarial gains and losses are recognised in the Consolidated Statement of Comprehensive Income.

As demonstrated in table 5, the Group's balance sheet remains strong. The long term nature of our debt and the existence of meaningful bank facilities add to the robustness and flexibility of the balance sheet. We believe that the Group should retain a level of capital sufficient to allow material growth in the aftermath of a major insurance disaster and also to respond to other opportunities to enhance long term profitable growth. The quality of the Group's underwriting and capital assets are analysed in note 10 to the condensed consolidated interim financial statements.

Table 5: Amlin capital analysis

	At 30 Jun 2012 £m	At 31 Dec 2011 £m
Net tangible assets	1,273.5	1,201.5
Subordinated debt	292.3	292.8
Undrawn bank facilities⁽⁷⁾	228.8	250.0
Available capital	1,794.6	1,744.3
Minimum required capital⁽⁸⁾	1,348.5	1,341.6
Headroom	446.1	402.7

Source: Amlin

(7Represents amended debt facility signed 17 August 2012 (see below). Bank facilities are subject to a number of restrictive covenants.

(8) Assessed capital represents management's estimate of required capital for current trading purposes.

On 17 August 2012 Amlin plc entered into an amended debt facility with its banks, which is available for five years from the date of signing. The new facility provides an unsecured £300 million multicurrency revolving credit facility available by way of cash advances or letter of credit (LOC).

At the same time, Amlin Underwriting Limited entered into an amended facility, being a secured $200 million LOC which is also available for five years from the date of signing. The facility allows Amlin Underwriting Limited to fund its US regulatory requirements by way of LOC rather than investments and therefore reduces funding pressures at the time of a major catastrophe loss. If drawn, security is provided by a fixed charge over a portfolio of assets.

Foreign exchange

Table 6: Net foreign exchange gains and losses in the income statement

	H1 2012 £m	H1 2011 £m
Net gains/(losses) on underwriting transactions and translation of underwriting assets and liabilities at closing rates	4.2	(1.6)
Underwriting exchange gains/(losses)	4.2	(1.6)
Gains on long term US dollar borrowings	0.7	2.4
Net gains/(losses) on non-underwriting transactions and translation of non-underwriting assets and liabilities at closing rates	0.3	(1.6)
Non-underwriting exchange gains	1.0	0.8
Total FX gain/(loss) in income statement	5.2	(0.8)

Source: Amlin

The Group's investment in overseas operations, principally Amlin Bermuda and Amlin European Insurance, generated a net foreign exchange loss, after hedging, of £22.5 million in the period (H1 2011: £13.4 million). The net loss was recognised in the Consolidated Statement of Comprehensive Income.

The income statement includes a net foreign exchange gain of £5.2 million in the period (H1 2011: loss of £0.8 million). With strengthening of the US dollar, underwriting assets increased £4.2 million (H1 2011: loss of £1.6 million), non-underwriting assets produced a £1.0 million gain (H1 2011: £0.8 million).

Principal risks and uncertainties

There are a number of risks and uncertainties which could impact upon the Group's performance over the remaining six months of the financial year and cause actual results to differ materially from expected and historical results. The Directors consider that the principal risks and uncertainties described on page 46 and explained in detail in the risk disclosures note on pages 111 to 138 of the 2011 Annual Report continue to reflect the principal risks and uncertainties of the Group over the remaining six months of the financial year, except where specifically mentioned in the interim report. Amlin categorises risks closely to those laid out by the FSA.

A summary of each of the Group's principal risks and uncertainties is provided below.

· The Group accepts underwriting risks through a range of classes of business. In underwriting insurance or reinsurance policies the Group's underwriters use their skill and knowledge to assess each risk and they use exposure information and data on past claims experience to evaluate the likely claims costs and therefore the premium that should be sufficient (across a portfolio of risks) to cover claims costs, expenses and to produce an acceptable profit. However, due to the nature of insurance risk there is no guarantee that the premium charged will be sufficient to cover claims costs. This shortfall may originate either from insufficient premium being calculated and charged or may result from an unexpected, or unprecedented, high level of claims.

· From our standard set of realistic disaster scenarios the largest modelled loss at 1 July 2012 was a North East US Windstorm with a modelled loss of £278 million, which represents 22% of net tangible assets at 30 June 2012. This is £36 million lower than the largest modelled loss at 1 January 2012, being a Japanese earthquake modelled loss of £314 million (26% of net tangible assets at 31 December 2011).

· Market risk is the risk that fluctuations in the fair value or future cash flows of the Group's financial instruments have an adverse financial impact. Market risk results from valuation risk, interest rate risk and foreign exchange risk. The Group is exposed to market risk in its investment portfolio. In light of the continued heightened country risk, a breakdown of the Group's exposure to sovereign debt is provided in note 10.

· Credit risk is the risk that the Group becomes exposed to loss if a specific counterparty fails to perform its contractual obligations in a timely manner, impacting the Group's ability to meet its claims as they fall due. Credit risk can also arise from underlying causes that have an impact upon the creditworthiness of all counterparties of a particular description or geographical location. The Group is exposed to credit risk in its investment portfolio and with its premium and reinsurance receivables. An analysis of the Group's investments in bonds by credit quality is included in note 10.

· Liquidity risk is the risk arising from insufficient financial resources being available to meet liabilities as they fall due. This includes the risk of being forced sellers of any of the Group's assets, which may result in realising prices below fair value, especially in periods of below normal investment market liquidity.

· Operational risk results from inadequate or failed internal processes, people and systems, or from external events, including regulatory control failures.

· Strategic risk is the risk to current and prospective earnings or capital arising from adverse business decisions, improper implementation of decisions or lack of responsiveness to industry changes.

Related parties

Related party transactions are disclosed in note 20 to the interim financial statements.

Business development

On 1 July, Amlin effected a number of senior management changes within the Group, designed to strengthen management oversight of the Group's underwriting, risk and corporate centre functions.

· Simon Beale was appointed to the new role of Group Chief Underwriting Officer. He will further develop the Group Underwriting function, which was established last year to help ensure that Amlin's underwriting standards are applied across the Group and will drive and co-ordinate underwriting strategy, in particular where the same class of business is being written in more than one division.

· Corporate Centre Risk, led by Group Chief Risk Officer James Illingworth, is to function as an independent second line of defence for the Group with a focus on further implementing and validating Amlin's internal model as required under Solvency II regulation, as well as identifying and understanding unacceptable levels of risk and prompting management action as necessary.

· Reserving risk will be reviewed independently of the actuarial function with that function reporting to Richard Hextall to whom, as Group Finance & Operations Director, the Corporate Centre's Operations function also now report.

· Andreas Luberichs, who joined Amlin from Chubb in March 2011 as Head of Group Underwriting, has transferred to Amlin European Insurance, assuming the newly created role of Executive President, Non-Marine. He will be responsible for the management and future development of Amlin's non-marine business across Europe and the country managers of Belgium, France and the Netherlands will report directly to him.

· Separately, Bert Nelen, formerly of the Ace European Group, joined Amlin European Insurance on 1 July as its new Executive President, Marine.

Elsewhere, on 6 July, we announced that Christine Bosse retired from the Board of Amlin plc having served as a Non-Executive Director since 2008.

We also announced on 17 August that Shonaid Jemmett-Page would be joining the Board as a Non-Executive Director on 1 September 2012.

In line with the Group's growth strategy for Europe, Amlin France (previously known as Anglo-French underwriters prior to acquisition by Amlin Group in 2008) is being integrated into the Amstelveen-based Amlin Corporate Insurance. This integration will consolidate all the Amlin Group's commercial insurance activities on the European continent and will deliver a broader client proposition in Europe. François Martinache, Chairman of Amlin France, will continue to manage the French business.

On 19 July, Amlin announced it is to establish a lead US market for casualty reinsurance, targeting nationwide business with a focus on general and professional liability. The business will be sourced direct from US brokers and underwritten on behalf of Syndicate 2001 through a new US-based Amlin service company, Amlin Reinsurance Managers, Inc. The new team will be led by Paul Brauner, previously of F&G Re, Chubb Re, and most recently of Harbor Point/Alterra. Amlin Reinsurance Managers, Inc. will be open for business on 1st October, operating from offices in New Jersey, but backed by the security and strong ratings of Syndicate 2001.

Outlook

During the first six months of 2012, we have benefited from positive price movements across the portfolio, with more than 80% of the portfolio seeing increases. The strongest area has been catastrophe reinsurance, which has seen a return to peak rating levels for the US and international accounts. The speed of increases slowed into the middle of the year, but strong margins are expected to be maintained over the near term. The level of catastrophe activity will determine the extent of rate movement, however, we do not expect dramatic shifts in rating levels unless events are severe.

Our business model benefits from diversity and our return potential is at its strongest when we can balance the high reward, high risk catastrophe portfolio with other non correlating profit streams. After an extended period during which insurance rates were under pressure in many core markets, and with lower investment return potential going forward for all insurers, we are pleased to see that premium rates are once again moving in the right direction.

The UK commercial insurance market is steadily seeing improvements, particularly for commercial motor. We expect this trend to continue over the next twelve months and expect that liability rates will follow, albeit with their usual lag. Our UK business has grown swiftly in the last three years through a combination of organic growth and acquisitions to broaden out the portfolio. We continue to seek opportunities to add to the business.

US property and casualty rates also look set for a gradual increase. We do not see a sharp correction of rates unless a major US catastrophe event drains capital from the industry. However, the lost investment return potential already seems to be pushing casualty rates upwards.

Taken has a whole, London market marine rates have been steady for the last few years. Pockets of opportunity have arisen following major losses, particularly on the energy and liability portfolios. We have expanded our portfolios accordingly and the business continues to perform strongly. In addition, we have added to the business through recruitment and acquisition.

Continental European rates remain competitive, although downward pressure has ceased. The marine market in the Benelux has seen tentative signs of improvement with some withdrawal of capital evident. Rating correction has also been possible on some poor performing accounts. We do not expect to continue to reunderwrite the old Benelux marine portfolio in the same way that has been required for the last three years and the underwriting team has spent the last few months developing its forward strategy.

There is little renewal activity in the continental reinsurance market in the second half of the year. Amlin Re Europe has grown its portfolio well in the first two years of operation, building up a solid client base. The team are on track to deliver their original plan and we expect to see growth slow from here unless there is a sharp correction in rating in these markets. Some positive rate movement was achieved last year and we expect that the market will respond to lower interest rates.

The capital position of the Group remains good and able to support meaningful growth if conditions allow. This position has been enhanced by earnings in the period and the completion of a new five year banking facility.

Investment markets remain volatile, with the political uncertainty around the world making the path for future economic activity more difficult than usual to predict or to be optimistic about. However, the low level of interest rates in the developed world makes investment in so-called 'risk free' government assets unattractive over the medium term. Our portfolios are well diversified, short in duration, to avoid interest rate risk if growth surprises on the upside, and include investment in corporate bonds and equities, which we believe offer better relative value over the medium term.

We expect the remainder of 2012 to confirm a return to attractive levels of profitability for Amlin. As described above, underwriting conditions are good in the reinsurance market and improving in key areas for our insurance business. The improving rating environment, the work done in ACI over the last years to improve the portfolio performance and the growth in our European reinsurance portfolio, all bring positive earnings momentum.

Consolidated Income Statement

For the six months end 30 June 2012

	Note	6 months 2012 (Unaudited) £m	6 months 2011 (Unaudited) £m	12 months 2011 (Audited) £m
Gross earned premium	5	1,172.1	1,056.6	2,223.2
Reinsurance premium ceded	5	(181.8)	(137.3)	(295.8)
Net earned premium	5	990.3	919.3	1,927.4

Investment return	6	82.1	45.3	40.5
Other operating income		2.3	6.5	8.8
Total income		1,074.7	971.1	1,976.7

Insurance claims and claims settlement expenses	7	(540.9)	(1,025.1)	(1,869.6)
Insurance claims and claims settlement expenses recoverable from reinsurers	7	18.3	176.5	370.2
Net insurance claims	7	(522.6)	(848.6)	(1,499.4)

Expenses for the acquisition of insurance contracts		(211.7)	(177.6)	(380.2)
Other operating expenses	8	(142.9)	(123.5)	(263.0)
Total expenses		(354.6)	(301.1)	(643.2)

Results of operating activities		197.5	(178.6)	(165.9)
Finance costs		(13.4)	(13.7)	(27.8)
Share of profit/(loss) after tax of associates and joint venture		0.4	-	(0.1)
Profit/(loss) before tax		184.5	(192.3)	(193.8)
Tax	9	(15.5)	40.8	44.3
Profit/(loss) for the period/year		169.0	(151.5)	(149.5)

Attributable to:
Equity holders of the Parent Company		168.9	(151.7)	(149.9)
Non-controlling interests		0.1	0.2	0.4
		169.0	(151.5)	(149.5)

Earnings per share from continuing operations attributable to equity holders of the Parent Company
Basic	13	34.1p	(30.7p)	(30.3p)
Diluted	13	33.7p	(30.7p)	(30.3p)

Consolidated Statement of Changes in Equity

For the six months ended 30 June 2012

The attached notes form an integral part of these condensed consolidated interim financial statements

	6 months 2012 (Unaudited) £m	6 months 2011 (Unaudited) £m	12 months 2011 (Audited) £m
Profit/(loss) for the period/year	169.0	(151.5)	(149.5)
Gains on revaluation of derivative instruments in designated hedge accounting relationships	1.8	2.7	2.4
Foreign exchange losses on translation of overseas operations	(22.0)	(20.6)	(36.7)
Foreign exchange (losses)/gains on translation of intangibles arising from investments in overseas operations	(2.3)	4.5	(2.2)
Defined benefit pension fund actuarial losses	(1.1)	(12.2)	(18.3)
Unrealised gains on investments designated as available for sale	-	-	0.2
Tax relating to components of other comprehensive expense	(0.1)	(0.4)	6.4
Other comprehensive expense for the period/year, net of tax	(23.7)	(26.0)	(48.2)

Total comprehensive income/(expense) for the period/year	145.3	(177.5)	(197.7)

Attributable to:
Equity holders of the Parent Company	145.2	(177.7)	(198.1)
Non-controlling interests	0.1	0.2	0.4
	145.3	(177.5)	(197.7)

The attached notes form an integral part of these condensed consolidated interim financial statements.

For the six months ended 30 June 2012

Consolidated Statement of Changes in Equity

Attributable to owners of the Parent Company


	Note	Share capital £m	Share premium £m	Other reserves £m	Treasury shares £m	Retained earnings £m	Total £m	Non-controlling interests £m	Total £m
At 1 January 2012		141.2	300.3	174.5	(22.5)	826.2	1,419.7	0.7	1,420.4
Total comprehensive income for the period		-	-	(23.7)	-	168.9	145.2	0.1	145.3
Employee share option schemes:
- share-based payment reserve		-	-	1.7	0.5	-	2.2	-	2.2
- proceeds from shares issued	12	-	-	-	0.3	(0.1)	0.2	-	0.2
Dividends paid	15	-	-	-	-	(78.2)	(78.2)	(0.1)	(78.3)
Tax relating to share option schemes		-	-	(0.1)	-	-	(0.1)	-	(0.1)
Transactions with the owners of the Group for the period		-	-	1.6	0.8	(78.3)	(75.9)	(0.1)	(76.0)
At 30 June 2012		141.2	300.3	152.4	(21.7)	916.8	1,489.0	0.7	1,489.7

For the six months ended 30 June 2011

Attributable to owners of the Parent Company


	Note	Share capital £m	Share premium £m	Other reserves £m	Treasury shares £m	Retained earnings £m	Total £m	Non-controlling interests £m	Total £m
At 1 January 2011		141.2	300.3	222.9	(26.2)	1,089.9	1,728.1	1.8	1,729.9
Total comprehensive expense for the period		-	-	(26.0)	-	(151.7)	(177.7)	0.2	(177.5)
Employee share option schemes:
- share-based payment reserve		-	-	(0.9)	2.2	-	1.3	-	1.3
- proceeds from shares issued	12	-	-	-	0.6	(0.1)	0.5	-	0.5
Dividends paid	15	-	-	-	-	(78.0)	(78.0)	-	(78.0)
Movements in non-controlling interests		-	-	-	-	-	-	(1.4)	(1.4)
Tax relating to share option schemes		-	-	(0.2)	-	-	(0.2)	-	(0.2)
Transactions with the owners of the Group for the period		-	-	(1.1)	2.8	(78.1)	(76.4)	(1.4)	(77.8)
At 30 June 2011		141.2	300.3	195.8	(23.4)	860.1	1,474.0	0.6	1,474.6

The attached notes form an integral part of these condensed consolidated interim financial statements

Consolidation Balance sheet

At 30 June 2012

Attributable to owners of the Parent Company


	Note	Share capital £m	Share premium £m	Other reserves £m	Treasury shares £m	Retained earnings £m	Total £m	Non-controlling interests £m	Total £m
At 1 January 2011		141.2	300.3	222.9	(26.2)	1,089.9	1,728.1	1.8	1,729.9
Total comprehensive expense for the year		-	-	(48.2)	-	(149.9)	(198.1)	0.4	(197.7)
Employee share option schemes:
- share-based payment reserve		-	-	0.8	2.5	-	3.3	-	3.3
- proceeds from shares issued	12	-	-	-	1.2	(0.2)	1.0	-	1.0
Dividends paid	15	-	-	-	-	(113.6)	(113.6)	-	(113.6)
Movements in non-controlling interests		-	-	-	-	-	-	(1.5)	(1.5)
Tax relating to share option schemes		-	-	(1.0)	-	-	(1.0)	-	(1.0)
Transactions with the owners of the Group for the year		-	-	(0.2)	3.7	(113.8)	(110.3)	(1.5)	(111.8)
At 31 December 2011		141.2	300.3	174.5	(22.5)	826.2	1,419.7	0.7	1,420.4

Consolidated statement of cash flows

For the six months ended 30 June 2012

Assets	Note	30 June 2012 (Unaudited) £m	30 June 2011 (Unaudited) £m	31 December 2011 (Audited) £m
Cash and cash equivalents		247.0	286.5	256.4
Financial assets	10	4,089.1	4,147.8	4,080.4
Reinsurance assets
- reinsurers' share of outstanding claims		532.6	516.1	617.0
- reinsurers' share of unearned premium		170.3	120.5	50.4
Loans and receivables, including insurance and reinsurance receivables
- insurance and reinsurance receivables		1,381.2	1,116.3	933.5
- other loans and receivables		161.0	90.5	69.0
Deferred acquisition costs		328.4	276.9	207.7
Current income tax assets		1.0	1.0	13.7
Deferred tax assets		21.6	22.8	26.9
Property and equipment		18.1	14.2	19.9
Intangible assets	11	216.2	213.9	218.9
Investment in associates and joint venture		8.7	2.7	8.3
Total assets		7,175.2	6,809.2	6,502.1
Equity and reserves
Share capital	12	141.2	141.2	141.2
Share premium		300.3	300.3	300.3
Other reserves		152.4	195.8	174.5
Treasury shares		(21.7)	(23.4)	(22.5)
Retained earnings		916.8	860.1	826.2
Equity attributable to equity holders of the Parent Company		1,489.0	1,474.0	1,419.7
Non-controlling interests		0.7	0.6	0.7
Total equity and reserves		1,489.7	1,474.6	1,420.4
Liabilities
Insurance liabilities
- outstanding claims		3,117.1	3,191.1	3,273.6
- unearned premium		1,623.6	1,388.2	998.0
Other payables, including insurance and reinsurance payables
- insurance and reinsurance payables		193.0	225.9	218.8
- other payables		212.9	138.7	118.5
Financial liabilities	10	7.8	27.7	11.0
Current income tax liabilities		5.3	6.4	0.1
Borrowings	16	458.2	290.4	388.5
Retirement benefit obligations		31.0	28.8	30.8
Deferred tax liabilities		36.6	37.4	42.4
Total liabilities		5,685.5	5,334.6	5,081.7
Total equity, reserves and liabilities		7,175.2	6,809.2	6,502.1

The attached notes form an integral part of these condensed consolidated interim financial statements. The financial statements were approved by the Board of Directors and authorised for issue on 17 August 2012. They were signed on its behalf by:

Consolidated Balance sheet

At 30 June 2012

Charles Philipps Richard Hextall

Chief Executive Group Finance & Operations Director

Consolidated Statement of cash flows

For the six months ended 30 June

	Note	6 months 2012 (Unaudited) £m	Restated 6 months 2011 (Unaudited) £m	Restated 12 months 2011 (Audited) £m
Cash flows from operating activities
Cash (utilised in)/generated from operations	19	(22.1)	350.9	271.1
Interest received		21.8	12.4	47.6
Dividends received		5.7	7.0	12.2
Income taxes received/(paid)		2.3	(30.8)	(38.6)
Net cash inflows from operating activities		7.7	339.5	292.3
Cash flows from investing activities
Acquisition through business combination, net of cash acquired		-	(11.4)	(11.4)
Deferred payment for acquired subsidiary		-	-	(0.1)
Investment in associates and joint venture		-	(0.5)	(1.6)
Purchase and disposal of property and equipment		(1.1)	(4.1)	(12.7)
Purchase and development of intangible assets		(2.9)	(11.0)	(25.7)
Net cash outflows from investing activities		(4.0)	(27.0)	(51.5)
Cash flows from financing activities
Net proceeds from issue of ordinary shares, including treasury shares		0.2	0.5	1.0
Dividends paid to shareholders	15	(78.2)	(78.0)	(113.6)
Dividends paid to non-controlling interests	15	(0.1)	-	-
Interest paid		(3.1)	(3.5)	(22.7)
Purchase of ESOT and treasury shares		-	(0.4)	(0.5)
Proceeds from issue of catastrophe linked instrument		-	-	96.5
Drawdown of revolving credit facility		71.2	-	-
Repayments of subordinated debt		-	(26.7)	(26.7)
Net cash outflows used in financing activities		(10.0)	(108.1)	(66.0)
Net (decrease)/increase in cash and cash equivalents		(6.3)	204.4	174.8
Cash and cash equivalents at beginning of period/year		256.4	81.5	81.5
Effect of exchange rate changes on cash and cash equivalents		(3.1)	0.6	0.1
Cash and cash equivalents at end of period/year		247.0	286.5	256.4

The attached notes form an integral part of these condensed consolidated interim financial statements.

The Group classifies cash flows from purchase and disposal of financial assets in its operating cash flows as these transactions are generated by the cash flows associated with the origination and settlement of insurance contract liabilities or capital requirements to support underwriting. Cash of £14.7 million from net purchases of financial investments was utilised in operations during the period (30 June 2011: £222.1 million from net sales;
31 December 2011: £215.9 million from net sales)

Notes to the Interim Financial Statements

1. Basis of preparation of interim financial statements

The condensed consolidated interim financial information included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim financial reporting' (IAS 34), as adopted by the European Union, and with the Disclosure and Transparency Rules of the Financial Services Authority. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2011, which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2011 were approved by the Board of Directors on 2 March 2012 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498(2) or section 498(3) of the Companies Act 2006.

After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Therefore the Group continues to adopt the going concern basis in preparing its condensed consolidated interim financial statements.

This condensed consolidated interim financial information was approved for issue on 17 August 2012.

2. Accounting policies

The same accounting policies, presentation and methods of computation are followed in the condensed consolidated interim financial statements as applied in the Group's latest annual audited financial statements except for the adoption of the following standard with effect from 1 January 2012:

· Amendment to IFRS 7, 'Financial instruments: Disclosure - Transfer of financial assets'

The adoption of this standard has had no material impact on the consolidated interim financial statements for the six months ended 30 June 2012.

Following the Group's announcement that Amlin France will be integrated within Amlin Corporate Insurance, the two businesses have been reported together within the 'Amlin European Insurance' column in the segmental information. Comparative information for the six months ended 30 June 2011 and the year ended 31 December 2011 has been restated accordingly. The 30 June 2011 comparative information has also been restated as a result of minor modifications to the internal reporting to the chief operating decision maker. As a consequence of these modifications, the 30 June 2011 comparative information for the presentation of underwriting and non-underwriting expenses has also been amended. Further details are provided in notes 5 and 8 respectively. These changes in presentation have no effect on the previously reported net income, shareholders' equity or net assets.

Improvements have also been made to the presentation of interest received and dividends received in the consolidated statement of cash flows, to reflect that such cash flows are considered cash flows from operating activities rather than cash flows from investing activities. There is no impact on the previously reported net change in cash and cash equivalents.

3. Estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2011.

4. Seasonality of interim operations

The Group derives insurance premium from a diverse range of underwriting classes and geographical locations. Depending on the class and location of the risk, there may be a seasonal pattern to incidence of claims. The US hurricane and West Pacific typhoon seasons run from May to November and the level of windstorm activity arising during this period may materially impact on the Group's claims experience during the second half of 2012.

The table below shows the Group's historical claims ratios for the six month periods to 30 June and 31 December. Claims ratio is defined as net claims plus claims expenses divided by net earned premium.

	Claims ratio
	H1 %	H2 %	Full year %
2008	40	69	55
2009	39	45	43
2010⁽¹⁾	63	58	60
2011⁽¹⁾	92	65	78
2012	53	n/a	n/a

Note:

(1)The Group incurred large losses from natural catastrophe claims during the first six months of 2010 and 2011 respectively. The 2010 losses included exposure to the Chile earthquake and the 2011 losses included claims on the New Zealand and Japanese earthquakes, Australian floods and US tornadoes.

Gross written premium comprises premium on insurance contracts incepting during the period. Inception dates are historically weighted more heavily towards the first half of the year. The table below shows the Group's gross written premium for the six month periods to 30 June and 31 December.

	Gross written premium
	H1 £m	H1 %	H2 £m	H2 %	Full year £m	Full year %
2008	715.5	69.2	318.5	30.8	1,034.0	100.0
2009⁽²⁾	950.1	72.0	368.6	28.0	1,318.7	100.0
2010	1,486.2	68.4	686.3	31.6	2,172.5	100.0
2011	1,514.6	65.7	789.5	34.3	2,304.1	100.0
2012	1,814.7	n/a	n/a	n/a	n/a	n/a

Note:

(3) The impact of the ACI acquisition is excluded for 2009. This acquisition added £225.2 million to both the H2 and full year amounts. Including ACI the 2009 figures would be H1: £950.1 million (61.5%), H2: £593.8 million (38.5%), full year: £1,543.9 million (100.0%).

5. Segmental reporting

a) Basis of segmentation

Management has determined the Group's operating segments based on the management information reviewed by the Board of Directors of the Company and used to make strategic decisions. All operating segments used by management meet the definition of a reportable segment under IFRS 8, 'Operating segments'.

The Group is organised into six operating segments. Segments represent the distinct units through which the Group is organised and managed. These segments are as follows:

· Amlin London, consisting of the Reinsurance, Property and Casualty, Marine and Aviation business units, underwritten via Syndicate 2001;

· Amlin UK, underwriting commercial insurance in the UK domestic market, via Syndicate 2001;

· Amlin Bermuda, which writes predominantly property reinsurance business, via Amlin AG, including reinsurance ceded by Syndicate 2001;

· Amlin Re Europe, which writes continental European non-life reinsurance business, via Amlin AG;

· Amlin European Insurance, including Amlin Corporate Insurance N.V., a leading provider of marine, corporate property and casualty insurance in the Netherlands and Belgium and specialty business in France; and

· Other corporate companies, comprising of all other entities of the Group including holding companies.

Included within the intra-group items column are consolidation adjustments.

Following the Group's announcement in May 2012 that Amlin France will be integrated within Amlin Corporate Insurance, the two businesses now meet the definition of one reportable segment in accordance with IFRS 8 and have therefore been reported together within the 'Amlin European Insurance' column in the segmental information. Comparative information for the six months ended 30 June 2011 and the year ended 31 December 2011 has been restated accordingly.

Additionally, to ensure continued consistency with the management information provided to the Board of Directors, each operating segment now includes the insurance intermediary and service entities, which generate income and expenses directly related to that segment, and intra-group commission income and certain operating expenses have been reclassified as acquisition costs and underwriting expenses respectively. The comparative information for the six months ended 30 June 2011 has been restated to reflect these changes, with the change having already been reported in the information for the year ended 31 December 2011.

Transactions between segments are carried out at arm's length. The revenue from external parties reported to the Board of Directors is measured in a manner consistent with that in the income statement and revenues are allocated based on the country in which the insurance risk is located. Management considers its external customers to be the individual policyholders, and as such the Group is not reliant on any individual customer.

b) Segmental information

Segmental information provided to the Board of Directors of the Company for the reportable segments of the Group is provided below. A reconciliation between this information and the consolidated income statement is provided in note 5(c).

Income and expenses by business segment Six months ended 30 June 2012	Amlin London £m	Amlin UK £m	Amlin Bermuda £m	Amlin Re Europe £m	Amlin European Insurance £m	Other corporate companies £m	Intra group items £m	Total £m
Analysed by geographic segment
UK	127.5	196.8	167.7	12.0	9.4	-	(144.3)	369.1
North America	457.9	3.9	148.2	0.5	-	-	-	610.5
Europe	53.2	11.8	26.2	134.4	223.2	-	(2.9)	445.9
Worldwide	7.8	12.6	0.3	-	165.7	-	-	186.4
Other	136.0	1.9	55.0	9.9	-	-	-	202.8
Gross written premium	782.4	227.0	397.4	156.8	398.3	-	(147.2)	1,814.7
Net written premium	519.1	180.0	342.8	125.6	328.6	-	(7.3)	1,488.8

Gross earned premium	516.3	171.6	261.0	71.1	248.1	-	(96.0)	1,172.1
Reinsurance premium ceded	(164.3)	(30.8)	(27.9)	(12.5)	(39.2)	-	90.3	(184.4)
Net earned premium	352.0	140.8	233.1	58.6	208.9	-	(5.7)	987.7
Insurance claims and claims settlement expenses	(216.0)	(109.7)	(91.4)	(49.4)	(130.5)	-	56.1	(540.9)
Reinsurance recoveries	48.3	23.8	(0.2)	5.6	1.8	-	(61.0)	18.3
Expenses for the acquisition of insurance contracts	(97.0)	(37.1)	(35.5)	(9.1)	(35.6)	-	2.6	(211.7)
Underwriting expenses	(28.9)	(16.5)	(8.9)	(5.5)	(40.7)	(0.1)	1.0	(99.6)
Profit attributable to underwriting	58.4	1.3	97.1	0.2	3.9	(0.1)	(7.0)	153.8
Investment return	11.2	3.2	28.9	0.2	31.8	14.3	(4.9)	84.7
Other operating income⁽¹⁾	12.8	4.4	0.7	-	0.8	4.9	(21.3)	2.3
Agency expenses⁽²⁾	(11.1)	(3.8)	-	-	(0.5)	-	15.4	-
Other non-underwriting expenses	(0.4)	(0.1)	(2.8)	(1.1)	(13.2)	(37.7)	12.0	(43.3)
Result of operating activities	70.9	5.0	123.9	(0.7)	22.8	(18.6)	(5.8)	197.5
Finance costs⁽³⁾								(13.4)
Share of profit after tax of associates and joint venture								0.4
Profit before taxation								184.5
Claims ratio	47%	61%	39%	75%	61%			53%
Expense ratio	36%	38%	19%	25%	37%			31%
Combined ratio	83%	99%	58%	100%	98%			84%

Notes:

(1) Other operating income is mainly agency fees payable by Syndicate 2001 to Amlin Underwriting Limited and external commission income earned by service companies;

(2) Agency expenses allocated to segments represent fees and commission payable to Amlin Underwriting Limited;

(3) Finance costs are incurred in support of the entire business of the Group and have not been allocated to particular segments.

Included within the gross written premium of Amlin Bermuda is premium ceded from Amlin London, Amlin UK and Amlin European Insurance amounting to £141.4 million on reinsurance contracts undertaken at commercial rates (30 June 2011: £115.9 million; 31 December 2011: £183.4 million).

Investment return in other corporate companies includes £10.3 million gain (30 June 2011: £8.8 million gain;
31 December 2011: £3.2 million loss) generated from capital assets that support the business reported in the Amlin London, Amlin UK and Amlin European Insurance segments.

Assets and liabilities by business segment At 30 June 2012	Amlin London £m	Amlin UK £m	Amlin Bermuda £m	Amlin Re Europe £m	Amlin European Insurance £m	Other corporate companies £m	Intra group items £m	Total £m
Assets	2,540.2	797.7	2,012.5	247.4	1,742.3	3,262.0	(3,426.9)	7,175.2
Liabilities	(2,479.9)	(786.8)	(1,026.0)	(254.8)	(1,547.3)	(1,581.8)	1,991.1	(5,685.5)
Total net assets	60.3	10.9	986.5	(7.4)	195.0	1,680.2	(1,435.8)	1,489.7

Amlin AG consists of a Zurich based underwriting unit and Bermudian branch, which are reported as Amlin Re Europe and Amlin Bermuda segments respectively. Therefore the net assets for Amlin Re Europe and Amlin Bermuda should be analysed on a combined basis.

Other corporate companies' segmental assets include £533.9 million (30 June 2011: £540.1 million; 31 December 2011: £563.1 million) of capital assets that support the business written by Syndicate 2001 which is reported within the Amlin London, Amlin UK and Amlin European Insurance segments.

Restated Income and expenses by business segment Six months ended 30 June 2011	Amlin London £m	Amlin UK £m	Amlin Bermuda £m	Amlin Re Europe £m	Amlin European Insurance £m	Other corporate companies £m	Intra group items £m	Total £m
Analysed by geographic segment
UK	120.9	142.2	144.9	5.6	-	-	(115.3)	298.3
North America	362.9	9.9	145.1	-	-	-	-	517.9
Europe	70.0	11.6	25.0	61.7	221.2	-	(3.4)	386.1
Worldwide	13.7	-	-	11.9	120.7	-	-	146.3
Other	111.7	3.7	50.6	-	-	-	-	166.0
Gross written premium	679.2	167.4	365.6	79.2	341.9	-	(118.7)	1,514.6
Net written premium	468.8	140.1	354.5	70.4	282.5	-	(1.4)	1,314.9

Gross earned premium	461.1	128.5	235.8	21.3	290.7	-	(80.8)	1,056.6
Reinsurance premium ceded	(135.5)	(22.2)	(8.8)	(2.2)	(51.1)	-	82.5	(137.3)
Net earned premium	325.6	106.3	227.0	19.1	239.6	-	1.7	919.3
Insurance claims and claims settlement expenses	(421.0)	(112.3)	(283.2)	(12.4)	(274.9)	-	78.7	(1,025.1)
Reinsurance recoveries	147.4	29.4	10.4	0.6	69.6	-	(80.9)	176.5
Expenses for the acquisition of insurance contracts	(82.5)	(21.8)	(31.2)	(2.6)	(38.0)	-	(1.5)	(177.6)
Underwriting expenses	(31.3)	(13.1)	(5.5)	(4.3)	(37.7)	(0.2)	(4.8)	(96.9)
Loss attributable to underwriting	(61.8)	(11.5)	(82.5)	0.4	(41.4)	(0.2)	(6.8)	(203.8)
Investment return	8.5	4.2	20.4	-	5.2	11.0	(4.0)	45.3
Other operating income⁽¹⁾	13.0	3.0	-	-	0.7	4.4	(14.6)	6.5
Agency expenses⁽²⁾	(11.4)	(3.1)	-	-	(0.4)	-	14.9	-
Other non-underwriting expenses	(0.3)	(0.1)	(0.8)	(1.2)	(10.6)	(1.4)	(12.2)	(26.6)
Result of operating activities	(52.0)	(7.5)	(62.9)	(0.8)	(46.5)	13.8	(22.7)	(178.6)
Finance costs⁽³⁾								(13.7)
Loss before taxation								(192.3)
Claims ratio	84%	78%	120%	62%	86%			92%
Expense ratio	35%	33%	16%	36%	32%			30%
Combined ratio	119%	111%	136%	98%	118%			122%

Notes:

(1) Other operating income is mainly agency fees payable by Syndicate 2001 to Amlin Underwriting Limited and external commission income earned by service companies;

(2) Agency expenses allocated to segments represent fees and commission payable to Amlin Underwriting Limited;

(3) Finance costs are incurred in support of the entire business of the Group and have not been allocated to particular segments.

Restated Assets and liabilities by business segment At 30 June 2011	Amlin London £m	Amlin UK £m	Amlin Bermuda £m	Amlin Re Europe £m	Amlin European Insurance £m	Other corporate companies £m	Intra group items £m	Total £m
Assets	1,992.3	677.9	1,790.9	81.7	1,931.2	4,377.9	(4,042.7)	6,809.2
Liabilities	(2,017.0)	(680.8)	(920.3)	(85.0)	(1,674.9)	(2,243.1)	2,286.5	(5,334.6)
Total net assets	(24.7)	(2.9)	870.6	(3.3)	256.3	2,134.8	(1,756.2)	1,474.6

Restated Income and expenses by business segment Year ended 31 December 2011	Amlin London £m	Amlin UK £m	Amlin Bermuda £m	Amlin Re Europe £m	Amlin European Insurance £m	Other corporate companies £m	Intra group items £m	Total £m
Analysed by geographic segment
UK	151.2	283.2	220.0	9.0	-	-	(185.2)	478.2
North America	544.5	8.3	201.8	2.2	-	-	(0.7)	756.1
Europe	81.4	14.9	25.8	90.3	309.1	-	(0.9)	520.6
Worldwide	17.1	0.7	0.1	-	279.6	-	-	297.5
Other	160.7	5.3	79.8	5.9	-	-	-	251.7
Gross written premium	954.9	312.4	527.5	107.4	588.7	-	(186.8)	2,304.1
Net written premium	675.3	261.3	503.8	98.3	480.1	-	(5.6)	2,013.2

Gross earned premium	938.2	280.3	499.8	58.3	620.2	-	(173.6)	2,223.2
Reinsurance premium ceded	(268.7)	(49.1)	(21.2)	(7.4)	(120.4)	-	171.0	(295.8)
Net earned premium	669.5	231.2	478.6	50.9	499.8	-	(2.6)	1,927.4
Insurance claims and claims settlement expenses	(751.2)	(205.7)	(504.7)	(38.3)	(497.9)	-	128.2	(1,869.6)
Reinsurance recoveries	300.3	45.3	54.5	1.8	99.6	-	(131.3)	370.2
Expenses for the acquisition of insurance contracts	(172.1)	(52.8)	(66.5)	(7.6)	(91.9)	-	10.7	(380.2)
Underwriting expenses	(60.4)	(25.9)	(20.0)	(9.4)	(76.2)	-	(1.9)	(193.8)
Loss attributable to underwriting	(13.9)	(7.9)	(58.1)	(2.6)	(66.6)	-	3.1	(146.0)
Investment return	17.5	5.0	4.5	0.1	(15.1)	29.0	(0.5)	40.5
Other operating income⁽¹⁾	24.8	6.4	0.6	-	1.9	11.2	(36.1)	8.8
Agency expenses⁽²⁾	(20.2)	(5.3)	-	-	(0.7)	-	26.2	-
Other non-underwriting expenses	(0.6)	(0.2)	(4.4)	(1.9)	(26.2)	(49.0)	13.1	(69.2)
Result of operating activities	7.6	(2.0)	(57.4)	(4.4)	(106.7)	(8.8)	5.8	(165.9)
Finance costs⁽³⁾								(27.8)
Share of loss after tax of associates and joint venture								(0.1)
Loss before taxation								(193.8)
Claims ratio	67%	69%	94%	72%	80%			78%
Expense ratio	35%	34%	18%	33%	33%			30%
Combined ratio	102%	103%	112%	105%	113%			108%

Notes:

(1)Other operating income is mainly agency fees payable by Syndicate 2001 to Amlin Underwriting Limited and external commission income earned by service companies;

(2)Agency expenses allocated to segments represent fees and commission payable to Amlin Underwriting Limited;

(3)Finance costs are incurred in support of the entire business of the Group and have not been allocated to particular

segments.

Restated Assets and liabilities by business segment At 31 December 2011	Amlin London £m	Amlin UK £m	Amlin Bermuda £m	Amlin Re Europe £m	Amlin European Insurance £m	Other corporate companies £m	Intra group items £m	Total £m
Assets	2,160.3	476.0	1,846.8	101.8	1,669.3	3,519.6	(3,271.7)	6,502.1
Liabilities	(2,136.8)	(476.0)	(971.1)	(108.6)	(1,481.1)	(1,744.6)	1,836.5	(5,081.7)
Total net assets	23.5	-	875.7	(6.8)	188.2	1,775.0	(1,435.2)	1,420.4

c) Reconciliation between management information and the consolidated income statement

The table below shows the reconciliation between the management information provided to the Board of Directors of the Company and the consolidated income statement.

Six months ended 30 June 2012	Management information £m	Reconciling items £m	IFRS Income statement £m
Gross written premium	1,814.7	-	1,814.7
Net written premium	1,488.8	16.7	1,505.5

Gross earned premium	1,172.1	-	1,172.1
Reinsurance premium ceded	(184.4)	2.6	(181.8)
Net earned premium	987.7	2.6	990.3
Insurance claims and claims settlement expenses	(540.9)	-	(540.9)
Reinsurance recoveries	18.3	-	18.3
Expenses for the acquisition of insurance contracts	(211.7)	-	(211.7)
Underwriting expenses	(99.6)	-	(99.6)
Profit attributable to underwriting	153.8	2.6	156.4
Investment return	84.7	(2.6)	82.1
Other operating income	2.3	-	2.3
Other non-underwriting expenses	(43.3)	-	(43.3)
Result of operating activities	197.5	-	197.5
Finance costs	(13.4)	-	(13.4)
Share of profit after tax of associates and joint venture	0.4	-	0.4
Profit before taxation	184.5	-	184.5

The reconciling items disclosed in the table above relate to items of income and expense under the Group's catastrophe linked instrument, the risk period of which incepted on 1 January 2012. From a management information perspective, the instrument is insurance linked and therefore these balances are included within the Group's profit attributable to underwriting in the segmental information provided to the Board of Directors. Under IAS 39, the instrument is classified as a derivative and therefore such items of income and expense are reported through investment return in the Group's consolidated income statement.

6. Investment return

	6 months 2012 £m	6 months 2011 £m	12 months 2011 £m
Investment income
- dividend income	5.7	7.0	12.2
- interest income	16.4	22.6	42.8
- cash and cash equivalents interest income	2.8	0.5	5.7
	24.9	30.1	60.7
Net realised gains/(losses)
on assets held for trading
- equity securities	4.2	10.7	12.8
- debt securities	11.2	32.2	29.2
- property funds	0.7	0.7	2.6
- derivative instruments	1.2	2.3	(8.7)
on assets classified as other than trading
- participation in investment pools	1.7	-	2.4
	19.0	45.9	38.3
Net unrealised gains/(losses)
on assets held for trading
- equity securities	4.7	(4.6)	(29.4)
- debt securities	36.8	(20.8)	(35.1)
- property funds	3.2	3.0	1.7
- derivative instruments	(6.5)	(8.3)	4.1
on assets classified as other than trading
- participation in investment pools	-	-	0.2
	38.2	(30.7)	(58.5)
	82.1	45.3	40.5

7. Net insurance claims

	6 months 2012 £m	6 months 2011 £m	12 months 2011 £m
Insurance claims and claims settlement expenses
Current year insurance claims and claims settlement expenses	604.0	1,038.1	1,948.1
Reduced costs for prior period insurance claims	(63.1)	(13.0)	(78.5)
	540.9	1,025.1	1,869.6
Insurance claims and claims settlement expenses recoverable from reinsurers
Current year insurance claims and claims settlement expenses recoverable from reinsurers	(28.4)	(152.7)	(336.1)
Reduced/(additional) costs for prior period claims recoverable from reinsurers	10.1	(23.8)	(34.1)
	(18.3)	(176.5)	(370.2)
Net insurance claims	522.6	848.6	1,499.4

8. Other operating expenses

	6 months 2012 £m	Restated 6 months 2011 £m	12 months 2011 £m
Expenses relating to underwriting
Employee expenses, excluding employee incentives	58.2	52.8	95.1
Lloyd's expenses	11.2	11.2	18.3
Other administrative expenses	34.4	31.3	74.5
Underwriting exchange (gains)/losses	(4.2)	1.6	5.9
	99.6	96.9	193.8
Other expenses
Employee expenses, excluding employee incentives	7.6	7.1	15.7
Employee incentives	14.1	2.0	9.5
Asset management fees	2.7	4.0	6.8
Other administrative expenses	7.1	6.1	16.1
ACI disentanglement and integration costs	12.8	8.2	16.8
Non-underwriting exchange (gains)/losses	(1.0)	(0.8)	4.3
	43.3	26.6	69.2
	142.9	123.5	263.0

Employee and other administrative expenses not relating to underwriting represent costs associated with the corporate activities of the Group.

ACI disentanglement and integration costs include expenditure incurred on the systems replacement programme.

As a result of the changes to the Group's segmental information in note 5, comparative information for the six months ended 30 June 2011 has been restated to reflect the reclassification of insurance intermediary and service entities' employee and other administrative expenses, totalling £9.5 million, from non-underwriting to underwriting expenses. There is no impact on the total value of other operating expenses for the six months ended 30 June 2011.

9. Tax

	6 months 2012 £m	6 months 2011 £m	12 months 2011 £m
Current tax - current period/year
Corporation tax	14.3	17.4	25.5
Foreign tax	2.7	4.1	4.8
Double tax relief	(1.9)	(3.3)	(3.2)
	15.1	18.2	27.1
Current tax - adjustment in respect of previous periods/years
Corporation tax	1.0	(2.4)	(15.9)
Deferred tax - current period/year
Movement for the period/year	(1.2)	(56.6)	(61.9)
Deferred tax - adjustment in respect of previous periods/years
Movement for the period/year	1.6	1.7	10.4
Effect of reduced tax rate on opening net liability	(1.0)	(1.7)	(4.0)
	0.6	-	6.4
Taxes on income	15.5	(40.8)	(44.3)

The UK Budget in March 2012 announced changes in the main rate of UK corporation tax. The new rate of 24.0% was substantively enacted on 26 March 2012 and applies from 1 April 2012. Details of future rate reductions are provided in note 21.

10. Financial assets and financial liabilities

Net financial investments	30 June 2012 £m	30 June 2011 £m	31 December 2011 £m
Assets
Financial assets held for trading at fair value through income
Shares and other variable yield securities	213.9	345.1	203.3
Debt and other fixed income securities	2,645.1	3,130.4	2,728.1
Property funds	133.6	90.3	117.3
Derivative instruments	8.7	10.1	19.4
Other financial assets at fair value through income
Participation in investment pools	967.6	560.0	1,000.2
Deposits with credit institutions	110.6	1.0	-
Other	2.1	1.9	2.7
Available for sale financial assets
Unlisted equities	4.2	9.0	4.2
Other
Derivative instruments in designated hedge accounting relationships	3.3	-	5.2
Total financial assets	4,089.1	4,147.8	4,080.4

Liabilities
Financial liabilities held for trading at fair value through income
Derivative instruments	(4.2)	(27.7)	(8.5)
Other
Derivative instruments in designated hedge accounting relationships	(3.6)	-	(2.5)
Total financial liabilities	(7.8)	(27.7)	(11.0)
Net financial assets	4,081.3	4,120.1	4,069.4

Debt and other fixed income securities include pooled funds, investing in bonds and other fixed income securities. The valuation of these funds is £1,356.8 million (30 June 2011: £1,361.6 million; 31 December 2011: £1,348.7 million).

Participation in investment pools includes units held in money market funds.

At 30 June 2012 Amlin AG recognises US$150.0 million (30 June 2011: US$nil; 31 December 2011: US$150.0 million) of money market funds in relation to the sale of catastrophe linked instruments. The use by the Group of the funds is restricted. The corresponding liability is included in borrowings (note 16).

In the six months to 30 June 2012 there have been no significant changes in the business or economic circumstances that have affect

ed the fair value of the Group's financial assets and financial liabilities. There have been no significant transfers between levels of the f

air value hierarchy used in measuring the fair value of financial instruments.

	30 June 2012				30 June 2011		31 December 2011
Asset allocation	Underwriting assets £m	Capital assets £m	Total assets £m	%	Total assets £m	%	Total assets £m	%
Type of asset
Bonds	1,788.2	865.0	2,653.2	63.3	3,150.7	76.0	2,739.0	65.5
Other liquid investments	724.2	462.8	1,187.0	28.3	547.6	13.2	1,114.7	26.7
Global equities	-	218.7	218.7	5.2	355.3	8.6	208.0	5.0
Property funds	-	133.6	133.6	3.2	90.3	2.2	117.3	2.8
	2,512.4	1,680.1	4,192.5	100.0	4,143.9	100.0	4,179.0	100.0
Type of bond
Government securities	480.7	166.2	646.9	24.4	1,059.2	33.6	759.2	27.7
Government index-linked securities	-	-	-	-	20.9	0.7	24.7	0.9
Government agencies/guaranteed⁽¹⁾	91.2	8.2	99.4	3.7	129.1	4.1	110.2	4.0
Supranational	14.1	4.1	18.2	0.7	41.0	1.3	17.3	0.6
Asset backed securities	38.6	7.5	46.1	1.8	75.1	2.4	50.1	1.8
Mortgage backed securities	72.4	140.6	213.0	8.0	138.2	4.4	161.0	5.9
Corporate bonds	153.7	114.9	268.6	10.1	285.9	9.1	260.3	9.5
Pooled vehicles⁽²⁾	933.3	423.5	1,356.8	51.1	1,361.6	43.2	1,348.7	49.3
Insurance linked securities	4.2	-	4.2	0.2	39.7	1.2	7.5	0.3
	1,788.2	865.0	2,653.2	100.0	3,150.7	100.0	2,739.0	100.0
Assets by region⁽³⁾ (excluding pooled vehicles)
UK	179.5	191.3	370.8	13.1	307.0	11.2	296.4	10.4
US and Canada	709.9	511.1	1,221.0	43.1	986.5	35.9	1,145.8	40.5
Europe (excluding UK)	497.7	478.9	976.6	34.4	1,302.1	47.3	947.3	33.5
Far East	177.1	49.7	226.8	8.0	109.1	4.0	409.4	14.5
Emerging markets	14.9	25.6	40.5	1.4	45.1	1.6	31.4	1.1
	1,579.1	1,256.6	2,835.7	100.0	2,749.8	100.0	2,830.3	100.0

Notes:

(1) £1.8 million of government agencies/guaranteed assets are mortgage backed (30 June 2011: £2.1 million; 31 December 2011: £1.3million) and £26.2 million are government guaranteed corporate bonds (30 June 2011: £42.1 million; 31 December 2011: £48.1 million). Pooled vehicles are excluded.

(2) Pooled vehicles held are funds investing in debt and other fixed income securities. Of these 33.6% are government/agency bonds (30 June 2011: 14.6%; 31 December 2011: 24.6%), 21.8% are corporate bonds (30 June 2011: 39.3%; 31 December 2011: 24.0%), 33.2% are mortgage backed and asset backed securities (30 June 2011: 20.0%; 31 December 2011: 26.2%), 5.7% are insurance linked securities (30 June 2011: 2.7%; 31 December 2011: 5.6%) and the remaining 5.7% is held in other liquid investments (30 June 2011: 23.4%; 31 December 2011: 19.6%).

(3) The regional table excludes bond pooled vehicles of £1,356.8 million (30 June 2011: £1,361.6 million and insurance linked securities £32.5 million; 31 December 2011: £1,348.7 million).

The total value of investments in the asset allocation table reconciles to the financial investment note as follows:

	30 June 2012 £m	30 June 2011 £m	31 December 2011 £m
Net financial investments	4,081.3	4,120.1	4,069.4

Assets/(liabilities) shown separately in the financial statements:
Accrued income	9.1	18.4	11.2
Net unsettled payables for investments purchased	(30.6)	(9.5)	(5.1)
Cash funds held by financial institutions	135.3	21.2	112.0
Assets not analysed in the investment asset allocation table:
Liquid investments	(2.2)	1.0	0.6
Unlisted equities	(0.2)	(0.2)	(0.2)
Margin and collateral relating to derivative instruments	(0.2)	(7.1)	(8.9)
Total investments in asset allocation tables above	4,192.5	4,143.9	4,179.0

The credit ratings of the Group's investments in bonds are set out below:

Credit rating⁽⁴⁾	30 June 2012 £m	30 June 2011 £m	31 December 2011 £m
AAA	982.8	1,419.9	987.9
AA	1,231.0	1,086.7	1,104.8
A	293.0	511.8	516.9
BBB	49.2	36.1	31.3
Other⁽⁵⁾	97.2	96.2	98.1
Total	2,653.2	3,150.7	2,739.0

Notes:

(4) Credit ratings on bonds are State Street composite ratings based on Standard & Poor's, Moody's and Fitch, depending on which agency/agencies rate each bond.

(5) Other relates to non-rated and rated lower than BBB.

A breakdown of the Group's exposure to sovereign debt is set out below:

	30 June 2012 £m	30 June 2011 £m	31 December 2011 £m
Investments in sovereign debt
France	26.4	450.0	20.8
US	483.5	276.5	433.7
Germany	341.4	140.1	316.0
Netherlands	0.6	86.1	-
Canada	60.0	47.0	60.8
Australia	93.5	30.2	45.6
Other	121.5	163.0	170.3
Investments in sovereign debt issued by Portugal, Republic of Ireland, Italy, Spain and Greece⁽¹⁾
Italy	20.1	-	62.7
Spain	17.8	13.1	52.6
Greece	1.3	-	-
	1,166.1	1,206.0	1,162.5

Note:

(1) The Group's investments in sovereign debt issued by Portugal and Republic of Ireland were £nil at 30 June 2012 (30 June 2011 and 31 December 2011: £nil).

Sovereign debt is included in the asset allocation table under government securities, government index-linked securities, government agencies/guaranteed assets, supranational bonds and within the underlying holdings of pooled vehicles.

11. Intangible assets

	Goodwill £m	Syndicate participations £m	Broker and customer relationships £m	Computer software £m	Other intangibles £m	Total £m
Net book value
At 1 January 2011	61.8	63.2	40.8	17.4	1.3	184.5
Additions	-	-	-	11.0	-	11.0
Acquisitions through business combinations	16.3	-	-	-	-	16.3
Amortisation	-	-	(2.2)	-	(0.3)	(2.5)
Foreign exchange gains	2.8	-	1.3	0.5	-	4.6
At 30 June 2011	80.9	63.2	39.9	28.9	1.0	213.9
Additions	-	-	-	14.7	-	14.7
Adjustments to prior acquisitions	(0.5)	-	-	-	-	(0.5)
Amortisation	-	-	(2.2)	-	(0.2)	(2.4)
Foreign exchange losses	(3.8)	-	(2.0)	(1.0)	-	(6.8)
At 31 December 2011	76.6	63.2	35.7	42.6	0.8	218.9
Additions	-	-	-	2.9	-	2.9
Amortisation	-	-	(2.1)	(0.4)	(0.3)	(2.8)
Foreign exchange losses	(1.6)	-	(0.8)	(0.4)	-	(2.8)
At 30 June 2012	75.0	63.2	32.8	44.7	0.5	216.2

Additions to goodwill during the six months to 30 June 2011 of £16.3 million relate to the acquisitions of J R Clare Holding Company Limited (£4.8 million) and Lead Yacht Underwriters Limited (£11.5 million).

Syndicate participations represent the ongoing rights to trade on Syndicate 2001 within the Lloyd's insurance market.

Computer software represents the costs that the Group has incurred on internally developed software relating to a new underwriting platform for Amlin Corporate Insurance N.V. This software was completed in the period and will be amortised over ten years on a straight-line basis.

12. Share capital

	Number	£m
Allotted, called up and fully paid ordinary shares
At 1 January 2011 and 1 January 2012 issued ordinary shares of 28.125 pence each	502,076,006	141.2
At 30 June 2011, 31 December 2011 and 30 June 2012 issued ordinary shares of 28.125 pence each	502,076,006	141.2

During the period the Company transferred 117,833 shares out of treasury shares at a cost of £0.3 million (30 June 2011: 233,323 at a cost of £0.6 million; 31 December 2011: 488,309 at a cost of £1.2 million). The shares have been transferred to meet exercises of employee share options, leaving 5,269,559 ordinary shares in treasury at 30 June 2012 (30 June 2011: 5,642,378; 31 December 2011: 5,387,392).

13. Earnings and net assets per share

Basic and diluted earnings per share are as follows:

	6 months 2012	6 months 2011	12 months 2011
Profit/(loss) attributable to equity holders of the Parent Company	£168.9m	(£151.7m)	(£149.9m)
Weighted average number of shares in issue	494.7m	494.0m	494.1m
Dilutive shares⁽¹⁾	6.7m	-	-
Adjusted average number of shares in issue	501.4m	494.0m	494.1m
Basic earnings per share	34.1p	(30.7p)	(30.3p)
Diluted earnings per share	33.7p	(30.7p)	(30.3p)

Note:

(1) 6.5 million and 5.8 million potential ordinary shares have not been treated as dilutive at 30 June 2011 and 31 December 2011 respectively as their conversion to ordinary shares would decrease the loss per share.

Net assets and tangible net assets per share are as follows:	30 June 2012	30 June 2011	31 December 2011
Net assets	£1,489.7m	£1,474.6m	£1,420.4m
Adjustments for intangible assets	(£216.2m)	(£213.9m)	(£218.9m)
Tangible net assets	£1,273.5m	£1,260.7m	£1,201.5m

Number of shares in issue at end of period/year	502.1m	502.1m	502.1m
Adjustment for ESOT and treasury shares	(7.3m)	(7.9m)	(7.6m)
Basic number of shares after ESOT and treasury shares adjustment	494.8m	494.2m	494.5m

Basic net assets per share	301.1p	298.4p	287.2p
Basic tangible net assets per share	257.4p	255.1p	243.0p

14. Other comprehensive income

All items of other comprehensive income in 2012 and 2011 are charged to 'Other reserves'.

Other reserves include the cumulative amount of goodwill written off to reserves on acquisitions prior to 1 January 1999 of £45.7 million (30 June 2011 and 31 December 2011: £45.7 million), a capital redemption reserve, charges for share options issued, deferred tax and current tax on these items, cumulative foreign exchange gains of £40.8 million (30 June 2011: £87.9 million; 31 December 2011: £65.1 million) on investments in overseas operations and £45.4 million (30 June 2011: £46.9 million; 31 December 2011: £47.2 million) cumulative losses on hedges of investments in overseas operations.

15. Dividends

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

Group	6 months 2012 £m	6 months 2011 £m	12 months 2011 £m
Final dividend for the year ended:
- 31 December 2011 of 15.8 pence per ordinary share	78.2	-	-
- 31 December 2011 of Amlin Plus Limited to non-controlling interests	0.1	-	-
- 31 December 2010 of 15.8 pence per ordinary share	-	78.0	78.0
Interim dividend for the year ended:
- 31 December 2011 of 7.2 pence per ordinary share	-	-	35.6
	78.3	78.0	113.6

The interim dividend of 7.5 pence per ordinary share for 2012, amounting to £37.1 million, payable in cash, was agreed by the Board on 17 August 2012, and has not been included as a liability as at 30 June 2012.

16. Borrowings

	Note	6 months 2012 £m	6 months 2011 £m	12 months 2011 £m
Subordinated debt		292.3	290.4	292.8
Revolving credit facility		71.5	-	-
Catastrophe linked instrument	10	94.4	-	95.7
		458.2	290.4	388.5

17. Principal exchange rates

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

	H1 2012 Average rate	At 30 June 2012	H1 2011 Average rate	At 30 June 2011	Full year 2011 Average rate	At 31 December 2011
US dollar	1.58	1.57	1.62	1.61	1.60	1.55
Canadian dollar	1.59	1.60	1.58	1.55	1.59	1.59
Euro	1.22	1.24	1.15	1.11	1.15	1.20
New Zealand dollar	1.96	1.96	2.16	2.17	2.03	2.00
Japanese yen	125.74	125.32	139.44	132.40	127.88	119.54

18. Contingent liabilities

The Group has no contingent liabilities at 30 June 2012 (30 June 2011 and 31 December 2011: £nil), other than as noted below.

Commitment to defined benefit funding

The Group participates in the Lloyd's Superannuation Fund defined benefit scheme (the Fund), details of which can be found in note 32 to the Group's Annual Report for the year ended 31 December 2011.

The funding position of the Fund is assessed every three years by an independent qualified actuary. The last completed formal valuation of the Fund was as at 31 March 2010 and was completed in June 2011 by Mr R N Wharmby, Fellow of the Institute of Actuaries, and used the projected unit credit actuarial method.

On 30 June 2011, the Group agreed a schedule of contributions with the Trustee. The schedule requires seven separate payments of £2.0 million to the Fund over a period of seven years. The first payment was made in July 2011, with six further annual payments commencing on 31 March 2012. The present value of the future payments has been recognised as a liability at 30 June 2012, to the extent that the contributions will not be available after they are paid into the Fund, as the Fund's rules do not allow the Group to receive a refund of contributions in any circumstances.

The Group has also entered into an agreement with the Trustee to hold certain funds within an escrow account. These funds would be transferred to the Trustee in full for the purpose of defined benefit funding if any one of a number of enforcement events within the agreement were to occur. The Group made two payments of £5.0 million each to the escrow account in July 2011 and June 2012. A further payment to the escrow account of £4.0 million will be made in June 2013. The Group considers it unlikely that any one of the enforcement events defined within the agreement will occur.

19. Cash flows from operations

	Note	6 months 2012 £m	6 months 2011 £m	12 months 2011 £m
Profit/(loss) on ordinary activities before taxation		184.5	(192.3)	(193.8)
Adjustments:
Depreciation charge		2.9	2.7	5.3
Amortisation charge	11	2.8	2.5	4.9
Finance costs		13.4	13.7	27.8
Interest income	6	(19.2)	(23.1)	(48.5)
Dividends income	6	(5.7)	(7.0)	(12.2)
(Gains)/losses on investments realised and unrealised	6	(57.2)	(15.2)	20.2
Other non-cash movements		2.2	(10.5)	2.8
Movement in operating assets and liabilities:
Net (purchases)/sales of financial investments		(14.7)	222.1	215.9
Exchange losses/(gains) on investments		61.8	(24.3)	(7.1)
(Increase)/decrease in loans and receivables		(215.3)	(85.7)	3.1
Increase in insurance and reinsurance contract assets		(483.2)	(518.9)	(366.8)
Increase in insurance contract liabilities		443.2	1,013.1	698.2
Increase/(decrease) in other payables		83.2	(18.0)	(40.7)
(Decrease)/increase in retirement benefits		(1.0)	13.5	(2.7)
Exchange (gains)/losses on borrowings		(1.4)	(1.1)	1.1
Exchange gains on other non-operating assets and liabilities		(18.4)	(20.6)	(36.4)
Cash (utilised in)/generated from operations		(22.1)	350.9	271.1

20. Related party transactions

Transactions with related parties during the period are consistent in nature and scope with those disclosed in note 38 to the Group's Annual Report for the year ended 31 December 2011.

21. Subsequent events

No subsequent events have been identified between the balance sheet date and the date on which the interim financial statements were authorised other than stated below.

Credit facilities

At the same time, Amlin Underwriting Limited entered into an amended facility, being a secured $200 million LOC which is also available for five years from the date of signing. If drawn, security is provided by a fixed charge over a portfolio of assets.

UK corporation tax rate

The new rate of UK corporation tax of 24.0% applying from 1 April 2012 was substantively enacted on 26 March 2012. The rate of 23.0% (applying from 1 April 2013) was substantively enacted on 3 July 2012. As this reduction was not enacted by the balance sheet date, it has not been recognised in these interim financial statements.

A further reduction to 22.0% was announced in the March 2012 Budget. This reduction has not yet been enacted or substantively enacted. The impact of the reductions from 24.0% to 22.0% is not considered material.

Responsibility Statment

The directors confirm that this consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

(a)an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

(b)material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

By order of the Board

Charles Philipps Richard Hextall

Chief Executive Group Finance & Operations Director
17 August 2012 17 August 2012

Introduction

We have been engaged by the company to review the condensed set of financial statements in the Amlin plc Interim Report for the six months ended 30 June 2012, which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated balance sheet, the consolidated statement of cash flows and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of Amlin plc are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLP

Chartered Accountants
17 August 2012

7 More London Riverside

London

SE1 2RT

Notes:

a) The maintenance and integrity of the Amlin plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions

Information for Shareholders

The additional information consisting of the shareholder information and directors and advisers has been prepared

from the records of the Company. Whilst it does not form part of the interim statement, it should be read in conjunction with it and with the responsibilities section of the independent review report thereon.

Financial Calendar

2012

7 September Record date for payment of 2012 interim dividend

4 October Payment of 2012 interim dividend

2013

4 March Expected announcement date of results for the year ending 31 December 2012

May Annual General Meeting

May Expected payment of 2012 final dividend, subject to shareholder approval

Shareholder enquiries, register and website

Please call our Shareholder Enquiries line on 020 7746 1111, or, for enquiries concerning share registration, call our Registrar, Computershare Investor Services PLC, on 0870 703 6165.

Amlin's website is at www.amlin.com

Directors and Advisors

As of 17 August 2012

Directors

Richard Davey (Chairman)*

Simon Beale (Group Chief Underwriting Officer)

Nigel Buchanan*+

Brian Carpenter

Sir Alan Collins*

Marty Feinstein*

Richard Hextall (Group Finance & Operations Director)

Charles Philipps (Chief Executive)

Sir Mark Wrightson Bt*

* Non-executive

+ Senior independent director

Audit Committee

Nigel Buchanan (Chairman)

Sir Alan Collins

Marty Feinstein

Risk and Solvency Committee

Marty Feinstein (Chairman)

Nigel Buchanan

Sir Alan Collins

Richard Davey

Remuneration Committee

Sir Mark Wrightson Bt (Chairman)

Nigel Buchanan

Nomination Committee

Richard Davey (Chairman)

Nigel Buchanan

Sir Alan Collins

Marty Feinstein

Charles Philipps

Sir Mark Wrightson Bt

Secretary

Mark Stevens

Registered Office

St Helen's

1 Undershaft

London

EC3A 8ND

Independent Auditors

PricewaterhouseCoopers LLP

7 More London Riverside

London SE1 2RT

Financial Advisers

Evercore Partners Limited

No 1 Paternoster Square

London EC4M 7DX

Joint Stockbrokers

Morgan Stanley

20 Bank Street

Canary Wharf

London E14 4AD

Numis Securities

The London Stock Exchange Building

10 Paternoster Square

London EC4M 7LT

Corporate Lawyers

Linklaters LLP

One Silk Street

London EC2Y 7HQ

Principal Bankers

Lloyds TSB Bank PLC

25 Gresham Street

London EC2V 7MN

Registrar

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol BS13 8AE

This information is provided by RNS

The company news service from the London Stock Exchange

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