REG - Amlin PLC - Interim Results <Origin Href="QuoteRef">AML.L</Origin> - Part 2
29/10/2014 13:26
- Part 2: For the preceding part double click ID:nRSR3327Pa
(0.1) (0.3) (0.4)
Transactions with the owners - - (2.3) 1.1 (91.1) (92.3) (0.3) (92.6)
of the Group for the period
At 30 June 2014 142.0 311.3 58.5 (17.7) 1,176.2 1,670.3 0.1 1,670.4
Attributable to owners of the Parent Company
For the six months ended 30 June 2013(Unaudited) Note Sharecapital Share premium Otherreserves Treasury shares Retained earnings Total Non-controlling interests Total
£m £m £m £m £m £m £m £m
At 1 January 2013 141.2 300.4 121.6 (20.8) 954.7 1,497.1 0.6 1,497.7
Total comprehensive income for the period - - 83.9 - 140.2 224.1 - 224.1
Employee share option schemes:
- share-based payment reserve - - (3.0) 3.7 - 0.7 - 0.7
- proceeds from shares issued 12 - - - 1.0 (0.7) 0.3 - 0.3
Dividends paid 14 - - - - (82.4) (82.4) (0.1) (82.5)
Deferred tax relating to share option schemes - - (1.3) - - (1.3) - (1.3)
Issue of new shares 12 0.8 10.8 - - - 11.6 - 11.6
Transactions with the owners 0.8 10.8 (4.3) 4.7 (83.1) (71.1) (0.1) (71.2)
of the Group for the period
At 30 June 2013 142.0 311.2 201.2 (16.1) 1,011.8 1,650.1 0.5 1,650.6
Attributable to owners of the Parent Company
For the year ended 31 December 2013(Audited) Note Sharecapital Share premium Otherreserves Treasury shares Retained earnings Total Non-controlling interests Total
£m £m £m £m £m £m £m £m
At 1 January 2013 141.2 300.4 121.6 (20.8) 954.7 1,497.1 0.6 1,497.7
Total comprehensive income for the year - - (8.4) - 298.7 290.3 - 290.3
Employee share option schemes:
- share-based payment reserve - - (0.5) - - (0.5) - (0.5)
- proceeds from shares issued 12 - 0.1 - 2.0 (0.9) 1.2 - 1.2
Dividends paid 14 - - - - (121.3) (121.3) (0.1) (121.4)
Deferred tax relating to share option schemes - - (0.3) - - (0.3) - (0.3)
Issue of new shares 12 0.8 10.8 - - - 11.6 - 11.6
Transactions with the owners 0.8 10.9 (0.8) 2.0 (122.2) (109.3) (0.1) (109.4)
of the Group for the year
At 31 December 2013 142.0 311.3 112.4 (18.8) 1,131.2 1,678.1 0.5 1,678.6
The attached notes form an integral part of these condensed consolidated interim financial statement
Consolidated statement of financial position At 30 June 2014 Assets Note 30 June 30 June 31 December2013
2014 2013 (Audited)
(Unaudited) £m (Unaudited) £m
£m
Cash and cash equivalents 222.6 196.1 164.5
Financial assets 11 4,185.7 4,282.0 4,368.8
Reinsurance assets
- reinsurers' share of outstanding claims 8 337.8 466.3 343.1
- reinsurers' share of unearned premium 161.2 179.7 45.1
Loans and receivables, including insurance and reinsurance receivables
- insurance and reinsurance receivables 1,465.4 1,497.1 1,013.8
- other loans and receivables 94.6 94.0 88.4
Deferred acquisition costs 370.0 365.6 246.1
Current income tax assets 10.2 11.3 23.0
Deferred tax assets 6.8 15.4 6.1
Property and equipment 25.4 20.6 22.6
Goodwill and intangible assets 234.7 247.2 239.1
Investments in associates 14.4 10.5 12.5
Total assets 7,128.8 7,385.8 6,573.1
Equity and reserves
Share capital 12 142.0 142.0 142.0
Share premium 311.3 311.2 311.3
Other reserves 58.5 201.2 112.4
Treasury shares (17.7) (16.1) (18.8)
Retained earnings 1,176.2 1,011.8 1,131.2
Equity attributable to owners of the Parent Company 1,670.3 1,650.1 1,678.1
Non-controlling interests 0.1 0.5 0.5
Total equity and reserves 1,670.4 1,650.6 1,678.6
Liabilities
Insurance liabilities
- outstanding claims 8 2,898.6 3,183.5 2,897.1
- unearned premium 1,721.3 1,693.6 1,093.9
Other payables, including insurance and reinsurance payables
- insurance and reinsurance payables 287.6 324.0 273.3
- other payables 153.5 133.0 137.5
Financial liabilities 11 8.7 13.1 4.7
Current income tax liabilities 1.2 1.6 0.1
Borrowings 15 288.4 295.4 391.6
Retirement benefit obligations 31.4 36.2 32.6
Deferred tax liabilities 67.7 54.8 63.7
Total liabilities 5,458.4 5,735.2 4,894.5
Total equity, reserves and liabilities 7,128.8 7,385.8 6,573.1
The attached notes form an integral part of these condensed consolidated interim financial statements.
The interim financial statements were approved by the Board of Directors and authorised for issue on 15 August 2014. They
were signed on its behalf by:
Charles Philipps Richard Hextall
Chief Executive Group Finance & Operations Director
Consolidated statement of cash flows
For the six months ended 30 June 2014
Note 6 months 2014 6 months 2013 12 months 2013
(Unaudited) (Unaudited) (Audited)
£m £m £m
Cash flows from operating activities
Cash generated from operations 18 239.1 196.0 127.9
Interest received 11.6 17.2 21.5
Dividends received 12.7 8.4 16.3
Income taxes received/(paid) 4.7 0.1 (0.1)
Net cash inflows from operating activities 268.1 221.7 165.6
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired - (8.8) (8.8)
Deferred payment for acquired subsidiary (0.4) (0.2) (0.2)
Investment in associates - - 0.9
Purchase of property and equipment (5.4) (1.3) (7.5)
Purchase and development of intangible assets (1.7) (1.2) (2.3)
Net cash outflows from investing activities (7.5) (11.5) (17.9)
Cash flows from financing activities
Net proceeds from issue of ordinary shares, including treasury shares 0.2 11.9 12.8
Dividends paid to owners of the Parent Company 14 (90.8) (82.4) (121.3)
Purchase of non-controlling interest 4 (0.4) - -
Dividends paid to non-controlling interests 14 - (0.1) (0.1)
Interest paid (3.8) (4.5) (24.4)
Purchase of ESOT and treasury shares (4.0) (1.8) (5.5)
Net repayment of revolving credit facility (99.9) (128.3) (24.1)
Net cash outflows from financing activities (198.7) (205.2) (162.6)
Net increase/(decrease) in cash and cash equivalents 61.9 5.0 (14.9)
Cash and cash equivalents at beginning of year 164.5 190.6 190.6
Effect of exchange rate changes on cash and cash equivalents (3.8) 0.5 (11.2)
Cash and cash equivalents at end of period/year 222.6 196.1 164.5
The attached notes form an integral part of these condensed consolidated interim financial statements.
Notes to the interim financial statements
For the six months ended 30 June 2014
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 issued by the Financial Conduct Authority. The condensed consolidated
interim financial information should be read in conjunction with the consolidated financial statements for the year ended
31 December 2013, 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 2013 were approved by the Board of
Directors on 28 February 2014 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. These condensed consolidated interim financial statements have been reviewed, not
audited.
After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, it 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 15 August 2014.
2.Accounting policies
Accounting policies applied in condensed consolidated interim financial statements
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 standards and amendments with effect from 1 January 2014:
a) IAS 36 (amended), 'Impairment of assets - Recoverable amount disclosures for non-financial assets'
The amendments remove the requirement to disclose the recoverable amount when a cash generating unit contains goodwill or
indefinite life intangible assets but there has been no impairment. However, the amendments require additional information
about fair value measurement when the recoverable amount of impaired assets is based on fair value less costs of disposal.
There has been no impact on the financial statements of the Group.
b) IFRS 10, IFRS 12 and IAS 27 (amended), 'Investment entities'
IFRS 10, IFRS 12 and IAS 27 have been amended to address the accounting for investments controlled by investment entities.
The amendments define an investment entity and require an investment entity to measure its subsidiaries at fair value
through profit or loss. The amendments do not permit the 'roll-up' of fair value accounting in the consolidated financial
statements of a non-investment entity parent. The amendments have not had an impact on the financial statements of the
Group on adoption.
c) IAS 39 (amended), 'Financial instruments: recognition and measurement'
The amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging
instrument meets certain criteria. The amendments have had no impact on the financial statements of the Group.
d) IFRIC 21, 'Levies'
The interpretation was endorsed by the EU for periods commencing on or after 13 June 2014. This has been early adopted by
the Group from 1 January 2014 and requires retrospective application. The interpretation sets out the accounting for a
liability to pay levies that are imposed by governments. The interpretation requires a liability to be recognised when the
obligating event to pay a levy occurs, which might arise at a point in time or progressively over time. The interpretation
has not had a significant impact on the financial statements of the Group.
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 2013, unless otherwise noted below. These can be
found on pages 120 to 121 of the 2013 Annual Report.
Insurance contract liabilities
During the first half of 2014, Amlin London, Amlin UK and Amlin Bermuda have transitioned from an insurance claim
liabilities reserving process led by the underwriting and claims teams to a process where the actuarial teams produce best
estimate reserves on to which an appropriate margin is added. The level of prudence in the estimate of the insurance claim
liabilities remains consistent and therefore the change in the reserving process does not give rise to a quantifiable
impact on the level of reserves at 30 June 2014. This is in line with the processes already in place for Amlin Europe and
Amlin Re Europe and full details of both processes are provided on page 137 of the 2013 Annual Report.
3. Estimates continued
The change in claims costs for prior period insurance claims represents the claims development of earlier reported years
incurred in the current accounting period. The carrying value of the Group's net outstanding insurance claim liabilities at
30 June 2014 is £2,560.8 million (30 June 2013: £2,717.2 million; 31 December 2013: £2,554.0 million). For the period to 30
June 2014, there has been a net positive development of £40.1 million (30 June 2013: £61.4 million; 31 December 2013:
£133.5 million) for the Group. Further details are included in note 8.
4.Significant events and transactions in the period
a)Change to Lloyds pension funding arrangements
A triennial valuation of the Lloyd's Superannuation Fund (the Fund) as at 31 March 2013 was completed in June 2014 by Mr D
Wilding, Fellow of the Institute of Actuaries. The triennial valuation estimated a funding shortfall of £20.2 million and
on 20 June 2014, the Group agreed a schedule of contributions with the Trustee, to run over a period of ten years. The
schedule requires four separate payments of £2.0 million to the Fund, followed by six separate payments of £1.2 million to
the Fund. The present value of the future payments attributable to past service has been recognised as a liability at 30
June 2014, to the extent that the contributions will not be available after they are paid into the Fund through a refund or
a reduction in future contributions.
b) Purchase of non-controlling interest in Amlin Plus Limited
On 20 May 2014, the Group acquired the 40% non-controlling interest in Amlin Plus Limited for consideration of £0.4
million, resulting in a £0.3 million reduction to the non-controlling interest and a £0.1 million decrease in other
reserves. The acquisition supports the Group's strategy to develop its equine and bloodstock business.
5.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 the 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 2014. However, in recent years windstorm
activity has been more benign than might be expected which has resulted in less seasonal variation in loss ratios.
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 and claims settlement expenses divided by net earned premium.
Claims ratio
H1 H2 Full year
% % %
2010 63 58 60
2011 92 65 78
2012 53 61 57
2013 53 52 52
2014 54 n/a n/a
Note: The Group incurred large losses from natural catastrophe claims during the first six months of 2011. 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 H1 H2 H2 Full year Full year
£m % £m % £m %
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 75.4 590.9 24.6 2,405.6 100.0
2013 1,838.9 74.5 628.5 25.5 2,467.4 100.0
2014 1,891.2 n/a n/a n/a n/a n/a
Note: The significant uptake in H1 Gross written premium from 2012 onwards is a result of the establishment of
Amlin Re Europe, which has a significant proportion of policies incepting at the start of the year.
6. Segmental reporting
a) Basis of segmentation
Management has determined the Group's operating segments based on the management information reviewed by the chief
operating decision maker that is 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 & Casualty, and Marine & Aviation business units,
underwritten via Syndicate 2001;
• Amlin UK, underwriting commercial insurance in the UK domestic market, via Syndicate 2001 and Amlin Insurance
(UK) Limited;
• 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 Europe, including Amlin Europe N.V., a leading provider of marine, corporate property and casualty
insurance in the Netherlands and Belgium; specialised, commercial SME property and casualty business in Germany and
specialty business in France; and
• Other corporate companies, comprising all other entities of the Group including holding companies.
Included within the intra group items column are consolidation adjustments, primarily eliminating transactions between
segments.
Consolidation adjustments relating to transactions within segments that were previously reported through the intra group
items column, are now reported through the segment to which the adjustment relates. The most significant impact is in
respect of service company commission income recognised as acquisition expenses in Amlin London, Amlin UK and Amlin Europe.
The segmental analyses for comparative periods have been restated accordingly.
Investment return generated from investments in Funds at Lloyd's and managing agency expenses that were previously reported
through the other corporate companies column, are now reported through segments that support the business. The segmental
analyses for comparative periods have been restated accordingly.
Transactions between segments are carried out at arm's length. The revenue from external parties reported to the chief
operating decision maker is measured in a manner consistent with that in the consolidated statement of profit or loss 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.
During the first half of 2014, management have reviewed the Group operating structure. From 1 September the Group will
operate as three strategic business units: Reinsurance, Marine & Aviation and Property & Casualty. Reporting to the chief
operating decision maker for the 2015 financial year will be adjusted to reflect the changed allocation of responsibilities
and the financial statements will be adjusted accordingly.
b) Segmental information
Segmental information for the reportable segments of the Group is provided below. A reconciliation between this information
and the consolidated statement of profit or loss is provided in note 6(c).
Income and expenses by business segmentSix months ended 30 June 2014 Amlin London Amlin Amlin Bermuda Amlin Re Europe Amlin Europe Other corporate companies Intra group Total
£m UK £m £m £m £m items £m
£m £m
Analysed by geographic segment:
UK 161.9 124.0 189.9 26.0 9.8 - (161.8) 349.8
North America 483.2 13.9 154.8 0.8 - - - 652.7
Europe 68.9 21.0 51.4 180.5 225.7 - (23.4) 524.1
Worldwide 4.4 23.0 0.2 - 106.1 - - 133.7
Other 150.2 5.4 64.3 11.0 - - - 230.9
Gross written premium 868.6 187.3 460.6 218.3 341.6 - (185.2) 1,891.2
Net written premium 616.9 149.9 418.0 174.9 293.2 - (15.7) 1,637.2
Gross earned premium 582.4 167.4 274.3 114.2 223.8 - (121.5) 1,240.6
Reinsurance premium ceded (148.1) (30.3) (15.2) (20.1) (29.3) - 117.2 (125.8)
Net earned premium 434.3 137.1 259.1 94.1 194.5 - (4.3) 1,114.8
Insurance claims and claims (260.9) (111.6) (136.0) (91.9) (101.2) - 84.4 (617.2)
settlement expenses
Insurance claims and claims settlement expenses recoverable from reinsurers 73.8 20.5 (1.6) 14.0 (4.7) - (85.2) 16.8
Expenses for the acquisition (123.1) (33.1) (44.4) (17.1) (32.8) - 10.3 (240.2)
of insurance contracts
Underwriting expenses (62.0) (15.6) (9.3) (6.7) (43.9) 0.1 4.8 (132.6)
Profit attributable to underwriting 62.1 (2.7) 67.8 (7.6) 11.9 0.1 10.0 141.6
Investment return 18.2 3.4 17.2 2.3 15.4 4.1 (5.7) 54.9
Other operating income 0.8 1.1 0.8 0.1 1.0 3.0 (3.8) 3.0
Other non-underwriting expenses (6.8) (0.9) (2.7) (1.7) (5.8) (28.9) 7.5 (39.3)
Result of operating activities 74.3 0.9 83.1 (6.9) 22.5 (21.7) 8.0 160.2
Finance costs (13.6)
Share of profit after tax of associates 1.9
Profit before tax 148.5
Claims ratio 43% 66% 53% 83% 54% 54%
Expense ratio 43% 36% 21% 25% 39% 33%
Combined ratio 86% 102% 74% 108% 93% 87%
Note: 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 Europe
amounting to £148.3 million on reinsurance contracts undertaken at commercial rates (30 June 2013: £135.0 million; 31
December 2013: £197.8 millionThe table below illustrates the claims, expense and combined ratios excluding whole account
quota share (WAQS) intra group reinsurance arrangements:
Excluding WAQS intra group reinsurance arrangements Amlin Amlin AmlinBermuda Amlin Re Europe AmlinEurope Total
London UK
Claims ratio 46% 70% 44% 83% 54% 54%
Expense ratio 37% 31% 26% 25% 39% 33%
Combined ratio 83% 101% 70% 108% 93% 87%
RestatedIncome and expenses by business segmentSix months ended 30 June 2013 Amlin London Amlin Amlin Bermuda Amlin Re Europe Amlin Europe Other corporate companies Intra group Total
£m UK £m £m £m £m items £m
£m £m
Analysed by geographic segment:
UK 165.3 143.3 165.1 15.2 12.6 - (147.7) 353.8
North America 446.5 10.8 160.2 0.8 - - - 618.3
Europe 59.4 17.0 35.1 146.7 230.2 - (1.7) 486.7
Worldwide 7.4 34.0 1.4 - 134.6 - - 177.4
Other 132.6 5.2 54.8 10.1 - - - 202.7
Gross written premium 811.2 210.3 416.6 172.8 377.4 - (149.4) 1,838.9
Net written premium 531.5 171.5 368.6 138.7 320.1 - (5.2) 1,525.2
Gross earned premium 538.9 173.1 289.8 104.4 235.3 - (113.6) 1,227.9
Reinsurance premium ceded (176.4) (28.5) (18.1) (20.7) (32.0) - 106.6 (169.1)
Net earned premium 362.5 144.6 271.7 83.7 203.3 - (7.0) 1,058.8
Insurance claims and claims (226.3) (104.8) (144.5) (72.6) (138.4) - 79.1 (607.5)
settlement expenses
Insurance claims and claims settlement expenses recoverable from reinsurers 76.5 21.1 1.4 10.7 15.1 - (81.1) 43.7
Expenses for the acquisition (107.9) (38.9) (43.6) (16.4) (36.7) - 10.3 (233.2)
of insurance contracts
Underwriting expenses (18.1) (17.2) (17.3) (7.3) (43.1) (0.1) (0.5) (103.6)
Profit attributable to underwriting 86.7 4.8 67.7 (1.9) 0.2 (0.1) 0.8 158.2
Investment return 17.4 7.1 23.1 0.1 15.5 8.3 (4.1) 67.4
Other operating income 1.3 0.5 0.6 - 0.2 0.1 (0.8) 1.9
Other non-underwriting expenses (9.5) (2.0) (6.3) (1.9) (6.0) (25.7) (1.0) (52.4)
Result of operating activities 95.9 10.4 85.1 (3.7) 9.9 (17.4) (5.1) 175.1
Finance costs (14.7)
Share of profit after tax of associates 1.0
Profit before tax 161.4
Claims ratio 41% 58% 53% 74% 61% 53%
Expense ratio 35% 39% 22% 28% 39% 32%
Combined ratio 76% 97% 75% 102% 100% 85%
Note: Finance costs are incurred in support of the entire business of the Group and have not been allocated to particular
segments.
The table below illustrates the claims, expense and combined ratios excluding whole account quota share (WAQS) intra group
reinsurance arrangements:
Excluding WAQS intra group reinsurance arrangements Amlin Amlin Amlin Bermuda Amlin Re Europe Amlin Europe Total
London UK
Claims ratio 46% 60% 46% 74% 61% 53%
Expense ratio 30% 34% 29% 28% 39% 32%
Combined ratio 76% 94% 75% 102% 100% 85%
6. Segmental reporting continued
RestatedIncome and expenses by business segmentYear ended 31 December 2013 AmlinLondon Amlin Amlin Bermuda Amlin Re Europe£m Amlin Europe Other corporate companies Intra group Total
£m UK £m £m £m items £m
£m £m
Analysed by geographic segment:
UK 189.2 269.6 237.8 25.6 18.9 - (217.0) 524.1
North America 621.5 11.6 203.2 2.3 - - - 838.6
Europe 89.9 21.3 40.3 171.7 266.9 - (1.7) 588.4
Worldwide 10.0 29.4 - - 168.7 - - 208.1
Other 224.2 2.1 70.7 11.2 - - - 308.2
Gross written premium 1,134.8 334.0 552.0 210.8 454.5 - (218.7) 2,467.4
Net written premium 775.1 279.4 500.4 173.8 385.4 - (6.7) 2,107.4
Gross earned premium 1,086.7 333.4 560.3 207.1 469.8 - (216.7) 2,440.6
Reinsurance premium ceded (351.9) (58.8) (53.8) (40.9) (65.2) - 207.4 (363.2)
Net earned premium 734.8 274.6 506.5 166.2 404.6 - (9.3) 2,077.4
Insurance claims and (439.8) (216.9) (249.4) (148.2) (241.0) - 142.2 (1,153.1)
claims settlement expenses
Insurance claims and claims settlement expenses recoverable from reinsurers 119.7 46.8 1.6 24.3 14.6 - (147.0) 60.0
Expenses for the acquisition (210.5) (65.8) (83.5) (32.8) (70.8) - 12.5 (450.9)
of insurance contracts
Underwriting expenses (86.0) (38.7) (25.5) (16.5) (91.2) - 7.6 (250.3)
Profit attributable to underwriting 118.2 - 149.7 (7.0) 16.2 - 6.0 283.1
Investment return 42.5 11.2 56.5 2.3 44.5 17.9 (14.5) 160.4
Other operating income 2.5 0.8 1.0 0.1 1.1 0.2 (1.4) 4.3
Other non-underwriting expenses (25.9) (3.7) (9.4) (0.9) (15.7) (37.1) (4.3) (97.0)
Result of operating activities 137.3 8.3 197.8 (5.5) 46.1 (19.0) (14.2) 350.8
Finance costs (29.0)
Share of profit after tax of associates 3.9
Profit before tax 325.7
Claims ratio 44% 62% 49% 74% 56% 52%
Expense ratio 40% 38% 21% 30% 40% 34%
Combined ratio 84% 100% 70% 104% 96% 86%
Note: Finance costs are incurred in support of the entire business of the Group and have not been allocated to particular
segments.
The table below illustrates the claims, expense and combined ratios excluding whole account quota share (WAQS) intra group
reinsurance arrangements:
RestatedExcluding WAQS intra group reinsurance arrangements Amlin Amlin AmlinBermuda Amlin Re Europe AmlinEurope Total
London UK
Claims ratio 47% 65% 40% 74% 56% 52%
Expense ratio 35% 33% 28% 30% 40% 34%
Combined ratio 82% 98% 68% 104% 96% 86%
c) Reconciliation between management information and the consolidated statement of profit or loss
The following tables show the reconciliation between the management information provided to the chief operating decision
maker and the consolidated statement of profit or loss.
Six months ended 30 June 2014
Consolidated statement of profit or loss Management Reconciling items IFRS Consolidated statement of profit or loss £m
information £m
£m
Gross written premium 1,891.2 - 1,891.2
Net written premium 1,637.2 14.9 1,652.1
Gross earned premium 1,240.6 - 1,240.6
Reinsurance premium ceded (125.8) 3.2 (122.6)
Net earned premium 1,114.8 3.2 1,118.0
Insurance claims and claims settlement expenses (617.2) - (617.2)
Insurance claims and claims settlement expenses recoverable from reinsurers 16.8 - 16.8
Expenses for the acquisition of insurance contracts (240.2) - (240.2)
Underwriting expenses (132.6) - (132.6)
Profit attributable to underwriting 141.6 3.2 144.8
Investment return 54.9 (3.2) 51.7
Other operating income 3.0 - 3.0
Other non-underwriting expenses (39.3) - (39.3)
Result of operating activities 160.2 - 160.2
Finance costs (13.6) - (13.6)
Share of profit after tax of associates 1.9 - 1.9
Profit before tax 148.5 - 148.5
160.2
-
160.2
Finance costs
(13.6)
-
(13.6)
Share of profit after tax of associates
1.9
-
1.9
Profit before tax
148.5
-
148.5
The reconciling items relate to items of income and expense under the Group's risk transfer contracts with Tramline Re Ltd
and Tramline Re II Ltd. These incepted on 1 January 2012 and 1 July 2013 and provide cover for risk periods of three years
and four years respectively. From a management information perspective, these instruments are insurance linked and
therefore these balances are included within the Group's profit attributable to underwriting in the segmental information
provided to the chief operating decision maker. Under IAS 39, the instruments are classified as derivatives and therefore
such items of income and expense are reported through investment return in the Group's consolidated statement of profit or
loss.
6. Segmental reporting continued
Six months ended 30 June 2013 Year ended 31 December 2013
Consolidated statement of profit or loss Managementinformation Reconciling items IFRSConsolidated statement of profit or loss£m Managementinformation Reconciling items IFRSConsolidated statement ofprofit or loss£m
£m £m £m £m
Gross written premium 1,838.9 - 1,838.9 2,467.4 - 2,467.4
Net written premium 1,525.2 15.6 1,540.8 2,107.4 18.2 2,125.6
Gross earned premium 1,227.9 - 1,227.9 2,440.6 - 2,440.6
Reinsurance premium ceded (169.1) 2.7 (166.4) (363.2) 17.2
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