REG - Amlin PLC - Interim Results <Origin Href="QuoteRef">AML.L</Origin> - Part 2
24/08/2015 07:01
- Part 2: For the preceding part double click ID:nRSX8151Wa
0.6
Transactions with the owners - 0.7 (0.7) 4.3 (169.9) (165.6) - (165.6)
of the Group for the period
At 30 June 2015 142.0 312.4 38.3 (11.8) 1,199.2 1,680.1 2.9 1,683.0
Attributable to owners of the Parent Company
For the six months ended 30 June 2014(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 2014 142.0 311.3 112.4 (18.8) 1,131.2 1,678.1 0.5 1,678.6
Total comprehensive (expense)/income for the period - - (51.6) - 136.1 84.5 (0.1) 84.4
Employee share option schemes:
- share-based payment reserve - - (1.6) 0.6 - (1.0) - (1.0)
- proceeds from shares issued 14 - - - 0.5 (0.3) 0.2 - 0.2
Dividends paid 11 - - - - (90.8) (90.8) - (90.8)
Deferred tax relating to share option schemes - - (0.6) - - (0.6) - (0.6)
Changes in non-controlling interests in subsidiaries - - (0.1) - - (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 year ended 31 December 2014(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 2014 142.0 311.3 112.4 (18.8) 1,131.2 1,678.1 0.5 1,678.6
Total comprehensive (expense)/income for the year - - (4.6) - 236.5 231.9 (0.1) 231.8
Employee share option schemes:
- share-based payment reserve - - 2.0 0.7 - 2.7 - 2.7
- proceeds from shares issued 14 - 0.1 - 2.0 (0.4) 1.7 - 1.7
Dividends paid 11 - - - - (131.2) (131.2) - (131.2)
Deferred tax relating to share option schemes - - (0.6) - - (0.6) - (0.6)
Issue of new shares 14 - 0.3 - - - 0.3 - 0.3
Changes in non-controlling interests in subsidiaries - - (0.1) - - (0.1) 2.7 2.6
Transactions with the owners - 0.4 1.3 2.7 (131.6) (127.2) 2.7 (124.5)
of the Group for the year
At 31 December 2014 142.0 311.7 109.1 (16.1) 1,236.1 1,782.8 3.1 1,785.9
The attached notes form an integral part of these condensed consolidated
interim financial statements.
Consolidated statement of financial position
At 30 June 2015
Assets Note 30 June 30 June 31 December2014
2015 2014 (Audited)
(Unaudited) £m (Unaudited) £m
£m
Cash and cash equivalents 196.0 222.6 204.8
Financial assets 13(a) 4,099.3 4,185.7 4,390.3
Reinsurance assets
- reinsurers' share of outstanding claims 6 316.2 337.8 305.9
- reinsurers' share of unearned premium 199.8 161.2 44.0
Loans and receivables, including insurance and reinsurance receivables
- insurance and reinsurance receivables 1,589.0 1,465.4 1,046.9
- other loans and receivables 83.4 94.6 85.5
Deferred acquisition costs 444.7 370.0 270.7
Current income tax assets 55.5 10.2 11.6
Deferred tax assets 5.6 6.8 5.7
Property and equipment 58.3 25.4 35.9
Goodwill and intangible assets 259.1 234.7 267.4
Investments in associates 7.4 14.4 7.0
Total assets 7,314.3 7,128.8 6,675.7
Equity and reserves
Share capital 14 142.0 142.0 142.0
Share premium 312.4 311.3 311.7
Other reserves 38.3 58.5 109.1
Treasury shares (11.8) (17.7) (16.1)
Retained earnings 1,199.2 1,176.2 1,236.1
Equity attributable to owners of the Parent Company 1,680.1 1,670.3 1,782.8
Non-controlling interests 2.9 0.1 3.1
Total equity and reserves 1,683.0 1,670.4 1,785.9
Liabilities
Insurance liabilities
- outstanding claims 6 2,810.3 2,898.6 2,928.2
- unearned premium 1,961.6 1,721.3 1,168.4
Other payables, including insurance and reinsurance payables
- insurance and reinsurance payables 272.8 287.6 196.2
- other payables 139.8 153.5 178.6
Financial liabilities 13(a) 8.9 8.7 28.6
Current income tax liabilities 9.3 1.2 0.6
Borrowings 13(b) 297.5 288.4 262.1
Retirement benefit obligations 42.8 31.4 41.4
Deferred tax liabilities 88.3 67.7 85.7
Total liabilities 5,631.3 5,458.4 4,889.8
Total equity, reserves and liabilities 7,314.3 7,128.8 6,675.7
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 21 August 2015. They were signed on its behalf by:
Charles Philipps Richard Hextall
Chief Executive Chief Finance & Operations Officer
Consolidated statement of cash flows
For the six months ended 30 June 2014
Note 6 months 2015 6 months 2014 12 months 2014
(Unaudited) (Unaudited) (Audited)
£m £m £m
Profit before tax 143.3 148.5 258.7
Adjustments:
Depreciation charge 2.1 2.8 5.4
Amortisation charge 5.2 5.4 10.7
Finance costs 12.0 13.6 27.0
Interest income 7 (9.0) (11.9) (22.0)
Dividend income 7 (14.5) (12.7) (22.9)
Gains on investments realised and unrealised 7 (66.4) (27.1) (56.4)
Gain on revaluation of existing investment - - (11.4)
Other non-cash movements 3.3 4.8 3.0
Movement in operating assets and liabilities:
Net sales of financial investments 198.3 84.2 71.5
Foreign exchange losses/(gains) on investments 156.6 130.8 (8.9)
Increase in loans and receivables (175.4) (129.6) (14.6)
(Decrease)/increase in insurance and reinsurance contract assets (708.2) (562.5) 5.2
Increase in insurance and reinsurance contract liabilities 751.9 643.2 28.5
(Decrease)/increase in other payables (108.5) 1.0 11.4
Decrease in retirement benefit obligations (3.0) (2.2) (1.0)
Foreign exchange (gains)/losses on other non-operating assets and liabilities (55.3) (49.2) 9.6
Cash generated from operations 132.4 239.1 293.8
Interest received 11.7 11.6 20.1
Dividends received 14.5 12.7 22.9
Income taxes received 5.9 4.7 13.2
Net cash inflows from operating activities 164.5 268.1 350.0
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired - - 2.0
Deferred payment for acquired subsidiary (0.3) (0.4) (0.4)
Investment in associates 0.9 - 4.8
Purchase of property and equipment (19.4) (5.4) (16.5)
Purchase and development of intangible assets (5.7) (1.7) (9.9)
Net cash outflows from investing activities (24.5) (7.5) (20.0)
Cash flows from financing activities
Net proceeds from issue of ordinary shares, including treasury shares 1.0 0.2 1.7
Dividends paid to owners of the Parent Company 11 (169.7) (90.8) (131.2)
Purchase of non-controlling interest - (0.4) (0.4)
Interest paid (1.7) (3.8) (22.1)
Purchase of ESOT and treasury shares - (4.0) (4.0)
Net drawdown/(repayment) of borrowings 35.0 (99.9) (131.8)
Net cash outflows from financing activities (135.4) (198.7) (287.8)
Net increase in cash and cash equivalents 4.6 61.9 42.2
Cash and cash equivalents at beginning of year 204.8 164.5 164.5
Effect of exchange rate changes on cash and cash equivalents (13.4) (3.8) (1.9)
Cash and cash equivalents at end of period/year 196.0 222.6 204.8
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 2015
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 2014, 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 2014 were approved by
the Board of Directors on 27 February 2015 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.
Having reassessed the principal risks, the directors considered it appropriate
to adopt the going concern basis of accounting in preparing the condensed
consolidated interim financial statements.
This condensed consolidated interim financial information was approved for
issue on 21 August 2015.
2. Accounting policies
Accounting policies applied in condensed consolidated interim financial
statements
The accounting policies, presentation and methods of computation adopted in
the preparation of the interim condensed consolidated financial statements are
consistent with those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 31 December 2014, except
for the adoption of amendments to existing standards and interpretations as
set out below:
a) Amendments to published standards and interpretations effective on or after
1 January 2015
The Group has adopted the following amended IFRSs effective as of 1 January
2015:
Annual Improvements 2011-2013 Cycle
These improvements have been endorsed by the EU for annual periods beginning
on or after 1 January 2015. The changes identified in these improvements are
not applicable to the Group.
b) Amendments to published standards and interpretations early adopted by the
Group
The Group has early adopted the following amended IFRSs effective as of 1
January 2015:
i) Amendments to IAS 19 'Employee Benefits', 'Defined Benefit Plans: Employee
Contributions'
The amendment has been endorsed by the EU for annual periods beginning on or
after 1 February 2015. This has been early adopted by the Group from 1 January
2015 and has been applied retrospectively. IAS 19 requires an entity to
consider contributions from employees or third parties when accounting for
defined benefit plans. Where the contributions are linked to service, they
should be attributed to periods of service as a negative benefit. These
amendments clarify that, if the amount of the contributions is independent of
the number of years of service, an entity is permitted to recognise such
contributions as a reduction in the service cost in the period in which the
service is rendered, instead of allocating the contributions to the periods of
service. This amendment has not had a significant impact on the financial
statements of the Group.
ii) Annual Improvements 2010-2012 Cycle
These improvements have been endorsed by the EU for annual periods beginning
on or after 1 February 2015 and have been early adopted by the Group from 1
January 2015. The following changes are applicable to the Group:
IFRS 2 'Share-based Payment'
This improvement is applied prospectively and clarifies various issues
relating to the definitions of performance and service conditions which are
vesting conditions.
The definitions are consistent with how the Group has identified any
performance and service conditions which are vesting conditions in previous
periods, therefore the amendment does not impact the Group's accounting
policy.
IFRS 3 Business Combinations
The amendment is applied prospectively and clarifies that all contingent
consideration arrangements classified as liabilities (or assets) arising from
a business combination should be subsequently measured at fair value through
profit or loss whether or not they fall within the scope of IFRS 9 'Financial
Instruments' (or IAS 39 'Financial Instruments: Recognition and Measurement',
as applicable). This is consistent with the Group's current accounting
practice; therefore the amendment does not impact the Group's accounting
policy.
3. Significant 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. These estimates are based on management's best knowledge of
current events and actions and accordingly actual results may ultimately
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 2014, unless otherwise noted below. These can be found on pages 118
to 124 of the 2014 Annual Report.
Insurance contract liabilities
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 2015 is £2,494.1million (30 June 2014: £2,560.8
million; 31 December 2014: £2,622.3 million). For the period to 30 June 2015,
there has been a net positive development of £48.3 million (30 June 2014:
£40.1 million; 31 December 2014: £89.6 million) for the Group. Further details
are included in note 6.
Following the transition in our 2014 results to a seasonally adjusted earnings
profile for North American windstorm exposed business, there has been a
reduction in gross earned premium of £61.7 million and reinsurance premium
ceded of £23.7 million in the first half of this year, compared to the 2014
period. The profile change has resulted in the majority of premium being
earned in the third quarter reflecting the risk profile of the business.
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 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 2015. 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
% % %
2011 92 65 78
2012 53 61 57
2013 53 52 52
2014 54 58 56
2015 55 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 %
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 73.8 672.8 26.2 2,564.0 100.0
2015 2,007.6 n/a n/a n/a n/a n/a
Note: The significant uplift 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.
5. Segmental reporting
a) Basis of segmentation
Management has determined the Group's operating segments based on the
management information reviewed during the year 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'.
Segments represent the distinct units through which the Group is organised and
managed. From 1 September 2014, management reorganised the Group operating
structure, from an entity/divisional basis, to three Strategic Business Units
(SBUs): Reinsurance, Marine & Aviation and Property & Casualty. From 1 January
2015, reporting to the chief operating decision maker reflects the change in
organisation and segmental analyses for the comparative periods have been
restated accordingly. Segments are as follows:
· Reinsurance - Offering coverage of catastrophe, property and casualty
risks through treaty and facultative reinsurance, and providing clients with
Insurance Linked Securities (ILS) solutions. Operates through offices in
Hamilton, London, Miami, Singapore and Zurich.
· Marine & Aviation - Primarily focusing on cargo, energy, hull,
liability and aviation portfolios, and some other specialist areas such as
specie and fine art risks. Operates through offices in Antwerp, London, Paris
and Rotterdam.
· Property & Casualty - Providing insurance coverage in five main areas -
property, casualty, accident and health, motor and bloodstock. Operates
through offices in Amstelveen, Brussels, Hamburg, London and Paris.
· Other, comprising all other entities of the Group including holding
companies, and certain adjustments unrelated to the performance of the SBUs.
Included within the intra group column are consolidation adjustments,
eliminating transactions between segments that are outside of the following
arrangements:
· Consolidation adjustments eliminating the whole account quota share
(WAQS) intra group reinsurance arrangement have been allocated to the segments
based on the segmental analyses of the counterparties to the arrangement. Thus
each segment is presented excluding the WAQS arrangement.
· Consolidation adjustments relating to transactions within segments are
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 Syndicate 2001, Amlin Insurance (UK) plc
and Amlin Europe N.V.
Investment return generated from centrally managed investments and managing
agency expenses are reported through segments to which these relate.
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
insured is located.
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 5(c).
Income and expenses by business segmentSix months ended 30 June 2015 Reinsurance Marine &Aviation Property &Casualty Other Intra group Total
£m £m £m £m items £m
£m
Analysed by geographic segment:
UK 174.5 87.1 214.4 - (24.1) 451.9
North America 464.3 68.0 163.6 - - 695.9
Europe 257.5 93.1 243.0 - - 593.6
Other 160.0 67.0 39.2 - - 266.2
Gross written premium 1,056.3 315.2 660.2 - (24.1) 2,007.6
Net written premium 839.2 280.7 556.8 (7.2) 0.8 1,670.3
Gross earned premium 471.9 219.5 489.7 - (21.1) 1,160.0
Reinsurance premium ceded (62.8) (22.5) (57.7) (7.2) 21.5 (128.7)
Net earned premium 409.1 197.0 432.0 (7.2) 0.4 1,031.3
Insurance claims and claims (225.8) (118.9) (289.8) - 10.3 (624.2)
settlement expenses
Insurance claims and claims settlement expenses recoverable from reinsurers 15.1 12.9 41.0 - (10.8) 58.2
Expenses for the acquisition (91.7) (47.8) (102.1) - 3.1 (238.5)
of insurance contracts
Underwriting expenses (39.0) (34.5) (59.4) - - (132.9)
Profit attributable to underwriting 67.7 8.7 21.7 (7.2) 3.0 93.9
Investment return 60.3 10.4 27.5 (2.3) - 95.9
Other operating income 9.0 1.5 1.3 - (1.3) 10.5
Other non-underwriting expenses (11.8) (3.8) (5.6) (25.6) 1.3 (45.5)
Result of operating activities 125.2 16.8 44.9 (35.1) 3.0 154.8
Finance costs (12.0)
Share of profit after tax of associates 0.5
Profit before tax 143.3
Claims ratio 52% 54% 58% 55%
Expense ratio 31% 42% 37% 36%
Combined ratio 83% 96% 95% 91%
Notes:
1. Finance costs are incurred in support of the entire business of the Group
and have not been allocated to particular segments.
2. The Other segment includes an adjustment of £7.2 million for the
understatement of reinsurance premium ceded in prior periods. This adjustment
does not relate to the performance of the SBUs and the comparative periods
have accordingly been restated to present a consistent view by SBU.
RestatedIncome and expenses by business segmentSix months ended 30 June 2014 Reinsurance Marine &Aviation Property &Casualty Other Intra group Total
£m £m £m £m items £m
£m
Analysed by geographic segment:
UK 183.7 60.0 137.9 - (31.8) 349.8
North America 397.8 67.7 187.2 - - 652.7
Europe 229.1 138.9 265.1 - (2.9) 630.2
Other 124.6 47.4 86.5 - - 258.5
Gross written premium 935.2 314.0 676.7 - (34.7) 1,891.2
Net written premium 775.6 270.5 585.4 6.8 (1.1) 1,637.2
Gross earned premium 524.3 242.8 489.8 - (16.3) 1,240.6
Reinsurance premium ceded (67.8) (30.1) (52.9) 6.8 18.2 (125.8)
Net earned premium 456.5 212.7 436.9 6.8 1.9 1,114.8
Insurance claims and claims (249.4) (111.4) (264.5) - 8.1 (617.2)
settlement expenses
Insurance claims and claims settlement expenses recoverable from reinsurers 16.4 (2.7) 14.8 - (11.7) 16.8
Expenses for the acquisition (91.3) (51.9) (98.6) - 1.6 (240.2)
of insurance contracts
Underwriting expenses (34.2) (39.5) (58.2) - (0.7) (132.6)
Profit attributable to underwriting 98.0 7.2 30.4 6.8 (0.8) 141.6
Investment return 29.8 8.5 19.0 (2.4) - 54.9
Other operating income 0.9 1.8 1.1 0.1 (0.9) 3.0
Other non-underwriting expenses (7.3) (6.8) (6.5) (19.6) 0.9 (39.3)
Result of operating activities 121.4 10.7 44.0 (15.1) (0.8) 160.2
Finance costs (13.6)
Share of profit after tax of associates 1.9
Profit before tax 148.5
Claims ratio 51% 54% 57% 54%
Expense ratio 28% 43% 36% 33%
Combined ratio 79% 97% 93% 87%
RestatedIncome and expenses by business segmentYear ended 31 December 2014 Reinsurance Marine &Aviation Property &Casualty Other Intra group Total
£m £m £m £m items £m
£m
Analysed by geographic segment:
UK 185.1 89.0 361.4 - (43.5) 592.0
North America 502.4 102.5 252.6 - - 857.5
Europe 267.6 153.8 308.6 - (2.9) 727.1
Other 181.1 109.7 96.6 - - 387.4
Gross written premium 1,136.2 455.0 1,019.2 - (46.4) 2,564.0
Net written premium 965.7 397.0 910.7 7.2 (1.7) 2,278.9
Gross earned premium 1,095.0 460.1 968.4 - (47.1) 2,476.4
Reinsurance premium ceded (175.8) (60.8) (104.0) 7.2 40.4 (293.0)
Net earned premium 919.2 399.3 864.4 7.2 (6.7) 2,183.4
Insurance claims and claims (534.0) (242.5) (557.8) - 27.5 (1,306.8)
settlement expenses
Insurance claims and claims settlement expenses recoverable from reinsurers 32.8 40.0 38.2 - (27.4) 83.6
Expenses for the acquisition (187.9) (95.4) (197.0) - 7.3 (473.0)
of insurance contracts
Underwriting expenses (51.4) (72.0) (118.0) - 0.2 (241.2)
Profit attributable to underwriting 178.7 29.4 29.8 7.2 0.9 246.0
Investment return 68.2 21.1 42.2 (13.0) - 118.5
Other operating income 4.7 3.0 2.2 0.2 (2.1) 8.0
Other non-underwriting expenses (18.5) (13.4) (14.4) (57.7) 2.1 (101.9)
Result of operating activities 233.1 40.1 59.8 (63.3) 0.9 270.6
Finance costs (27.0)
Share of profit after tax of associates 3.7
Gain on revaluation of existing investment 11.4
Profit before tax 258.7
Claims ratio 55% 50% 60% 56%
Expense ratio 26% 42% 37% 33%
Combined ratio 81% 92% 97% 89%
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 2015
Consolidated statement of profit or loss Managementinformation Reconciling items IFRSConsolidated statement of profit or loss£m
£m £m
Gross written premium 2,007.6 - 2,007.6
Net written premium 1,670.3 52.7 1,723.0
Gross earned premium 1,160.0 - 1,160.0
Reinsurance premium ceded (128.7) 6.0 (122.7)
Net earned premium 1,031.3 6.0 1,037.3
Insurance claims and claims settlement expenses (624.2) - (624.2)
Insurance claims and claims settlement expenses recoverable from reinsurers 58.2 - 58.2
Expenses for the acquisition of insurance contracts (238.5) - (238.5)
Underwriting expenses (132.9) - (132.9)
Profit attributable to underwriting 93.9 6.0 99.9
Investment return 95.9 (6.0) 89.9
Other operating income 10.5 - 10.5
Other non-underwriting expenses (45.5) - (45.5)
Result of operating activities 154.8 - 154.8
Finance costs (12.0) - (12.0)
Share of profit after tax of associates 0.5 - 0.5
Profit before tax 143.3 - 143.3
The reconciling items relate to items of income and expense under the Group's
risk transfer contracts with Tramline Re II Ltd. These contracts incepted on 1
July 2013 and 1 January 2015 and each provide cover for risk periods of four
years. 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.
Six months ended 30 June 2014 Year ended 31 December 2014
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 1,891.2 - 1,891.2 2,564.0 - 2,564.0
Net written premium 1,637.2 14.9 1,652.1 2,278.9 17.0 2,295.9
Gross earned premium 1,240.6 - 1,240.6 2,476.4 - 2,476.4
Reinsurance premium ceded (125.8) 3.2 (122.6) (293.0) 17.2 (275.8)
Net earned premium 1,114.8 3.2 1,118.0 2,183.4 17.2 2,200.6
Insurance claims and claims settlement expenses (617.2) - (617.2) (1,306.8) - (1,306.8)
Insurance claims and claims settlement expenses recoverable from reinsurers 16.8 - 16.8 83.6 - 83.6
Expenses for the acquisition of insurance contracts (240.2) - (240.2) (473.0) - (473.0)
Underwriting expenses (132.6) - (132.6) (241.2) - (241.2)
Profit attributable to underwriting 141.6 3.2 144.8 246.0 17.2 263.2
Investment return 54.9 (3.2) 51.7 118.5 (17.2) 101.3
Other operating income 3.0 - 3.0 8.0 - 8.0
Other non-underwriting expenses (39.3) - (39.3) (101.9) - (101.9)
Result of operating activities 160.2 - 160.2 270.6 - 270.6
Finance costs (13.6) - (13.6) (27.0) - (27.0)
Share of profit after tax of associates 1.9 - 1.9 3.7 - 3.7
Gain on revaluation of existing investment - - - 11.4 - 11.4
Profit before tax 148.5 - 148.5 258.7 - 258.7
6. Outstanding claims
Outstanding claims Reinsurers' share Net
£m £m outstanding claims
£m
At 1 January 2015 2,928.2 (305.9) 2,622.3
Claims incurred during the current period 649.5 (35.2) 614.3
Movements arising from prior year claims (25.3) (23.0) (48.3)
624.2 (58.2) 566.0
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