The directors of Amlin plc (the Company) present their report, the audited accounts of the Company and the consolidated accounts of the Company and its subsidiaries (the Group) for the year ended 31 December 2004.
Principal activities, corporate and business review The Group’s principal activity is non-life insurance underwriting. A review of the Group’s business, and developments during the year, is included in the Chairman’s statement and the Operating and Financial Review (OFR).
Dividends
An interim dividend of 3.0p (2003: 0.85p) per ordinary share was paid on 1 November 2004. The directors propose a final dividend of 5.0p per ordinary share (2003: 1.65p), to be paid on 24 May 2005 to shareholders on the register at the close of business on 29 March 2005. This makes total dividends for the year of 8.0p per ordinary share (2003: 2.5p). A scrip dividend alternative is being offered in respect of the final dividend, as it was in respect of the 2004 interim and previous dividends. Details of the shares issued during the year in respect of scrip dividends are included in note 19 to the Accounts. Directors
The biographical details of the present directors are set out on pages 36 and 37. Mr Buchanan joined the Board on 22 March 2004 and Messrs Kennedy, Sanders and Stace retired from the Board at the Annual General Meeting on 19 May 2004. Messrs Kemp, Joslin, Mylvaganam and Taylor, and Lord Stewartby, retire at the 2005 Annual General Meeting by rotation. Lord Stewartby, being eligible, offers himself for re-election for a term of office of one year. Messrs Kemp, Joslin, Mylvaganam and Taylor, being eligible, each offers himself for re-election for a term of office of three years.
Directors’ interests
The interests of directors and their related parties in the ordinary shares of the Company, all of which are beneficial, were as follows:
At 4 Mar 2005 and at 31 Dec 2004 At 31 Dec 2003 No of shares No of shares N J C Buchanan 6,300 n/a B D Carpenter 561,463 541,004 R A Hextall 50,665 18,937 A W Holt 2,522,518 2,463,441 R W Mylvaganam 3,285 3,189 C E L Philipps 103,823 103,823 Lord Stewartby 46,054 46,054 R J Taylor 15,351 15,351
In addition, Messrs Carpenter, Hextall, Holt, and Philipps are deemed, as employees of a Group company, and therefore potential beneficiaries, to be interested in the whole of the holding of the Group’s Employee Share Ownership Trust (ESOT), details of which are given below. The directors’ own ESOT and other share options are set out in the Directors’ remuneration report. Details of transactions between the Group and directors who served during the year are set out in note 32 to the Accounts.
No directors have any other interests in the shares of the Group or any of its subsidiaries.
Shares held by Employee Share Ownership Trust
The trustee of the Group’s ESOT, Kleinwort Benson (Guernsey) Trustees Limited, held 4,229,734 shares in the Company on 31 December 2004 (2003: 5,209,922 shares). On 4 March 2005, the ESOT’s shareholding was 4,083,651 shares. All of the changes in the ESOT’s shareholding between 31 December 2003 and 4 March 2005 were as a result of exercises of options.
Substantial shareholdings
At 4 March 2005 the Company had been notified of the following holdings of 3% or more of its issued ordinary share capital:
% of Number of shares shares held in issue* Fidelity International Limited and
FMR Corporation 59,539,412 15.1
State Farm Mutual Automobile
Insurance Company 38,945,955 9.8
Barclays PLC 23,866,696 6.0
Legal & General Group
Plc companies 11,944,369 3.0
*Based on the shares in issue as at 4 March 2005 of 395,468,235
Corporate governance
Statements on corporate governance, including reports from the Board’s Nomination and Audit Committees, immediately follow this report. The Directors’ remuneration report, which includes details of the Board’s Remuneration Committee and is subject to approval by shareholders at the forthcoming Annual General Meeting, starts on page 48.
Employment policies
The Group is committed to keeping employees informed about the business through such means as a Group intranet, presentations to staff and management conferences. An Employee Consultative Forum, made up of representatives of the employees and of senior management, was instituted during the year. The Group encourages its employees to develop their full potential by providing opportunities for training and professional development.
The Group’s equal opportunities policy aims to ensure that no potential or existing employee receives less favourable treatment because of his/her sex, actual or perceived sexual orientation, gender (including gender reassignment), marital or family status, age, ethnic origin, disability, race, colour, nationality, national origin, creed, political affiliation, part-time status, or any other condition, unless it can be shown to be legally justifiable.
Copies of the Group’s policies on professional qualifications, equal opportunities, family leave and sabbaticals are available on the Company’s website at www.amlin.com or from the Secretary on request. The Group’s health and safety policy is publicised to staff through its intranet and on staff notice boards and is monitored by a staff Health and Safety Committee, which reports directly to the Chief Executive who makes an annual health and safety report to the Board.
Group employees are encouraged to participate in the Group’s pension arrangements, details of which are set out in the Directors’
remuneration report and in note 9 to the Accounts.
DIRECTORS’ REPORT
The Company also facilitates employees’ participation in its equity through direct share ownership and share option schemes, including a Sharesave scheme open to all permanent employees.
Further information relevant to the Group as an employer is set out in the ‘People’ section of the OFR.
Corporate responsibility
General
The Group recognises the potential impact of its dealings not only on shareholders and employees, but also on other stakeholders including customers, external capital providers, suppliers, creditors and the Lloyd’s and wider communities. Since the previous Annual Report the Board has been developing its corporate responsibility policies and programmes by particular reference to analysis of the Group’s impact on each of these stakeholder groups. As part of this process, the Group has mapped its new Vision in terms of its positive impact on each stakeholder group, and has participated in Business in the Community’s corporate responsibility survey for the last two years. The Group Chief Executive has direct responsibility at Board level for leading the Group’s initiatives on all corporate responsibility related matters, with the relevant senior managers reporting to him.
This section summarises some of the areas, in addition to employment policies, and health and safety, which are covered immediately above, which are most relevant to the Group’s fulfilment of its wider corporate responsibilities.
In terms of most of the areas commonly associated with corporate responsibility, such as the environment, the Group’s local communities and its supply chain, the Board considers that the social impact of the Group’s activities is relatively low. The major exception is Amlin’s impact as an employer, which is covered in the ‘Employment policies’ section above and in the ‘People’ section of the OFR.
The Lloyd’s community
A key Amlin stakeholder is the Lloyd’s community and market, as Amlin’s performance has a potential impact on perceptions of the wider Lloyd’s community. As Amlin presently operates solely in the Lloyd’s market, it is also in Amlin’s interest for the market to operate effectively and for its reputation to be sound. As outlined in the ‘People’ and ‘Infrastructure’ sections of the OFR, Amlin participates actively in the Lloyd’s community in order to influence the market’s performance and governance and is at the forefront of a number of initiatives aimed at improving the Lloyd’s marketplace.
Environmental
Notwithstanding its low overall environmental impact, Amlin recognises the need to manage the impact of its activities on the environment in such areas as internal processes, re-cycling, energy use and encouraging its suppliers and insureds to act responsibly regarding environmental impacts and risk. The Company adopted a Group Environmental Policy in 2001, which it continues to implement and develop.
Targets have been set, and performance measured, in a number of environmental areas. Amlin is a member of Business in the Environment (part of Business in the Community), the business-led campaign for environmental responsibility which assists its members in monitoring and improving environmental performance. The Group’s Environmental Committee is chaired by a senior executive, David Harris, the Group Operations Director, who is a member of the Board of the principal operating subsidiary, Amlin Underwriting Limited, and reports directly to the Chief Executive.
Ethical and Human Rights
The Group operates a Business Ethics Policy, which sets out the high ethical standards to which the Group is committed in carrying out its business. The policy is intended to assist in protecting the trust and confidence of those with whom the Group deals, including particularly that of its customers. This is of fundamental importance to Amlin’s reputation and business.
As a UK based insurance business, the Group has no non-UK employees and no material physical supply chain originating outside the UK. Thus, although the majority of the Group’s premium income originates from overseas risks (particularly from North America, but also elsewhere), most of the potential abuses of human rights that a formal policy would address are covered by the Company’s commitment to carry out its business according to the laws of the countries in which it operates.
Community involvement beyond Lloyd’s
The Group encourages employee involvement in community projects, particularly in conjunction with the Lloyd’s Community Programme in the neighbouring London Borough of Tower Hamlets. Examples of some of the Company’s activities in this sphere are given in the ‘People’ section of the OFR.
Risk management
As part of the Group’s general risk management review processes, the significant risks to the Company’s short and long term value arising from social, environmental and ethical matters, and the opportunities to enhance value from an appropriate response, are incorporated as a specific consideration. This review has identified no specific risks in this area with other than a low probability of incidence or low potential impact on the Group. More details of risk management generally are included in the Board corporate governance statement.
Copies of the Group Environmental Policy, the latest environmental progress report and the Business Ethics Policy are available in the corporate governance section of investor relations on the Company’s website or from the Secretary on request.
Charitable activities and donations
The Group made charitable donations during the year of £34,425 (2003: £29,998). The Group’s charities budget is managed by a Charities Committee of staff representatives. Special consideration is given to community projects and fund raising in which members of staff themselves are involved, as well as to charities involved with children and health in London.