Final Results

PRESS RELEASE

Charles Taylor plc

Announcement of results for year ended 31 December 2012

Consolidated financial highlights

For the year ended 31 December 2012

Note:

1. The 2012 adjusted profit before tax figures exclude customer relationship intangible amortisation charges of £1.3m (2011: £1.8m), pre-tax non-controlling interests of £1.2m (2011: £0.4m) and non-recurring costs of £nil (2011: £1.0m).

2. The final dividend is payable on 24 May 2013 to shareholders on the register on 12 April 2013.

"In 2012, we continued to make steady progress in delivering our strategy for growth despite difficult market conditions for our adjusting business. We also significantly reduced the Group's overall level of debt."

Rupert Robson

Chairman

Business highlights

·; Increase in Group revenues.

·; Group adjusted profit before tax stable, increase in statutory profit before tax.

·; Adjusted earnings per share marginally down, increase in statutory earnings per share.

·; Good progress in Management Services and Insurers in Run-off. Insurance Support Services performed in line with prior year.

·; Adjusting Services profit down due to a market-wide fall in the number of larger, more complex insurance claims, particularly in energy, combined with increased expenditure on new staff and offices.

·; Ongoing initiative to drive down debt makes good progress.

·; Continued progress in implementing growth strategy.

·; Final dividend of 6.75p, maintaining the full year dividend at 10.00p.

Chairman's statement

In 2012, we continued to make steady progress in delivering our strategy for growth despite difficult market conditions for our adjusting business. We also significantly reduced the Group's overall level of debt.

Results

Revenue increased to £108.2m (2011: £102.5m). Group adjusted profit before tax was £9.6m (2011: £9.6m), while Group statutory profit before tax increased to £7.1m (2012: £6.4m). Adjusted earnings per share fell slightly to 19.44p (2011: 19.86p). Statutory earning per share rose to 16.25p (2011: 12.79p).

Our Professional Services businesses increased revenue although operating segment profit fell. The Management Services business performed strongly, while the Insurance Support Services business showed a performance in line with the prior year. The Adjusting Services business revenue increased slightly, while operating segment profit fell. This was as a result of an unusual and significant market-wide fall in the number of larger, more complex insurance claims, particularly in energy, combined with increased expenditure on new staff and offices. This impacted the overall Professional Services business result.

Dividend

It is proposed that a final dividend of 6.75p per share (2011: 6.75p) be paid on 24 May 2013 to shareholders on the register on 12 April 2013. When added to the interim dividend of 3.25p per share (2011: 3.25p), this results in the total dividend per share for the year being maintained at 10.00p (2011: 10.00p).

Gearing and cash flow

Our initiative to drive down debt made good progress. A continued reduction in working capital levels in Adjusting Services and cash releases from the Alico life run-off business has resulted in net debt reducing to £29.5m (2011: £34.0m). This also contributed to free cash flow increasing to £12.4m (2011: £7.9m).

Board

I am very pleased to welcome Tito Soso to the Group and the Board as Group Chief Financial Officer. Tito joined Charles Taylor on 1 October 2012 as interim Group Chief Financial Officer and was appointed to the permanent role on 16 January 2013. Tito has already made a positive contribution to the financial management of the Group.

Julian Avery has informed me that he would like to retire from the Board during 2013, at a date to be determined. Julian has been a significant contributor as a member of the Board and has also been a highly effective Chairman of the Remuneration Committee. His input and advice will be missed.

Corporate governance

The Board remains committed to delivering high standards of corporate governance. We provide leadership for the Group in setting strategy, monitoring performance and ensuring that the appropriate resources are in place to meet our corporate objectives.

I would like to point to several areas which the Board chose to emphasise in its work during 2012. The Board spent a considerable amount of time assessing and testing new initiatives within the Group's stated strategy. Through the Remuneration Committee, we put in place a comprehensive new structure for the remuneration of the executive directors. We undertook a comprehensive process for the selection of our new Group Chief Financial Officer. Finally, the Board considered a small number of larger acquisition opportunities in Professional Services during the year, none has met our requirements.

Our Board has a broad and diverse range of skills and specialised knowledge, which enables us to achieve high standards of corporate governance.

Current trading and outlook

Overall trading for the year has started satisfactorily for our Professional Services businesses. There are early indications of improved performance in Adjusting Services. Our Insurers in Run-off business is not anticipated to repeat the performance it achieved in 2012 when it benefited from the Alico transfer. We are also taking steps to improve margins by reducing operating costs across the Group.

Our result for the year has been achieved through the diligence and commitment of our highly professional team. I would like to thank all our staff for their hard work and commitment to the business throughout the year.

Rupert Robson

Chairman

19 March 2013

Group Chief Executive Officer's statement

2012 has been a year of developments on many fronts for Charles Taylor. We have completed the first full year of implementing our business strategy for growth and I am pleased to report that we have made real progress. Our overall performance has demonstrated the resilience of our diversified business model, as the performance of our Management Services business and Isle of Man life run-off insurance business almost entirely offset the reduced earnings from our Adjusting Services business.

2012 performance

Professional Services

The Group's core Professional Services businesses - Management, Adjusting and Insurance Support Services - continued to show positive momentum in terms of revenue, which was up 5% on previous year at £106.1m (2011: £101.4m). A strong performance in Management Services was offset by a lower result in Adjusting Services. As a result and with the continued investment in the Group's capabilities, Professional Services operating segment profit was £9.8m, down from £11.6m in 2011.

As I explained in our 2011 annual report, we moved a number of our business lines from Management Services to Insurance Support Services at the start of 2012 to better reflect the way the business is structured. Our results for the year are reported under this new structure, with the previous year's figures restated to reflect the change where necessary.

Management Services: Revenue increased to £39.0m (2011: £34.6m) and operating segment profit to £7.1m (2011: £5.7m). This good result reflects a positive performance by the business on behalf of our mutual insurance company clients, combined with a careful focus on expenses. We successfully launched new products and services, which hold out the prospect of future growth.

Adjusting Services: Revenue increased slightly to £50.3m (2011: £50.1m) while operating segment profit was down to £2.7m (2011: £5.8m). The fall in operating segment profit was a result of an unusual and significant market-wide fall in the number of larger, more complex insurance claims, particularly in energy, combined with increased expenditure on new staff and offices. We believe these investments will give us a competitive advantage when market volumes recover. In fact there were signs of a slight pick-up in activity at the end of the year and in the first months of 2013, which give cause for cautious optimism.

Insurance Support Services: The business performed in line with prior year and continued to operate at break-even level. Revenue was steady at £16.7m (2011: £16.8m) and operating segment profit was £0.1m (2011: £0.2m). We have taken steps to cut costs and continue to make progress in developing the business. We remain positive about its prospects.

Insurers in Run-off

The business delivered revenue of £5.4m (2011: £3.6m) and an operating segment profit of £0.2m (2011: £0.7m loss). This was largely a result of the transfer of the Alico business, acquired in 2011, into our Isle of Man life run-off business. The transfer delivered a cash release in excess of the initial consideration paid. In line with our strategy to acquire offshore life insurers in run-off, we completed the acquisition of Global Life Assurance Limited in December 2012. We also expect this business to be transferred into our Isle of Man run-off life business once Court approval is received in 2013. The transfer is expected to generate a cash release, but not of the magnitude achieved as a result of the Alico transfer.

Business strategy

We have made good progress on delivering our business strategy. The strategy, introduced in December 2011 is to deliver growth in revenue, profit and shareholder value by focusing on professional services. Our approach is to seek organic growth by capitalising on our areas of strength by offering related services to our clients, building our niche businesses to leadership positions, and by realising the significant, unrealised potential for cross referral and joint working across the Group. We are well positioned for organic growth and believe the demand for the professional services we offer is substantial.

We also remain open to the idea of growing by entering new business lines or through targeted M&A activity. However, any initiative of this nature needs to be a good fit strategically, culturally and financially and none reached the high threshold we have set ourselves. While our focus is on professional services, we also see tactical opportunities to acquire UK offshore life insurers in run-off that we believe will provide near term cash releases.

Outlook

The market for insurance services remains strong. I firmly believe that our reputation for delivering high quality professional services with technically excellent professional staff from our international network of offices puts us in a good position to deliver growth. Our business model, with diversified sources of revenue from our three Professional Services businesses and Insurers in Run-off, means we have the strength to absorb short-term volatility in earnings. Alongside our initiatives to drive growth, we are increasingly focusing on improving our operational efficiency and are taking action to remove costs from our businesses. We will continue to implement our strategic initiatives throughout 2013 and beyond and I remain confident about the Group's prospects.

David Marock

Group Chief Executive Officer

19 March 2012

Group Chief Executive Officer's strategic update

Charles Taylor has significant competitive advantages in delivering professional services to insurers, their clients and advisers on a worldwide basis. Our Professional Services business strategy has three elements:

·; Reinforce the foundations

·; Create growth in the core Professional Services businesses

·; Explore medium term strategic options.

Reinforce the foundations: strengthen the Group's core capabilities and support services to underpin growth.

In 2012 our work to reinforce the foundations has delivered improved leadership structures, more effective coordination of marketing and business development and improved support for the businesses from our shared services teams.

Highlights of 2012

·; Implemented improved business planning: We have developed and are implementing business plans across all our businesses.

·; Created Global ICT and HR services teams: We provide more effective support services to our worldwide staff.

·; Reduced working capital: We have made very good progress in improving the speed of invoicing and collecting unpaid bills - which is making a positive difference to the Group's overall level of debt.

·; Developed a new corporate identity: We now present the Group as a single organisation and have capitalised on our ability to work across many related insurance services.

Create growth in the core Professional Services: achieve leadership positions in all the Group's businesses and develop new, closely related, insurance services. In 2012 we delivered an increase in revenue across the business. We introduced many effective initiatives to create growth in our core businesses with new products and services launched and new offices opened around the world.

Highlights of 2012

·; Delivered strong performance for our mutual insurance company clients.

·; Launched new products for our mutual insurance company clients: We launched new Kidnap and Ransom, Traders' Transport Liability and Professional Liability covers for members of the Standard Club. We also launched a new run-off service for members of Signal Mutual, which has started to secure business with more in prospect.

·; Opened new adjusting offices: We made good progress opening new offices where there is demand for our adjusting services. We opened our first West Coast US adjusting office in San Francisco and opened new offices in Colombia, to target the Latin American market.

·; Broadened adjusting services: We are now offering more adjusting services from our existing offices. This included the creation of a non marine team in Indonesia and the establishment of an energy team in the Middle East.

·; Developed new services in our Insurance Support Services business: We launched a new Managing General Agency ("MGA") service to support the creation of new MGAs. We are also targeting increased live claims management work in the London market with the launch of our 'Taylored Claims Management' service. Both services have been received positively in the market.

·; Build other new products and services on existing capabilities: Launched a European corporate bond fund to market investment services outside our core client base for the first time.

Explore medium term strategic options: develop new Professional Services business lines through joint ventures or M&A opportunities.

We remain open to the idea of growing the business by entering new business lines or through targeted M&A activity. However any initiative of this nature needs to be a good fit strategically, culturally and financially. We considered a number of opportunities in the last year, but none cleared the high threshold we set. We will continue to look at opportunities as they arise, but will only progress those that meet our requirements.

Our Insurers in Run-off business strategy

Our primary focus is on building our Professional Services business. However, we are also seeking tactical acquisition opportunities in the offshore life insurance run-off sector while reducing our exposure to the non-life insurance run-off sector.

Progress in 2012

·; Integrated Alico acquisition into our Isle of Man life company, releasing cash and providing increased servicing business.

·; Acquired Global Life Assurance Limited which will be incorporated into our Isle of Man life company.

·; Disbanded our non-life run-off acquisition team in line with our decision not to acquire further non-life run-off insurance companies.

Group Chief Financial Officer's report

Results

The results for the year are summarised in the table below and explained in more detail in the Professional Services review and the Insurers in Run-off review.

Note: Small rounding differences arise in the total amounts above

These adjusted financial measures exclude acquired customer relationship intangible charges, material non-recurring items and non-controlling interests as set out in the table below.

The Group's adjusted profit before tax measure has been amended versus prior years to exclude non-controlling interests, as this better reflects the performance of the Group attributable to its shareholders.

Adjusted profit before tax was in line with 2011, with the improved Insurers in Run-off result offsetting the lower profit in Professional Services. Within Professional Services the good performance in Management Services could not wholly compensate for the lower result in Adjusting Services. Insurers in Run-off showed an improved result, with losses in Cardrow and Bestpark being mitigated by the large non-controlling interests in these companies.

Statutory profit before tax was £7.1m (2011: £6.4m). The £0.7m increase over 2011 results from the differences in divisional performance described above and reduced non-recurring charges.

Net debt, cash flow and financing

Net debt reduced by £4.5m over the year to £29.5m (2011: £34.0m) and free cash flow increased to £12.4m (2011: £7.9m). These movements largely reflect the continued effort in improving working capital levels in the Adjusting Services business, as well as net cash distributions from our Insurers in run-off business. Movements in net debt are summarised in the table below:

The Group's principal banking facilities were agreed in January 2009 for a five-year term, and outstanding senior term debt at year end was £13.0m. The Group also has £12.0m of senior revolving credit facilities for general corporate purposes, £10.0m of committed overdraft facilities in the UK and £6.3m of overseas facilities. Total headroom on committed facilities at year end was £12.1m (including surplus cash). Interest rates are mostly linked to three-month LIBOR plus margins of 1.75-2.5%. The Group entered into an interest rate swap in early 2009 which fixes LIBOR at 2.96% on the loan finance for the five-year term. The availability of the senior term debt and revolving credit facility has been extended to 30 May 2014. The other facilities are renewed on an annual basis.

Operational efficiency

We are increasingly focused on improving operational efficiency and are taking action to remove costs from our businesses. These include reviewing the Group's overall headcount, targeting savings in general expenses, introducing a central procurement capability, reducing professional fees and renegotiating property and IT infrastructure costs.

Retirement benefit schemes

The retirement benefit obligation in the Group balance sheet at 31 December 2012 was £31.6m, compared to £34.8m at the previous year end, and £38.8m at 30 June 2012. The reduction in net obligation has been driven largely by a change in market conditions, employer contributions and investment gains. There are multi-year programmes in place to recover pension scheme deficits fully on a regulatory funding basis and funding costs are reflected in management fees charged by the Group where appropriate. Employer contributions in the year were £3.6m (2011: £3.0m).

Dividends

The proposed final dividend for 2012 is 6.75p (2011: 6.75p) so the total dividend for the year is 10.00p, the same as the full year 2011 dividend.

Foreign exchange

The Group manages its exposure to foreign currency fluctuations by the use of forward foreign exchange contracts and options to sell currency in the future. The contracts open during the year and at the year-end were to protect the Group's exposure to movements between £sterling and the US$, the Singapore$ and the Canadian$. The US$ profits of the Group were translated at 1.59 in 2012 (2011: 1.60). The sensitivity of the Group's results to movements in exchange rates is explained in note 25 to the accounts. Results were not materially affected by movements in exchange rates between 2011 and 2012.

Taxation

During 2012, the effective tax rate on statutory profit was 24.1% compared to 28.4% in 2011, because in the prior year the statutory profit was reduced by large non-recurring items for which no tax credit was available. The underlying tax rate, which is calculated on adjusted profit and excludes prior year adjustments and the recognition of new deferred tax assets, was 19.8% (2011: 18.5%). The underlying tax rate was higher as a result of a larger proportion of profits being generated in higher tax countries.

Tito Soso

Group Chief Financial Officer

19 March 2013

Professional Services Review

Charles Taylor's Professional Services businesses - Management, Adjusting and Insurance Support services - delivered revenue of £106.1m, up from £101.4m in 2011, with operating segment profit of £9.8m, down from £11.6m in 2011.

The Management Services business performed well. The Adjusting Services business was impacted by the market-wide downturn in larger and more complex insurance claims, particularly in energy, combined with investment in new offices and senior adjusting staff. The Insurance Support Services business was steady.

Management Services

The Management Services business provides end-to-end insurance management services to insurance companies. We deliver a complete outsourced management and operational service to our insurance company clients, reporting directly to their independent boards of directors. Our services cover every aspect of the companies' operations from underwriting, claims management and delivery of safety services to regulatory, accounting and administrative operations, investment management, customer service, corporate governance and company secretarial services. We manage three mutual insurance companies: the Standard Club, Signal and SCALA.

Key points

·; Increased revenue to £39.0m

·; Grew Standard Club insured tonnage

·; Launched new products for Standard Club members

·; Increased Signal Mutual membership

·; Introduced new services for Signal members and the commercial market

The Management services business had a successful year. Revenue increased to £39.0m (2011: £34.6m) and operating segment profit to £7.1m (2011: £5.7m). This good result reflects a positive performance by the business on behalf of our mutual insurance company clients, combined with a careful focus on expenses incurred in running the businesses.

We are remunerated by fees to manage the mutual insurance companies. Growth in the size of the mutuals, the number and extent of services we deliver and the volume of work involved generally lead to growth in management activities and hence the level of management fees. The underlying foundations and performance of the three mutual insurance companies are strong - providing a positive long-term indicator of the Management Services business.

Management Services - UK/International

Standard Club: our work for the Standard Club delivered a positive result for the mutual. The club provides protection and indemnity insurance to around 9% of world shipping. Members are attracted by the club's financial strength and quality of service. At the annual insurance renewal in February 2012, insured tonnage increased slightly year on year to 124m gt. This increased further during the year and by 31 December stood at 131m gt, largely from increased entries in the club by existing members but also reflecting the addition of new members. Total calls (which are the equivalent of insurance premiums) for the 2012 policy year, net of reinsurance, were US$221m. The club has also seen an increase in its free reserves, which are expected to reach a record level of around US$360m by the club year-end in February 2013.

In line with our business plan objectives, we have launched new insurance products for Standard Club members, which have already been bought by a number of club members. We anticipate these products will deliver growth over time for the club once established in the market. We believe the new products will be attractive to ship owners familiar with the quality and reputation of the Standard Club and of Charles Taylor. We have continued our commitment to training and development, supporting 23 staff through the P&IQ professional qualification.

Management Services - Americas

The Management Services - Americas business had a successful 2012.

Signal Mutual: Charles Taylor has been manager of Signal Mutual, the largest provider of Longshore workers' compensation insurance to the US maritime industry, since it was founded. Six new member companies joined Signal Mutual for the 2012/13 membership year which commenced on 1 October 2012. 98% of existing members renewed their workers' compensation insurance with the mutual and total membership has now reached 229 companies. The total payroll of the member companies, on which calls are calculated, is projected to exceed US$3 billion for the first time in the association's history, reflecting the value of the mutual proposition and the strength of the member companies in a challenging business environment. Total calls for the year should be around US$200m.

We made good progress on our business plan objectives. During 2012 we introduced a new Run-off Service, enabling members of Signal to transfer self-insured run-off liabilities to the mutual. The new service has already been taken up by one member. We also developed a new Safety Management Service which combines the skills of our teams from Signal and risk management and offers the highly regarded safety services we provide to Signal members to the commercial market.

SCALA: provides workers compensation to the majority of Canada's ship owners. The mutual delivered a steady performance during 2012. Total calls for the year were CAD$5.8m.

Adjusting Services

The Adjusting Services business provides loss adjusting services across four sectors: energy, marine, aviation and non marine and average adjusting services for shipowners. The business focuses on larger and more complex claims arising from major onshore and offshore energy incidents, maritime casualties, aviation claims, large infrastructure losses, financial institution frauds and other property and casualty losses.

Key points

·; Slight increase in revenue to £50.3m (2011: £50.1m)

·; Fall in the number of larger, more complex insured losses across the market

·; Uplift in claims activity at the year end

·; Investment in new offices in Colombia and San Francisco and senior fee-earning adjusters

·; Extended the range of services offered by our adjusting offices

·; Won two London market awards for the best claims team

Revenue increased slightly to £50.3m (2011: £50.1m) while operating segment profit was £2.7m (2011: £5.8m). The fall in profit was the result of an unusual and significant market-wide fall in the number of larger, more complex insurance claims, particularly in energy, combined with increased expenditure on new staff and offices.

This is consistent with what we reported at the interims where we highlighted that Adjusting Services delivered a lower first half result due to a significant fall in the number of larger, more complex insured losses and that the full year result would be dependent on the incidence of major events. This downturn continued into the second half.

We continued to attract a good overall flow of new instructions across the board delivering stable revenue for the year. We also continued to invest in new staff, offices and improved business systems in line with our business plan objectives, which increased total expenditure. We are confident this investment in new and improved capabilities will position us well to grow our revenues and profits in the future.

Overall, the business is well-positioned to benefit from any increase in large and complex claims activity in the Lloyd's and London insurance markets. We saw early signs of an uplift in claims activity at the year end, particularly as a result of claims from Hurricane Sandy, which hit New York and the North East cost of the United States in late October 2012, and claims resulting from floods in Australia and Indonesia.

Our aviation business delivered a small increase in revenue but a lower profit. It was held back by an increase in staff costs in some offices and by the overall level of claims in a year that was widely described as the safest for air travel. Energy is the largest of our adjusting lines and remained the leading contributor to our overall adjusting result, but was impacted by the downturn in large and complex losses. In 2012, our energy team won the Cuthbert Heath Award at the Insider Honours, and the Insurance Day, Claims Team of the Year at the London Market Awards for our innovation, technical expertise and efficient management of one of the largest energy insurance claims to impact markets in recent years. Marine had a solid year, increasing revenue and performing well in the UK and Asia. Our non marine business was slightly behind the previous year, but benefited from an increase in instructions at the year end.

During the year we continued to expand our office network into new territories and regions where there is a demand from global or local insurance markets. In the second half we opened an office in Colombia and recruited a strong team with the capability of handling aviation, energy, marine and non marine claims giving us strong local market contacts and a highly regarded group of specialist adjusters in the region. We also opened a loss adjusting office in San Francisco to capitalise on opportunities in the non marine market. At the interim we reported that we had entered into an agreement to acquire a loss adjusting business in Saudi Arabia and we are continuing with the due diligence process.

We have also taken steps to extend the range of services offered by our adjusting offices. We expanded our Indonesia operation, which has hitherto been a marine business, by adding a non marine team. We appointed a senior adjuster in Dubai to develop further our onshore and offshore energy loss adjusting capabilities in the Middle East.

We firmly believe in investing in training and education to develop the next generation of loss adjusters. During the year, we seconded junior adjusters between our Hong Kong, Indonesia, Singapore, Greece, London and Liverpool offices to broaden their experience and build their knowledge of different markets. We invested in training across all our adjusting business lines and, in particular, supported 14 of our marine adjusters through the Association of Average Adjusters examinations.

Insurance Support Services

The Insurance Support Services business provides professional support services to clients in the Lloyd's, London and international insurance markets. It delivers services to more than half of all Lloyd's managing agents. It also delivers our non-life and offshore life run-off servicing services from London, Dublin and the Isle of Man. The business is the leading provider of third party life insurance administration on the Isle of Man and also includes our investment management, captive management and specialty risks business lines.

Key points

·; Revenue steady at £16.7m (2011: £16.8m)

·; Insurance Services business behind new business targets resulting in a flat result for the year

·; Greater contribution to Insurance Services business from Lloyd's static claims remit

·; International life insurance run-off servicing performs well

·; Investment Management achieves top P&I investment performance

Insurance Support Services revenue was steady at £16.7m (2011: £16.8m), and the business delivered a break even result with operating segment profit of £0.1m, marginally behind the previous year (2011: £0.2m).

Charles Taylor Insurance Services provides outsourced back office insurance services to the Lloyd's, London and international insurance markets. It is the largest part of the Insurance Support Services business. It delivered an improved first half performance with a greater contribution from our remit to reduce the number of static claims in Lloyd's, which is helping the market to build on its reputation for fast and fair claims handling. We also saw a small upturn in business from our Financial Reporting Services business as a result of more active marketing. Our cover holder and broker underwriting services performed in line with the previous year.

In the second half the business fell behind on its new business development targets, resulting in a flat result for the year. We have strengthened our sales and marketing capability and have taken further steps to cut costs in the business, both of which initiatives we believe will help performance in 2013. We also invested considerable effort in 2012 developing our new Managing General Agency and 'Taylored Claims Management' services. These new services will be a significant focus of our sales and marketing activity in 2013.

Other Insurance Services

The offshore life run-off servicing business improved on last year, benefiting from further work following the acquisition of Alico. Global Life Assurance, which was acquired by the Charles Taylor in the second half was already a client of the business. The investment management business maintained its successful investment performance record for our major clients. As announced at the interim, the investment management business also launched a bond fund in association with an independent asset manager as our first move to target investment business outside our core client base. Our captive management business performed well in Bermuda and our small US risk consulting business delivered an improved result on 2011.

Insurers in Run-off business

The Insurers in Run-off business owns life and non-life insurance companies which are closed to new business and runs off their liabilities in an orderly manner. It is supported by our Insurance Support Services business, which provides it with run-off servicing. The business owns a life insurance company in the Isle of Man which acquires and integrates UK offshore life insurers in run-off. It enjoys a strong market position, being one of the few offshore life businesses capable of acquiring these businesses. It also owns two non-life insurance companies in the UK, and one non-life company in the Republic of Ireland.

The Insurers in Run-off business performed strongly, with revenue of £5.4m (2011: £3.6m) and an operating segment profit of £0.2m (2011: £0.7m loss). This result included a contribution following the acquisition of Alico, which we do not expect to be repeated in the following year.

Offshore life run-off

The transfer of the Alico Isle of Man business, acquired by the Group in November 2011, completed during the second half of 2012 releasing significant cash. In line with our strategy to acquire offshore life insurers in run-off, we completed the acquisition Global Life Assurance Limited in December 2012. We also expect this business to be transferred into our Isle of Man run-off life business once Court approval is received. The transfer is expected to generate a cash release, but not at the level following the Alico transfer.

Non-life run-off

The three mature non-life run-off companies owned by the Group continue to run‑off. Although two of the companies suffered adverse claims experience during the year, the results are largely attributable to non-controlling interests and thus only have a minimal impact on the Group. We do not plan to make further non-life run‑off acquisitions.

FINANCIAL STATEMENTS

Consolidated Income Statement

Adjusted earnings per share figures are shown in the consolidated financial highlights on page 1

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

The financial statements were approved by the Board of Directors and authorised for issue on 19 March 2013.

Tito Soso

Director

19 March 2013

Cash Flow Statement

Consolidated Statement of Changes in Equity

The capital reserve and merger reserve arose on formation of the Group and are non-distributable capital reserves.

Own shares comprise 238,920 (2011: nil) shares held by the Charles Taylor Employee Share Ownership Plan Trust ("ESOP"). The market value of these shares was £402,580 (2011: £nil) at the balance sheet date.

The trustee of the ESOP is the Codan Trust Company Limited, an independent professional trust company registered in Bermuda. The ESOP is a discretionary trust for the benefit of employees of the Group and provides a source of shares to distribute to the Group's employees (including executive directors and officers) under the Group's various bonus and incentivisation schemes, at the discretion of the trustee acting on the recommendation of a committee of the Board.

The assets, liabilities, income and costs of the ESOP are incorporated into the consolidated financial statements.

There are no significant restrictions on the ability of subsidiaries to transfer funds to the parent in the form of cash dividends or to repay loans or advances other than company law requirements dealing with distributable profits, and in the case of the insurance companies regulatory permissions and solvency limits.

Notes to the Financial Statements

1. Accounting policies

Basis of accounting

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2012 or 2011, but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the Company's Annual General Meeting.

The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498 (2) or (3) Companies Act 2006.

2. Segmental information

Identification of segments

For management and internal reporting purposes the Group is currently organised into four operating businesses whose principal activities are as follows:

·; Management Services business - mutual management service.

·; Adjusting Services business - energy, aviation, non marine and marine (including average) adjusting.

·; Insurance Support Services business - non-life and life insurance support services, including captive management, investment management and risk management.

·; Insurers in Run-off business - non-life and life insurance companies closed to new business.

Management information about these divisions is regularly provided to the Group's chief operating decision maker to assess their performance and to make decisions about the allocation of resources. Accordingly, these businesses correspond with the Group's operating segments under IFRS 8 "Operating Segments". Businesses forming part of each business which might otherwise qualify as reportable operating segments have been aggregated where they share similar economic characteristics and meet the other aggregation criteria in IFRS 8.

As noted in the 2011 financial statements, our investment management, captive management and risk management businesses have moved from Management Services to Insurance Support Services from January 2012. The comparative figures below have been restated to reflect this change.

In the Management Services business, a higher proportion of revenue arises in the second half of the financial year. There is no significant seasonality or cyclicality in the other businesses.

Measurement of segmental results and assets

Transactions between reportable segments are accounted for on the basis of the contractual arrangements in place for the provision of goods or services between segments and in accordance with the Group's accounting policies. Reportable segment results and assets are also measured on a basis consistent with the Group's accounting policies. Operating segment profit includes an allocation of central costs across the four businesses and excludes non-recurring adjusting items. Reconciliations of segmental results to the Group profit before tax are set out below.

Information about major customers

The Group derived revenue of £28.7m (31 December 2011: £24.7m) from one external customer which accounts for more than 10% of Group revenue, and is included within the Management Services business.