11th Apr 2014 07:00
AMLIN plc (“Amlin”)
RELEASE OF ANNUAL REPORT AND NOTICE OF AGM
The following documents have today been made available to shareholders:
1. 2013 Annual Report
2. Notice of the 2014 Annual General Meeting
3. Form of Proxy for the 2014 Annual General Meeting
Copies of the 2013 Annual Report and Notice of AGM may be viewed on the Company’s website at www.amlin.com under “Investors/Reports” and “Investors/Shareholder-circulars” respectively.
In accordance with Listing Rule 9.6.1, copies have been uploaded to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do.
COMPLIANCE WITH DTR 6.3.5 – EXTRACTS FROM THE 2013 ANNUAL REPORT
The information below, which is extracted from the 2013 Annual Report, is included solely for the purpose of complying with DTR 6.3.5. It should be read in conjunction with the Company’s Preliminary Announcement issued on 3 March 2014 which is available at www.amlin.com. Together these constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text via a Regulatory Information Service. This material is not a substitute for reading the full 2013 Annual Report.
The information contained in this announcement and in the Preliminary Announcement does not constitute the Group’s statutory accounts, but is derived from those accounts.
Principal Risks and Uncertainties
| Principal risks | Risk factor description | Amlin’s analysis of impact levels | Risk trend and measure | Mitigation strategies for each underlying risk exposure are outlined below | Executive responsibility | Link to strategic priorities | Risk disclosure link | ||||||||
| Enterprise-level risk | Risks associated with oneor more losses from a portfolio of principal risks occurring and providing an aggregated impact on the organisation as a whole. | Amlin is exposed to a domino-type event whereby, for example, a major natural catastrophe event not only affects Amlin’s insurance underwriting portfolio but also impacts stock markets, causing significant market and currency movements and a material impact to investments. The combined effect of these risk events could trigger reinsurance counterparty default events and hence a secondary impact on liquidity. | No major change Model output of combined simulated results showsstable picture at31 December 2014 | The risk management framework ensures that potential risk exposures are considered individually and in aggregation. Corporate Centre Risk produces an aggregated group risk profile providing an enterprise-wide view of risk exposures for the Group Executive and the Board. Stress testing of a combination of material risks is conducted to determine impact on capital. Reverse stress testing of the ultimate impact of combinations of material risks on business model viability and reputation is also performed. The Internal Model produces 100,000 simulated results and combined scenarios which are then measured to ascertain the appropriate level of capital for Amlin. | Chief Risk Officer | Effective risk management which optimises return for the risks we take | |||||||||
| Strategic risk | Risks associated with the appropriateness of businessstrategy in the face of the external environment. | It is critically important that Amlin responds effectivelyto changes in the external environment which affectits business. The execution and integration ofacquisitions can carry increased risk which requiressound management. | Changing dynamicsin reinsurance markets leading to increased competition Increased consolidation of capacity by major brokers | Periodic review of key trends affecting Amlin’s markets is undertaken. Emerging risks are considered and reviewed quarterly. Clear guidelines and procedures exist for the execution and integration of acquisitions. All acquisitions undergo a risk assessment process. | Chief Executive | Effective risk management which optimises return for the risks we take Measured expansion of core businesses and geographic footprint |
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| Underwriting –Catastrophe risk | The risk of materialclaims arising frominherent uncertaintiesin the occurrence ofinsurance lossesassociated withnatural or man-made catastrophic events. | Amlin has an extensive portfolio of property and marine insurance and reinsurance business that has significant exposure to weather and earthquake exposures as wellas non-elemental perils such as industrial accidents. | Catastrophe exposures have increased broadly in line with the growth in net assets during 2013 Increased availability of outwards reinsurance at more attractive rates. | There is a focus on underlying homogenous risk exposure which is more easily modelled. Maintaining a geographic diversity of exposure. Maintaining pricing discipline and close monitoring of pricing. Setting and managing exposures within appropriate line size, aggregate exposure and probable maximum loss limits. Purchase of outwards reinsurance programme. Modelling and review of deterministic and stochastic loss scenarios. | Group Chief Underwriting Officer | Effective risk management which optimises return for the risks we take Profit focusedunderwriting excellence |
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| Underwriting –Attritional risk | The risks of unexpectedor unbudgeted increasein cost of small or large insurance claims. | Amlin is exposed to attritional losses caused by inadequate pricing and/or unexpected claims frequencyas well as systemic change in the nature of claims. | No major change | Maintaining pricing discipline and close monitoring of pricing relative to required technical price. Peer review of risks written. Monitoring and review of incurred claims trends and performance. Setting line size and underwriting authority limits. Purchase of outwards reinsurance programme. | Group Chief Underwriting Officer | Effective risk management which optimises return for the risks we take Profit focusedunderwriting excellence |
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| Underwriting –Reserving risk | The risk of unexpectedor unbudgeted increasein claims emanatingfrom business writtenwhere the result hasbeen declared. | Amlin considers it has some exposure to claims reserving risk. However, due to the short-tail nature of many of its business lines, underwriting outcomes are determined relatively quickly after a loss is notified. All classes are subject to actuarial analysis using development patternsto establish appropriate reserving provisions. | The margin held over the actuarial best estimate of required reserves remains stable at above £160 million (December 2012: £160 million) | Quarterly reserving process involving underwriters and actuaries. Independent review of reserving process and proposed reserving levels by Group Reserving Actuary and Corporate Centre Risk function. Periodic review of adequacy of case reserving. Reserves set in excess of actuarial best estimate with the reserving margin as a percentage of carried reserves tracked as a key metric. | Group Chief Underwriting Officer Group Finance& Operations Director | Effective risk management which optimises return for the risks we take | |||||||||
| Market risk –Investmentmarket volatility | The risk arising from fluctuations in valuesof investments. | Amlin seeks to optimise its investment return whilst focusing on ensuring it maintains sufficient capital tomeet solvency requirements and sufficient liquid fundsto meet liabilities when they fall due. Exposure to market risk is therefore limited to prescribed tolerance levels for each entity. | Improving economic growth prospects Continued low interest rate environment. Risks associated with tapering of quantitative easing | Regular review of strategic and tactical asset allocations. Portfolio diversification and, in the current environment, maintaining short duration in the bond portfolio. Modelling and monitoring of investment risk against agreed‘Value at Risk’ tolerances. | Group Finance& Operations Director | Effective risk management which optimises return for the risks we take | |||||||||
| Market risk –Currency fluctuation | Impact on the value of balance sheet or earnings arising from the movementin value of sterling againstkey non-functional currencies. | Amlin has an international business with subsidiaries operating in US dollar and euro currencies as well as significant underwriting activity conducted in US dollars, euro and Japanese yen. | No major change | Assets and liabilities are matched for major currencies. Approximately 50% of Amlin’s US dollar and Amlin’s euro net asset exposures are hedged. Foreign currency profits are sold as they are recognised. | Group Finance& Operations Director | Effective risk management which optimises return for the risks we take | |||||||||
| Credit risk –Reinsurancecounterparty | The risk of loss if a counterparty fails toperform its obligationsor fails to perform themin a timely fashion. | Reinsurance protection is a key aspect of how wemanage underwriting risk. | Growth in balance sheet of counterparties | Reinsurers are screened and risk assessed. Exposure limits are set for each reinsurer based on our risk assessment. Reinsurance debtors are controlled and managed. Collateralised reinsurance is used, particularly for retrocessional reinsurance. | Group Finance& Operations Director | Effective risk management which optimises return for the risks we take | |||||||||
| Credit risk –Intermediarycounterparty | The risk of loss if an insurance or treasury intermediary fails to meet credit obligations in atimely fashion. | Amlin works with insurance and reinsurance brokersas well as treasury intermediaries to manage thetransfer of funds. | Improvement in economic environment Operational improvement in debt management in Amlin Europe | Intermediaries are screened and risk assessed. Exposure limits are set for each broker based on our risk assessment. Debtors are controlled and managed. | Group Finance& Operations Director | Effective risk management which optimises return for the risks we take | |||||||||
| Liquidity risk –(including asset/liabilitymatching) | The risk of insufficient financial resources being available to meet liabilities as they fall due. | The strength and liquidity of the balance sheet is fundamental to our proposition as an insurer of choice, providing us with the ability to respond quickly to claims, particularly relevant in the event of a large catastrophic loss such as a hurricane or earthquake. | No major change | Liquidity needs arising from major catastrophe events are regularly stress tested. Sufficient liquidity is maintained in investment portfolios to address claims needs. | Group Finance& Operations Director | Effective risk management which optimises return for the risks we take | |||||||||
| Operational risk | Risks resulting from inadequate or failedinternal processes, people and systems, or from external events, including regulatory control failures. | Amlin operates a diverse business across a number of offices and jurisdictions and is expected to comply with legal, regulatory and best practice standards. The potential exists for a failure of critical business processes, people or systems resulting in an interruption to normal operations. Dependency on sophisticated stochastic models may introduce operational risk. Additionally natural or man-made disasters could impact Amlin’s operating platform in one or more location. | Separation of the FSA into the PRA and FCA has increased regulatory focus on conduct risk | The risk management framework identifies and evaluates operational risks. Policies and standards are prescribed for each business and function, including for data quality and business continuity management. Procedural controls operate including workflow management of key processes. Compliance with established policies, standards, procedures and processes is monitored. Risk events and ‘near misses’ are reported so lessons can be learned. | Group Finance& Operations Director Group Human Resources Director | Effective risk management which optimises return for the risks we take First class client service based on a thorough understanding of their needs. Develop a culture and employment practicesthat make Amlin ‘the place to work’ |
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Directors’ Responsibility Statement pursuant to DTR 4
Pursuant to the Disclosure and Transparency Rules of the Financial Conduct Authority each of the directors, whose names and functions are listed in the section of the Annual Report entitled ‘Board of Directors’ confirm that, to the best of each person’s knowledge and belief:
The financial statements, prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and loss of the Group and Company; and
The directors’ report contained in the annual report includes a fair review of the development and performance of the business and the position of the Company and Group, together with a description of the principal risks and uncertainties that they face.
11 April 2014
Enquiries:
| Mark Stevens | 020 7746 1000 | ||||||
| Group Company Secretary | |||||||
| Amlin plc | |||||||
Copyright Business Wire 2014
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