‘forward-looking statements’ with respect to certain of the Group’s plans and its current goals and expectations relating to its future financial condition, performance results, strategic initiatives and objectives.
Corporate Governance Code. This leaves the matter open to a ‘comply or explain’ process and in practice will take some time to settle.
The underlying return on opening equity was 10.3%, down from 12.7%, with the movement on 2009 due to lower underwriting profits, primarily driven by the adverse weather. The underlying return on equity based on average shareholders’ funds was 9.9%, compared to 13.4% in 2009. Excluding the impact of the worse than normal weather, the underlying return was 16.0% on opening equity and 15.3% based on average shareholders’ funds.
Net asset value per share excluding IAS 19 was 108p and including the pension fund deficit was 104p.
Commercial net written premiums increased by around 29% to £313m due to rate and strong new business in the Mid-Market and
The Marketing Academy, which we launched in 2009, also continues to act as the key resource centre for the training and development of our marketing teams. Approximately 250 staff have participated in the Foundation level training programme and we are now rolling-out the next level of training, focusing on digital and direct marketing. The Marketing Academy won the Insurance Times Best Training programme award in 2009, and the British Insurance
Sweden and Denmark. While in the UK, we launched a road safety education campaign for children, encouraging our employees to nominate the school their child attends.
Underlying return on average equity (%) 9.9 13.4 16.4 19.3 19.7
Our primary focus in 2011 will be integrating and driving value from these recent acquisitions.
• Johnson grew at 22% due to rate action, retention and 25 new sponsorship groups
• COR of 101.5% includes an excellent 90.9% COR for Ireland despite the adverse weather.
In Italy, the economy was steady, although the insurance market remains impacted by regulatory change to Motor. We anticipate that we will continue to see the benefi t of our management actions and expect the operation to be closer to breakeven at an underwriting level by the end of 2011 and return to underwriting profi tability in 2012.
SEGMENTAL KPIs products and enhancing our e-distribution capability. Although it’s early days, we saw a 21% increase in new business in 2010.
Our COR of 101.1% includes £22m of the total £25m reserve strengthening for bodily
The Group’s operating cashflows are £516m, an increase of 5% over 2009 driven by a significant improvement in insurance cashflows, with 8% growth in premium cashflows and tightly managed cash expenses, offset by reduced but still strong investment cashflows.
“ We are confident of delivering continued premium growth and strong profitability.”
IGD surplus remains at £1.5bn, with coverage a very strong 2.3 times the requirement.
• Reviews assess each portfolio against key performance and risk indicators. Portfolios that trigger key risk indicators are investigated. Corrective measures are implemented where required.
Behaving responsibly and ethically has a positive impact on people, communities and the environment in which we operate. We are committed to ‘Doing the Right Thing’, both as individuals and as a company and all employees are assessed against our brand beliefs – Bright
Construction has started to restore an urban river in East London. Slowing down the river, re-creating the natural meander and a floodplain demonstrates a cost-effective, natural solution. We have completed a new report examining the feasibility of sustainable urban drainage systems, which was launched at the House of Commons to raise awareness.
Remuneration Committee and a member of the Group Audit, Nomination and Investment
Offi cer with responsibility for Claims, Sales and Service, IT and Change across Personal and Commercial lines, and prior to that was
Derek joined the Group as General Counsel and Company Secretary in July 2010. Derek has over 15 years experience in the insurance industry. From 2002, he served as Group
Company including: • Recommending strategy and objectives to the Board and ensuring implementation in line with agreed business plans and budgets
The Chairman is currently Chairman of Aegis Group plc and was interim
Directors is an ongoing process which includes briefings on legislative and regulatory changes and on corporate governance issues. Directors also receive regular presentations about the Company’s operations and there are regular discussions on strategy, customer marketing, employee engagement and environmental, social and governance matters. Opportunities are also created for Non-Executive Directors to make informal visits to different parts of the Group and to meet with local management. These visits deepen the Non-Executive Directors’
GAC holds regular meetings with the Group Chief Auditor and the external auditor without any members of management being present.
All Directors are requested to attend the AGM and the Chairman and the Chairmen of each Board Committee make themselves available to take questions from ordinary shareholders at and after the AGM.
In the UK these are available on request from UK Strategic Sourcing,
APRIL • Approval of the financial metrics applying to the 2010 annual performance bonus for Executive Directors and other members of the Executive Team.
Members of the Committee have no personal financial interest, other than as shareholders, in the Committee’s decisions and they have no conflict of interest arising from cross Directorships. Fees for serving as a Committee member and chairing Committees of the Board are described in the Non-Executive Directors section of this Report on pages 63 to 64. The members and attendees of the Committee throughout the year, are summarised in the tables below.
John Napier’s initial letter of appointment was effective from 9 January 2003 and the term of his appointment was three years. This was most recently extended on 15 February 2011 when it was extended beyond 31 December 2011 so that it continues until termination in accordance with his letter of appointment.
This presented Siemens’ engineers with a frightening array of challenges as each turbine had to be water tight and be able to deal with salt corrosion, lightning and even floating ice.
• The business review on pages 4 to 35, which is incorporated into the Directors’ report, includes a fair review of the development and performance of the business and the position of the Group and
Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the
The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. For business combinations completed prior to 31 December 2009, the cost also includes costs directly attributable to the acquisition and the value of contingent consideration on settlement.
Items included in the financial statements of each of the Group’s entities
A financial asset is initially recognised, on the date the Group commits to purchase the asset, at fair value plus, in the case of all financial assets not classified as at fair value through the income statement, transaction costs that are directly attributable to its acquisition. A financial asset is derecognised when the rights to receive cashflows from the investment have expired or have been transferred and when the Group has substantially transferred the risks and rewards of ownership of the asset.
The unexpired risk provision is assessed in aggregate for business classes which, in the opinion of the Directors, are managed together.
The provisions for losses and loss adjustment expenses, and related reinsurance recoveries, are discounted where there is a particularly long period from incident to claims settlement and where there exists a suitable claims payment pattern from which to calculate the discount.
The amounts charged (or credited where relevant) in the income statement relating to post retirement benefits in respect of defined benefit schemes are as follows: • The current service cost
The expected returns on scheme assets are determined for each asset class, at the beginning of the period, as the expected investment returns on scheme assets over the entire life of the related obligations.
The value of the awards is recognised as an expense on a systematic basis over the period during which the employment services are provided. Where an award of options is cancelled by an employee, the full value of the award (less any value previously recognised) is recognised at the cancellation date.
The Group establishes property and casualty loss reserves to account for the anticipated ultimate costs of all losses and related loss adjustment expenses (LAE) on losses that have already occurred. The Group establishes reserves for reported losses and LAE, as well as for incurred but not yet reported (IBNR) losses and unallocated loss adjustment expenses (ULAE). Loss reserve estimates are based on known facts and on interpretation of circumstances including the Group’s experience with similar cases and historical claims payment trends. The Group also considers the development of loss payment trends, levels of unpaid claims, judicial decisions and economic conditions.
In total, this strategy covered an underlying equity value up to approximately £779m. If UK, Canadian and European equity markets decreased by 15%, the impact of these derivatives as of 31 December 2010, would be to decrease the impact of the decline by £42m (2009: £46m).
Impact on fixed interest securities of increase in interest rates of 100bps3 – – (354) (350)
remains confidential. The ICA is a forward looking, economic assessment of the capital requirements of the Group based on its assessment of the risks to which it is exposed. The models used to determine the ICA have been integrated into the Group’s business processes and are used to enhance the management of the Group.
Gross changes in provisions for losses and loss adjustment expenses 588 (295)
Basic earnings per share is calculated by dividing the profit attributable to the ordinary shareholders of the Parent Company by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the ESOP Trusts and Share Incentive Plan
The calculation is performed for the dilutive potential ordinary shares to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Parent Company’s shares) based on the monetary value of the subscription rights attached to outstanding dilutive potential ordinary shares. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the dilutive potential ordinary shares.
Net carrying amount at 31 December 2009 508 12 338 111 969
Available for sale financial assets: Financial assets at fair value through the income statement: Derivative assets at fair value through the income statement – 29 – 29
Level 3 financial assets at 1 January 2009 68 13 6 92 179
Of the total gains/(losses) for the period recognised in other comprehensive income (shown in the reconciliation above), £4m (2009: £1m) relates to assets held at the end of the reporting period and is reported in movements in the revaluation reserves in the statement of changes in equity.
To be settled after 12 months 157 146 16. CASH AND CASH EQUIVALENTS
Preference shareholders shall not have any right to receive notice of, attend, speak or vote at any general meeting of the Parent Company unless: • The preferential dividend on such shares for the dividend payment period immediately prior to the issue of the notice is in arrears or if any arrears or deficiency of dividend in respect of any preceding period has not been paid in full
The top triangle of the tables presents the estimated provisions for ultimate incurred losses and loss adjustment expenses at the end of each accident year as at the end of each reporting period.
Total (charged)/credited to other comprehensive income (11) (56) (19) 254 (30) 198
Of the above, £339m is due to be settled outside of 12 months (2009: £461m).
Present value of defined benefit obligations 5,467 5,178 4,536 5,086 4,838
In our opinion the Parent Company financial statements: • Give a true and fair view of the state of the Parent Company’s affairs as at 31 December 2010 and of its profit for the year then ended
The Company accounts for its investments in directly owned subsidiaries as available for sale financial assets, which are included in the accounts at fair value.
of the Company’s ordinary shares and loan capital instruments at the end of the reporting period, being the most transparent independent available indicator. The market value is adjusted for the fair value of the Company’s preference shares, assets and liabilities, excluding directly, owned subsidiaries.
Claims Handling Expenses • The administrative cost of processing a claim (salary costs, costs of running claims centres, etc. and allocated shares of the costs of head office units). Not the cost of the claim itself.