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Media Centre

Formation of Amlin Bermuda, a new wholly-owned US$1 billion reinsurance company in Bermuda

01/11/2005

For publication in the United Kingdom only. Not for release, publication or distribution into any other jurisdiction including the United States, Canada, Japan, Australia, New Zealand or the Republic of South Africa.

Amlin Bermuda

• Formation of a new wholly-owned reinsurance company in Bermuda, Amlin Bermuda, with initial capitalisation of US$1 billion
• Amlin Bermuda to focus on underwriting regional US and international catastrophe reinsurance, leveraging the expertise and relationships of Amlin’s London based underwriting business
• Expected incremental gross premium income (net of brokerage) to Amlin of $350 million and $500 million in 2006 and 2007, respectively
• Underwriting philosophy to be consistent with approach of Syndicate 2001
• Intention for Amlin Bermuda to participate in the forthcoming first quarter 2006 renewal season
• Proceeds from Rights Issue to be used to provide part of Amlin Bermuda’s underwriting capital. Remainder of capital to be funded through Amlin’s internal resources and additional borrowings

Syndicate 2001

• Increase in Syndicate 2001 capacity for 2006 of 17.6 per cent. to £1 billion

The Rights Issue

• 7 New Ordinary Shares for every 22 Existing Ordinary Shares
• Issue Price of 175p per share represents a discount of 21 per cent. to the Closing Price of an Existing Ordinary Share on 31 October 2005, the last business day prior to announcement
• Rights Issue to raise approximately £215 million (net of expenses)
• Fully underwritten by Hoare Govett Limited

Financial Effects and Prospects

• Hardening in rating environment expected for 2006, as a consequence of the severe windstorm-related losses in 2004 and 2005
• In the absence of abnormal losses, the Rights Issue and formation of Amlin Bermuda are expected to enhance earnings per share and return on equity from 2006 onwards

Commenting, Charles Philipps, Chief Executive of Amlin said:

“The formation of Amlin Bermuda will fulfil our strategic objective of establishing a strong underwriting platform outside the Lloyd's market, which will both support and complement the activities of Syndicate 2001. We believe that this is an opportune time to make this move, in view of the significant rating increases which are expected as a result of the unprecedented windstorm losses incurred in 2005 and 2004. We intend to be up and running in Bermuda by 1 January 2006, at the start of the key first quarter renewal season.

Together with our existing cash resources and new borrowings, the rights issue will enable us to achieve sufficient scale in Bermuda at the outset, with US$1 billion of paid up capital in Amlin Bermuda. We believe that this will be a vital component in our attracting business of the right quality, which is consistent with the existing book of Syndicate 2001. Our confidence that we will achieve this has been bolstered by the strong encouragement and indications of support we have had to expand our business in this way from a number of the major insurance and reinsurance brokers.

We expect that the operating environment in 2006 and beyond will be conducive to the continuance of the strong returns on equity which Amlin has achieved over the past three years. We look forward with confidence and excitement to this next phase of Amlin's development towards our vision of becoming the global reference point for quality in our markets.”

This summary should be read in conjunction with the detailed announcement which follows.

A presentation for analysts will be held today, 1 November 2005, at 9.45 a.m. at the offices of Amlin, St. Helen’s, 1 Undershaft, London, EC3A 8ND. Analysts intending to attend the presentation are requested to notify Haggie Financial in advance.

Enquiries:

View the full Press Release in PDF format.

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