We believe that debt capital should be a significant part of capital employed when underwriting margins are strong, but that leverage should reduce when underwriting margins are weak. This strategy should ensure that we optimise return on equity, whilst having due regard to the associated financial risk.
In the past Amlin has deployed debt capital largely in the form of letters of credit (“LOCs”). However, as the Group has grown we have been able to expand our sources of capital and long term subordinated debt is now the main type of debt capital utilised. This debt qualifies as regulatory capital for the Financial Services Authority. It is also recognised as capital by a number of the rating agencies.
For further information on the Group's borrowings, please click here.