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AON BENFIELD

Listed Integrated Lloyd’s Vehicles (ILVs)

Due to a combination of capital raising and profit recovery in 2009, shareholders’ funds for the group increased 24% year on year. Premium growth benefited from currency movements, acquisitions and organic growth as the ILVs took advantage of available rate increases at the start of 2009. A benign claims environment, particularly in the Gulf of Mexico, combined with improved investment returns, generated strong profit growth for most of the ILVs, offsetting the negative impact of foreign exchange adjustments.

31/12/2005

31/12/2006

31/12/2007

31/12/2008

31/12/2009

785

936

1,052

1,216

1,593

280

320

399

413

619

725

813

849

850

895

931

2,018

3,017

2,469

3,278

156

217

283

226

317

68

77

85

102

152

578

682

824

951

1,121

112

240

270

301

314

114

265

309

284

496

Balance Sheet

Table 2 shows shareholders’ funds of the listed ILVs. Total shareholders’ funds for the group increased by 24% in 2009, compared to 10% growth in 2008. However, there was considerable variation in growth between the companies, largely related to the extent to which each company raised capital in 2008/9. Beazley, Chaucer, Hardy and Omega raised the largest amount of capital relative to their equity base, and delivered the strongest growth in shareholders’ funds in 2009. Brit and Novae did not raise additional capital and therefore delivered the lowest levels of growth. While most of the ILVs stated that capital levels were above the level required, most commented that they wanted to hold additional capital to protect against severe losses and Solvency II. Capital redistribution was mentioned as a possibility if deemed to be in shareholders’ interests in future.

2009/2008 Change

31% 50% 5% 33% 40% 50% 18% 4% 75%

Table 2 – Shareholders’ Funds

Source: Company data, Aon Benfield Research

Company

Reporting Currency

Amlin Beazley Brit Catlin Chaucer Hardy Hiscox Novae Omega

GBPmn GBPmn GBPmn USDmn GBPmn GBPmn GBPmn GBPmn USDmn

Investment Return

Chart 9 illustrates the improvement in investment yield experienced by most of the ILVs in 2009. In line with the experience of Lloyd’s and the Aon Benfield Aggregate companies4, this recovery was largely driven by the recovery in the corporate bond market during the year. The strongest return on investments was demonstrated by Hiscox at 7.2% (2008: -1.3%), reflecting the recovery of corporate and asset-backed securities in the company’s investment portfolio. In contrast, Hardy’s relatively low return of 1.7% (5.2%) was indicative of its relatively high exposure to government backed securities, lower corporate bond holdings and absence of asset-backed securities.

4

The Aon Benfield Aggregate, Full year ended December 31, 2009, April 2010

11

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