Hampden Underwriting Plc Reinsurance Agreement (2468K)
26 July 2013 - 8:21PM
UK Regulatory
TIDMHUW
RNS Number : 2468K
Hampden Underwriting Plc
26 July 2013
26 July 2013
Hampden Underwriting PLC
("Hampden Underwriting" or the "Company")
Reinsurance releases capital for reinvestment in new
opportunities
Hampden Underwriting, which provides investors with a limited
liability direct investment into the Lloyd's insurance market, is
pleased to announce the significant release of capital achieved by
way of an annually renewable reinsurance arrangement.
Overview of the transaction
-- Collateralised quota share reinsurance agreement commencing
with 2013 year of account
-- 50% of the Company's 2013 insurance exposure ceded to
reinsurer
-- Release of GBP4.1m (approximately 50%) of the Company's
GBP8.2m of Funds at Lloyd's) for reinvestment in new
opportunities
-- Ratcheted, performance-based profit commission payable to the
Company of between 10% and 20% of the profits arising on business
ceded in each period
-- Minimum term of one year renewable annually thereafter
Commenting upon this transaction Sir Michael Oliver, the
Company's Chairman, said:
"This transaction presents Hampden Underwriting with a welcome
source of capital with which to fund near-term opportunities the
Company wishes to pursue and does so on attractive commercial
terms. The Board regularly considers the relative merits of
alternative sources of capital and is confident that this is an
appropriate funding option at this time."
Commenting upon this transaction Nigel Hanbury, the Company's
Chief Executive, said:
"Current market conditions continue to present the Company with
attractive investment opportunities which require funding. We are
delighted to have been able to successfully conclude this
transaction which provides the Company with a modest war chest with
which we can continue to progress acquisition opportunities. The
reinsurance terms provide a profit commission in good underwriting
years and a reduced risk exposure in disappointing underwriting
years in a spectrum that is both equitable and commercially
attractive. Its annually renewable feature provides Hampden
Underwriting with certainty for 2013 as well as the appropriate
opportunity to review the arrangement from time to time."
For further information please contact:
Hampden Underwriting Nigel Hanbury nigel.hanbury@hampdenplc.com
------------------------------ --------------- -----------------------------
Smith & Williamson Corporate
Finance David Jones 020 7131 4000
------------------------------ --------------- -----------------------------
Additional information on the reinsurance arrangements
The Company has entered a reinsurance agreement with Hampden
Insurance PCC (Guernsey) Limited - Cell 6 ("Cell 6"), a
newly-formed special purpose vehicle. On a back-to-back basis, Cell
6 has reinsured the reinsurance risk with Bermudan reinsurer, XL Re
Ltd ("XL"), part of global NYSE-quoted insurer XL Group plc.
The key terms of the arrangements are as follows:
- XL will take on via Cell 6 the risks and rewards of 50% of the
Company's existing 2013 underwriting activities (although the
activities themselves and the underwriting capacity will remain the
Company's);
- XL will provide a letter of credit to Lloyd's in an amount of
GBP4.1m (approximately 50% of the Company's existing funds at
Lloyd's ("FAL"), enabling an equivalent amount to be released from
FAL to the Company;
- XL will pay a profit commission of between 10% and 20% of
profits from the business ceded to the Company (via Cell 6)
depending on the results of the relevant insurance years of
account;
- XL will pay a fee to Cell 6 of 1.5% per year of account of the
value of the letter of credit provided to Lloyd's and Cell 6 will
pay this on to the Company, less the Company's share of Cell 6's
management fees, costs and expenses which is estimated to be
approximately GBP12,500 per annum; and
- the reinsurance arrangements apply to the Company's 2013 year
of account and are renewable annually thereafter.
Cell 6 is ultimately 51% owned by Nigel Hanbury (a director and
14.8% shareholder in the Company) and 49% by Hampden Capital plc (a
11.9% shareholder in the Company). Nigel Hanbury and a number of
Lloyd's underwriting entities ultimately owned by him and his
family have entered reinsurance agreements with Cell 6 on a pari
passu basis. The terms of the transaction have been approved by the
independent members of the Company's board of directors.
About Hampden Underwriting plc
Hampden Underwriting plc has been incorporated primarily to
provide a limited liability direct investment into the Lloyd's
insurance market. Hampden Underwriting plc is quoted on the London
Stock Exchange's AIM market (ticker: HUW). For further information
please visit www.hampdenplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCUNARROBABUAR
Helios Underwriting (LSE:HUW)
Historical Stock Chart
From May 2024 to Jun 2024
Helios Underwriting (LSE:HUW)
Historical Stock Chart
From Jun 2023 to Jun 2024