ADV.L Regulatory News (ADV)

29 Aug 2008 15:45



29 August 2008

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.

ADVENT CAPITAL (HOLDINGS) PLC

("ADVENT" OR THE "COMPANY")

Introduction

The Board of Advent notes the announcement made by Fairfax today regarding its offer for the entire issued share capital of Advent (the "Offer"). Fairfax has announced that the Offer has become unconditional as to acceptances. The Offer remains subject to the conditions set out in paragraphs (b) to (j) of Part A of Appendix I to the Fairfax Offer Document. The Offer has been extended until 1.00pm (London time) on 11 September 2008.

Level of Acceptances

Fairfax's Offer Document stated that Fairfax had received non-binding letters of intent to accept the Offer from Amber Capital ("Amber") (in respect of 2,421,590 Advent shares representing 6.0 per cent. of the Company's issued share capital) and Phoenix Asset Management Partners Limited  ("Phoenix") (in respect of 5,698,346 Advent shares representing 14.0 per cent. of the Company's issued share capital).

On 20 and 21 August 2008 Amber sold, for 170 pence per Advent share, 1,315,130 and 1,106,460 (respectively) Advent shares to Mackenzie Cundill Investment Management, which now holds 5,168,090 Advent shares, representing 12.7 per cent. of the Company's issued share capital. With regard to their letter of intent, Amber will not therefore be in a position to accept the Offer in respect of any Advent shares, and Mackenzie Cundill Investment Management has confirmed its non-binding intention to the Company's advisers not to accept the Offer in relation to its 5,168,090 Advent shares.

Fairfax's announcement of today records that valid acceptances have been received in respect of 5,699,428 Advent shares. Of these, 5,698,346 Advent shares represent acceptances of the Offer by Phoenix.

Fairfax now either own, or have received valid acceptances in respect of, a total of 23,776,036 Advent shares representing approximately 58 per cent. of the existing issued share capital of Advent.

Business Overview 

The Board of Advent believes that the Company has a good future ahead of it, being well positioned in its specialist markets with dual underwriting platforms in London and Bermuda.

Net tangible asset value per share of 240p as at 30 June 2008

Advent has operated in the Lloyd's market for over 30 years. As a Lloyd's platform, Advent has access to the licensing, rating, underwriting opportunities, broker distribution networks and underwriting talent of Lloyd's.

Advent's Lloyd's and Bermuda operations are 100 per cent. owned by the Advent Group, with 100 per cent. of the capacity of Syndicate 780 being owned by Advent from the 2008 Year of Account.

Syndicate 780 operates with underwriting capacity of £135m for the 2008 Year of Account.

Syndicate 780 premiums written for 2008 at 30 June 2008 are ahead of business plan.

The 2006 and 2007 underwriting Years of Account of Syndicate 780 are forecast at 30 June 2008 to show profits (2006: 17.5 to 22.5 per cent. of capacity; 2007: 10 to 15 per cent. of capacity).

Syndicate 780 specialises in short tail property reinsurance and insurance and also underwrites specialist lines including energy and marine excess of loss.

Advent Re (Bermuda) is fully capitalised by Advent and operational since 2007, initially writing retrocessional reinsurance.

In the last three years, 50 per cent. of the total client base has renewed with Advent year on year, and for its core treaty book business over 64 per cent. has renewed.

Changes to the business model made by management since 2006 have lead to a significant reduction in peak exposures to major US catastrophes within Syndicate 780.

Strong management team with many years' experience in the Lloyd's market.

A dedicated and highly experienced underwriting team with a proven track record who have been working in the Lloyd's market for an average of 14 years, highlighted by the combined ratio of 83 per cent. for 2006, and 78 per cent. for 2007.

Recent appointments of Duncan Lummis (Chief Underwriting Officer) and Darren Stockman (Active Underwriter), both with Advent for 20 years.

Return on equity of 21.6 per cent. in 2007 and 25.1 per cent. in 2006.

2007 profit before tax of £25.2m.

Summary and recommendation

The Board will be working in the interests of all shareholders to seek to ensure that the true value of Advent's business franchise and assets is reflected in shareholders' returns. 

The Advent Board, which has been so advised by Kinmont, reiterates its recommendation of 7 August 2008 that Advent shareholders take NO ACTION at this point and DO NOT return any form of acceptance.

ENDS 

Contact

In view of the fact that Trevor Ambridge is an employee and officer of Fairfax, he is not considered independent for the purposes of the Offer and accordingly he has taken no part in the Advent Board's deliberations relating to the Offer nor the recommendation from the Advent Board in relation to the Offer.

The Directors of the Company (other than Trevor Ambridge) accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the Directors of the Company (other than Trevor Ambridge), who have taken all reasonable care to ensure that such is the case, the information contained in this announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

Kinmont Limited, which is regulated in the United Kingdom by the Financial Services Authority, is acting as financial adviser to the Company in relation to the matters referred to in this announcement and no one else and will not be responsible to any other person for providing the protections afforded to clients of Kinmont Limited or for providing advice in relation to the matters referred to in this announcement.

Fox-Pitt, Kelton Limited, which is regulated in the United Kingdom by the Financial Services Authority, is acting as Nomad and Broker to the Company in relation to the matters referred to in this announcement and no one else and will not be responsible to any other person for providing the protections afforded to clients of Fox-Pitt, Kelton Limited or for providing advice in relation to the matters referred to in this announcement.