ADV.L Regulatory News (ADV)

25 Nov 2005 07:01

Advent Capital (Holdings) PLC25 November 2005 For publication in the United Kingdom only. Not for release , publication,or distribution in or into any other jurisdiction including the United States, Canada, Australia, South Africa, The Republic of Ireland or Japan. Advent Capital (Holdings) PLC ("Advent" or the "Company") Trading Update Advent Capital (Holdings) PLC, the specialist Lloyd's insurer, today announcesfurther information on the impact of the 2005 US Hurricanes, an update offorecast syndicate results and a placing of £30m equity. Update on 2005 Hurricanes The updated position for the three major hurricanes is shown below Syndicate 780 Net Ultimate £m ACH share pre tax £m ACH share after tax £m Katrina 89.1 46.8 32.8Rita 22.1 11.7 8.2Wilma 19.0 10.1 7.1Total 130.2 68.6 48.1 The increase in net cost after reinsurance recoveries and reinstatement premiumsfor Advent Capital Holdings from £32 million to £47 million (US$ 84 million)relating to Hurricane Katrina reflects new information received and an expectedaggregate insured market loss estimate of US$50 billion (the company's initialestimate was based on an expected aggregate insured market loss of US$35billion). The majority of the increase derived from the Treaty and AssumedReinsurance lines of business. Advent's initial estimate for the combined net cost after reinsurance recoveriesand reinstatement premiums, of Hurricanes Rita and Wilma is £22 million (US$39million) to Advent and £41 million (US$73 million) to the syndicate. As withAdvent's initial figures for Hurricane Katrina, management has rigorouslyreviewed the estimates for Hurricane Rita. Information from ceding companies isstill scarce in respect of Wilma and accordingly, management have used anestimated aggregate insured market loss of US$10 billion and catastrophe modelsto assess its loss estimates. The aggregate loss from the three events has resulted in substantial utilisationof the syndicate's reinsurance programme. There is no further cover available tooffset any further deterioration in the ultimate loss projection for HurricaneKatrina. Whilst substantial cover remains in place to meet any deterioration inthe direct and treaty account elements of the ultimate projected losses forhurricanes Rita and Wilma, cover has been exhausted in respect of the marine,energy and retrocession lines of business for these two events. While Syndicate 780's business plan is designed to withstand major catastrophicevents, the exceptional scale and frequency of this year's hurricanes will havea material impact on Advent's operating result. A loss for the full year for theCompany is expected, with a combined impact of all three hurricanes on profitsbefore tax of £68.6 million and on profits after tax of £48.1 million. This year's hurricane activity has been extreme. Advent specialises in theproperty catastrophe reinsurance sector with the result that although profitlevels vary substantially depending on the frequency and severity of catastropheevents, the syndicate has significantly outperformed the Lloyd's market in themedium to long term over its 30 year history. Syndicate results forecasts update The syndicate results update in respect of the 2003 and 2004 accounts are shownbelow. Revised Forecast Previous forecast Capacity £m ACH Share 2003 25.0% 30.0% 25.0% 30.0% 149.8 41.4% 2004 * -17.5% -22.5% -12.5% -17.5% 227.7 47.0% * Movement principally in respect of 2005 hurricane losses attaching to 2004 account Economic Capital Assessment The revised capital requirement for Advent Capital Holdings is 67% of capacityfor 2006. Raising of Additional Capital Advent today announces a capital raising of £30 million, subject to shareholderapproval. Of this amount, £16.5 million will be subscribed for by existingshareholders including Fairfax Financial Holdings Limited, the Company's biggestshareholder (46.8%). Numis Securities Limited ("Numis") has underwritten thebalance of £13.5m of which £3.1 million is subject to FSA and Lloyd's controllerapproval. This additional equity puts the company in a strong position with the ability totake up additional capacity released by third party capital and to takeadvantage of the strong market conditions that are now being experienced in itsspecialist classes. Details of the proposed placing are as follows:- • Placing to raise £30 million before expenses. • Issue price of 20 pence per ordinary share, representing a discount of 27% to the closing price on the 24th November 2005, the last business day prior to announcement. • EGM planned for 5th January 2006. Irrevocable undertakings have so far been received by Advent in respect of in excess of 60% of the existing ordinary share capital to vote in favour of the resolutions to effect the Placing. The director shareholders, representing in excess of a further 8% have also indicated their support for the proposals. The Company has entered into a placing agreement with Numis pursuant to whichNumis has agreed to procure placees for the underwritten Shares, such placees tocomprise institutional and other investors (including certain existingShareholders.) The Placing is conditional inter alia, on: • the passing of certain Resolutions to approve the implementation of the Placing. • The Placing Agreement becoming unconditional and not having terminated in accordance with the terms; and • Admission becoming effective by no later than 31 January 2006 (or such later time as the Company and Numis may agree). The Placing Shares will be issued credited as fully paid and will rank onAdmission pari passu in all respects with the existing Ordinary Shares,including as to the right to receive and retain all dividends and otherdistributions declared, made or paid after the date of allotment in respect ofthe Ordinary Shares. The Placing Shares are not being made available to thepublic and are not being offered or sold in any jurisdiction where it would beunlawful to do so. Application will be made to the London Stock Exchange for the Placing Shares tobe admitted to trading on AIM. It is expected that Admission will becomeeffective and that dealings in the Placing shares will commence on or about 6January 2006. Brian Caudle, Chairman commented: "This has been an unprecedented year for hurricane activity and the entireindustry has been impacted. However, such events create future opportunities forspecialist reinsurance businesses such as Advent. We believe the impact of this year to be manageable and more importantly werecognise the opportunities this presents for our business and the insurancemarket in 2006, which we expect will be an excellent trading environment." 25 November 2005 For further information please contact:Advent Capital HoldingsKeith Thompson Tel: 020 7743 8200Chief Operating Officer Pelham Public RelationsJames Henderson Tel: 020 7743 6670Gavin Davis Advent Capital (Holdings) PLC, which listed on AIM in June 2005, is a leadingLloyd's insurer which manages and participates on Syndicate 780. The Syndicateis predominantly a short tail property reinsurance and insurance syndicatespecialising in catastrophe business. Notes: • Advent listed on AIM in June 2005 raising a total of £65 million. • Advent manages and participates on Syndicate 780 through Advent Underwriting Limited (a Lloyd's managing agency) and Advent Capital Limited (a corporate member of Lloyd's). • Advent Underwriting Limited, which was formed in 1975, has operated in the Lloyd's market for thirty years. • Syndicate 780 has outperformed the Lloyd's market in 27 of the last 29 closed years of account returning an average profit of 18.5% compared with the Lloyd's average of 1.3%. However, Syndicate 780 is expected to underperform the Lloyd's market for the 2004 and 2005 years of account. • Advent's management is led by Brian Caudle (Executive Chairman and Director of Underwriting) and Keith Thompson (Chief Operating Officer). Numis Securities Limited which is regulated in the United kingdom by the FSA isacting for the Company as Nominated Advisor and broker for the purposes of theAim Rules in connection with the Placing and Admission and will not beresponsible to anyone other than the Company for providing the protectionsafforded to customers of Numis or for providing advice in relation to thePlacing, Admission and other arrangements described in this document. The release, publication or distribution of this announcement in certainjurisdictions may be restricted by law and therefore persons in suchjurisdictions into which this announcement is released, published or distributedshould inform themselves about and observe such restrictions. No offer, invitation or inducement to acquire shares or other securities inAdvent or any other company is being made by this announcement. Certain statements contained in this announcement may constitute forward-lookingstatements. Any such forward-looking statements involve risks, uncertainties andother factors that may cause the actual results, performance or achievements ofthe Advent Group, or industry results, to be materially different from anyfuture results, performance or achievements expressed or implied by suchforward-looking statements. These forward-looking statements speak only as ofthe date of this announcement and there can be no assurance that the results andevents contemplated by such forward-looking statements will, in fact, occur. TheCompany and the Directors expressly disclaim any obligation or undertaking torelease publicly any updates or revisions to any forward-looking statementcontained herein, save as required to comply with any legal or regulatoryobligations (including the AIM Rules), to reflect any change in the Company'sexpectations with regard thereto or any change in events, conditions, orcircumstances on which any such statement is based. In addition, any referencein this announcement to the price at which Ordinary Shares have been bought orsold in the past or the yield on Ordinary Shares cannot be relied on as a guideto future performance. The Placing Shares have not been, and will not be, registered under the UnitedStates Securities Act of 1933 as amended (the "Securities Act") or qualified forsale under the laws of any state of the United States or under the applicablelaws of any of Canada, Australia, South Africa, the Republic of Ireland or Japanand, subject to certain exceptions, may not be offered or sold in the UnitedStates or to, or for the account or benefit of, US persons (as such term isdefined in Regulation S under the Securities Act) or to any national or residentof Canada, Australia, South Africa, the Republic of Ireland or Japan. This information is provided by RNS The company news service from the London Stock Exchange