Helios Underw Regulatory News (HUW)

3 Oct 2007 07:00

Hampden Underwriting Plc03 October 2007 3 October 2007 Hampden Underwriting plc Total fund raising of £7.4 million and closing of the offer for subscription Hampden Underwriting plc ("Hampden Underwriting" or the "Company"), which hasbeen incorporated primarily to provide a limited liability direct investmentinto the Lloyd's insurance market through its subsidiary underwriting vehicle,Hampden Corporate Member Limited ("HCM"), announces that its offer for subscription ("the Offer") has closed and confirms that it has raised in totalgross proceeds of £7.4 million at a price of £1.00 per ordinary share. On 4 September 2007, the Company announced that it had raised £5.2 million under the Offer and had extended the Offer to provide an opportunity for furtherinvestment. Application has been made for the admission to AIM of the additional2,171,810 ordinary shares of the Company issued since then. It is expected thatadmission in relation to these additional shares will become effectiveat 8.00am on 4 October 2007. Of the total gross proceeds of the Offer, £7.04 million was subscribed in cashand £0.34 million in shares in Heritage Underwriting Agency plc. The net cash proceeds from this fundraising will be used to acquire underwritingparticipations in Lloyd's syndicates and invest in other Lloyd's relatedopportunities. Following the recent Lloyd's auctions, the Directors expect HCMto participate in underwriting capacity of £5.0 million at a cost of £1.0 million through arrangements made by Hampden Agencies Limited. Smith & Williamson is acting as the Nominated Adviser, Broker and Promoter tothe Company. Offer Price £1.00Number of Shares issued pursuant to the Offer 7,410,374Number of Ordinary Shares in issue 7,410,376Estimated net proceeds receivable by the Company from the Offer £6.9 millionMarket capitalisation at the Offer price £7.4 million Sir Michael Oliver, Chairman of Hampden Underwriting, said: "This is a good result for the Company, particularly in the light of recentmarket conditions. We are pleased with the outcome of the recent Lloyd'sauctions and look forward to developing the Company's business." Enquiries: Hampden Underwriting Jeremy Evans 020 7863 6567 Smith & Williamson Corporate Finance Azhic Basirov 020 7131 4000Limited David Jones Joanne du Plessis Cardew Group Tim Robertson 020 7930 0777 Shan Shan Willenbrock David Roach About Hampden Underwriting • Hampden Underwriting's subsidiary, HCM, will be advised by Hampden Agencies Limited ("HAL"). HAL is the largest provider of third party capital to the Lloyd's market, with over £2 billion of capacity under management in 2007 which, the directors of Hampden Underwriting (the "Directors") believe, gives it an influential voice in the Lloyd's market as a whole. • The Directors believe that Hampden Underwriting will offer the only opportunity currently available for investment in a quoted company whose principal purpose is to participate in a spread portfolio of Lloyd's syndicates rather than manage syndicates itself. There are other companies whose shares are traded on the London Stock Exchange and whose activities include underwriting at Lloyd's, but the Directors believe that these do not provide such concentrated exposure to Lloyd's underwriting as the Company. • The Company's strategy is to seek to generate returns for its shareholders primarily through: • the acquisition of underwriting participations in Lloyd's syndicates and providing the necessary supporting funds at Lloyd's. • the acquisition of corporate members of Lloyd's as suitable opportunities arise; and • the acquisition in other Lloyd's insurance-related investments and products, if and when suitable opportunities arise. • Hampden Underwriting will seek to benefit from the positive market conditions created in the wake of the recent US catastrophes. In summary: • The Directors believe that the main reason why recent results have been so much better than might have been expected from past experience is that Lloyd's has undertaken a comprehensive process of internal reform over the past few years, the most crucial component of which was the establishment of the Franchise Performance Directive in 2002. For the calendar year 2005 Lloyd's reported a loss of £103 million, in spite of the fact that it was trading in a year when there were some US$83 billion of major catastrophe losses. 2006 saw a low catastrophe incidence, which resulted in a reported calendar year profit of £3.7 billion, which again compares favourably with Lloyd's peers. • The Directors believe that two of the main ramifications of the large US catastrophe losses of 2004 and 2005 are that: (i) they have led to an improvement of rating levels for certain classes of business; and (ii) they have changed the shape of the worldwide insurance industry. The Directors believe that this gives the best Lloyd's syndicates a significant trading opportunity for the medium term. • Rates have increased by substantial margins in classes of insurance business such as reinsurance, US property and US offshore energy following these losses. The Directors believe that what is arguably more important, however, is that there has been an erosion of worldwide competition in some insurance classes, especially certain sectors of the reinsurance market. • The Directors do not expect to see a significant softening of rates in many of the major catastrophe exposed insurance classes in the medium term and believe that current underwriting conditions offer the capability to produce good underwriting profits (though not indefinitely). HAL Through HCM, Hampden Underwriting will not invest in the Lloyd's market as awhole, but in a carefully chosen spread portfolio of syndicates that will berecommended by HCM's Lloyd's adviser, HAL. HAL's advice will be based upon analysis of the past and forecasted performanceof syndicates to grade their potential to outperform the market through anygiven cycle. The table below shows the way in which members advised by HAL haveoutperformed relative to the Lloyd's market as a whole since 2001: Percentage return on capital invested HAL-advised Lloyd'sYear of account members market 2001 (31.1)% (45.9)%2002 34.3% 28.6%2003 52.9% 47.0%2004 26.2% 25.9%2005 (estimate) (0.5)% (12.2)%2006 (estimate) 39.8% 36.3% Past performance should not be seen as an indication of future performance.Sources: HAL 2001 to 2004 at 36 months, calculated from Synopsis MAIR reports.Lloyd's Market 2001 to 2004 at 36 months from Lloyd's Global Results/ Year endQMRs. 2005 estimates calculated from 2007 Q1 QMR returns. Lloyd's 2006 estimatebased on Lloyd's aggregate of the 2006 Q4 QMRs. HAL 2006 estimate based on acombination of Syndicate official estimates (accounting for 64% of HAL capacity)and Hampden Underwriting Research Syndicate estimates for remaining 36%. Fundsat Lloyd's are assumed at 40%. All returns include personal expenses but arebefore members' agent's charges. The Directors believe that another potential benefit for the Company is that HALhas built up strategic relationships with some of the underwriters in the marketand this leaves it well placed to introduce HCM to early investments in newsyndicates and other underwriting opportunities within the Lloyd's market. Directors Sir James Michael Yorrick Oliver, aged 67, (Non-executive Chairman)Sir Michael Oliver is a director of a number of investment funds, and thechairman of a specialised Central and Eastern European fund. He was previously adirector, Investment Funds at Hill Samuel Asset Management and of ScottishWidows Investment Partnership Limited. He was a partner in stockbrokers Kitkat &Aitken for 20 years and subsequently managing director of Carr Kitkat & Aitkenbetween 1990 and 1993. He is non-executive chairman of Zirax plc and Europa Oil& Gas (Holdings) plc, both of which are quoted on AIM. John Andrew Leslie, aged 62, (Non-executive Director)Andrew Leslie has 40 years' experience as an insurance broker. He started hiscareer with Leslie & Godwin in 1967, where he held a number of senior positions,until he left to join Morgan Read and Coleman as a director. In 1991 he andthree others effected a management buy out of the company which was thenpurchased by Arthur J. Gallagher (UK) Limited in 1996. Until recently he was amain board director of Arthur J. Gallagher (UK) Limited. Jeremy Richard Holt Evans, aged 49, (Non-executive Director)Jeremy Evans joined Minories Underwriting Agencies in 1993, which wassubsequently transferred to Aberdeen Underwriting Advisers Limited, withspecific responsibility for its corporate capital plans, including thedevelopment of a conversion scheme for existing members. He has been a directorof HAL since 1999 and is also the managing director of Nomina plc. Harold Michael Clunie Cunningham, aged 59, (Non-executive Director)Michael Cunningham joined Neilson Hornby Crichton & Co in 1976, becoming apartner in 1981. In 1986, he became a director of Neilson Cobbold Limited,formerly Neilson Milnes Limited, which is now part of Rathbone Brothers. He hasworked in the investment management business for over 20 years and formerly hadresponsibility for venture capital trusts and Rathbones Enterprise InvestmentScheme portfolios and Inheritance Tax service, which have raised over £100million in total. Hampden Agencies Limited Nigel Hanbury, Chief ExecutiveNigel Hanbury joined Lloyd's in 1979 as an external member and became a Lloyd'sbroker in 1982. He later moved to the Members' Agency side. He serves on theboard of the Association of Lloyd's Members and was elected to the Council ofLloyd's for "Working Names" constituency and served on that body between 1999and 2001, as well as participating on the Market Board and other Lloyd'scommittees. In January 2005, Nigel was re-elected to the Council for his secondthree year term. Nick Carrick, Hampden Underwriting ResearchNick Carrick joined Lloyd's in 1977 and moved into an underwriting agency rolein 1983. He is a Fellow of the Chartered Insurance Institute and was appointedhead of Hampden Underwriting Research in 2002. Jeremy Evans, DirectorJeremy Evans, also a director of Hampden Underwriting, as detailed above, is anexecutive director of HAL where he has particular responsibility for businessdevelopment. This document has been approved as a financial promotion under the FinancialServices and Markets Act 2000 by Smith & Williamson Corporate Finance Limited("S&W"), which is authorised and regulated by the Financial Services Authority.S&W is acting for Hampden Underwriting plc and no-one else and will not beresponsible to anyone other than Hampden Underwriting plc for providing theprotections afforded to customers of S&W. This document is for information onlyand does not form part of any offer or invitation to subscribe for shares. Thisdocument is not a prospectus, but an advertisement, and investors should notsubscribe for the shares referred to in this document except on the basis of theprospectus dated 13 August 2007 which is available from: Tax EfficientSolutions, Smith & Williamson Investment Management Limited, 25 Moorgate,London, EC2R 6AY (tel: +44(0)20 7131 4502; email: tes@smith.williamson.co.uk). This document should not be distributed directly or indirectly, to any personswith addresses in the United States of America (or any of its territories orpossessions), Canada, Japan, Australia or the Republic of South Africa, or toany corporation, partnership or other entity created or organised under the lawsthereof, or in any other country outside the United Kingdom where suchdistribution may lead to a breach of any legal or regulatory requirement. Theshares referred herein have not been and will not be registered under the UnitedStates Securities Act 1933 (as amended) or under any of the applicablesecurities laws of Canada, Japan, Australia or the Republic of South Africa andmay not, subject to certain exceptions, be offered for sale or sold orsubscribed directly or indirectly within the United States, Canada, Japan,Australia or the Republic of South Africa or to or by any national, resident orcitizen of any such countries. This document does not represent advice about subscribing for, purchasing orselling shares and is not a substitute for independent professional advice aboutlegal, investment or tax matters. It is only intended to provide some basicinformation. If you are in any doubt as to the action you should take, you arerecommended to seek your own personal financial advice immediately from yourstockbroker, bank manager, solicitor, accountant or other qualified financialadviser authorised under the Financial Services and Markets Act 2000. Pleasenote that neither Hampden Underwriting nor S&W is permitted to provide you withlegal, investment or tax advice. This information is provided by RNS The company news service from the London Stock Exchange