Proposed Acquisition & Suspension from Trading

1 September 2011

Insetco plc

Acquisition & Suspension from Trading

Proposed Acquisition of the Assets of ARM Asset Backed Securities S.A.& Catalyst Investment Group Limited

Insetco plc ("Insetco" or the "Company") has today announced that it has agreed to acquire the assets of ARM Asset Backed Securities S.A. ("ARM") subject to certain conditions including those referred to below. Insetco has also announced that it will purchase Catalyst Investment Group Limited ("CIGL"), subject to certain conditions also referred to below (together, the "Acquisitions").

The assets of ARM comprise the entitlement to cash from maturing senior life settlement policies (the "ARM Portfolio"), which have a face value of approximately $320 million (£196 million) which, together with uninvested cash to be acquired, has a present estimated market value of approximately $81 million (£50 million).

Consideration for the acquisition of the assets of ARM will be met through the issuance of new Insetco 7.5% Perpetual Limited Recourse Bonds (the "Insetco Bonds") details of which will be provided to shareholders shortly. The value of the Insetco Bonds will reflect directly the market value of the ARM Portfolio at completion. Subject to the final terms of the agreement, it is also anticipated that Insetco will issue new ordinary shares ("New Ordinary Shares"), representing up to 10 per cent. of theCompany's enlarged issued share capital, further information on which will be communicated to shareholders in due course.

ARM currently has outstanding liabilities for $220 million (£135 million) arising from a series of bonds issued by ARM with various fixed maturity dates and coupons. It is intended that these liabilities will be exchanged in full for the Insetco Bonds. 

Acquisition conditions

The acquisition of the ARM Portfolio is conditional on, among other things, a majority of the existing ARM investors by value indicating that they will agree to the disposal of the ARM Portfolio.

In addition, the Company notes the press release dated 29 August 2011 by the Commission de Surveillance du Secteur Financier (the "CSSF"), the Luxembourg financial regulator, concerning its refusal to grant a license to ARM as a regulated securitisation vehicle. The acquisition of the ARM Portfolio will be completed only if in compliance with this and previous statements by the CSSF.

The acquisition of CIGL is conditional on the acquisition of the ARM assets. Consideration for the acquisition of CIGL will be met through the issue of New Ordinary Shares representing up to 19.90 per cent. of the Company's enlarged issued share capital.

The acquisition of the ARM Portfolio is conditional on, among other things, a majority of the existing ARM investors by value indicating that they will agree to the disposal of the ARM Portfolio.

Suspension from trading

The Acquisitions will be regarded as a reverse takeover pursuant to the AIM Rules for Companies and will therefore be subject to shareholder approval, as well as a number of further conditions.

Given that the Acquisitions will constitute a reverse takeover, Insetco's shares will be suspended from trading pending the publication of an admission document. Suspension is effective from 7.30 am on 1 September 2011.

Information on ARM

ARM has issued approximately $220 million (£135 million) of bonds to existing ARM bondholders (taking account of those who have applied for ARM bonds that are as yet unissued). ARM has an entitlement to the cash flows arising from the ARM Portfolio, which has a face value of around $320 million (£196 million). The senior life settlement policies within the ARM Portfolio will be independently valued, and the ultimate number of Insetco Bonds and the total number of New Ordinary Shares issued, will be adjusted to reflect significant deviations below the estimated asset value and to take account of reductions in cash balances.

Following completion of Acquisitions, Insetco intends to restructure the ARM Portfolio to re-align the assets with the liabilities associated with the Insetco Bonds.

Information on CIGL

Launched in 2000, CIGL is a specialist investment company that distributes a wide range of financial products. CIGL has extensive experience in the SLS asset class and since 2005 has developed the ARM bond programme. CIGL has strong relationships with leading service providers and it benefits from a strong industry reputation. It was a founding member of the European Life Settlements Association, the trade association for the senior life settlement market.

CIGL will be purchased on a cash free/debt free basis. The acquisition of CIGL is subject to obtaining FSA approval for the change of ownership.

Upon completion of the Acquisitions, it is anticipated that Brian Rayment (CEO of CIGL) will join the Insetco Board.

A further announcement concerning the Acquisitions will be made in due course.

The exchange rate used in this announcement is £1 = $1.63.

Enquiries:

Insetco plc

Clive Cooke (CEO)

Sanjeev Joshi 020 7887 7840

Charles Stanley Securities

Nominated Adviser

Russell Cook / Darren Vickers 020 7149 6000