22nd Jun 2007 07:00
BRIT Insurance Holdings PLC22 June 2007 PRESS RELEASEFOR IMMEDIATE RELEASE 22 June 2007 Brit Insurance Holdings PLC Catastrophe Swap Brit Insurance Holdings PLC ("Brit Insurance") the UK-domiciled internationalgeneral insurer and reinsurer announces that its principal subsidiary BritInsurance Limited ("BIL") has entered a three-year catastrophe swap contractwith Fremantle Limited ("Fremantle"), a Cayman Islands exempted company, thatwould pay BIL up to US$200 million in the event of four to nine qualifyingnatural catastrophes ("events"). Fremantle will pay BIL US$40 million for each of the 4th and 5th events andUS$30 million for each of the 6th to 9th events. The first three events areexcluded. Fremantle was formed solely for issuing loan notes underpinning a catastropheswap programme. In its first issue Fremantle has raised US$200 million by theissue of three-year Principal At-Risk Variable Rate Notes, maturing June 2010and divided into Classes A, B and C. The proceeds from the notes secureFremantle's obligations under the catastrophe swap contract with BIL. Fitch Ratings and Moody's Investor Service assigned ratings to the notes issuedby Fremantle as shown below. Class Amount Fitch Moody's Annual spread (US$ m) above LIBOR (bps) Class A 60 AAA Aa1 90Class B 60 BBB+ A3 200Class C 80 BB- Ba2 700 BIL may, at its option terminate the swap after twelve, fifteen or eighteenmonths for a total additional one off payment of US$5 million. Dane Douetil, Group Chief Executive of Brit Insurance, said: "As stated in our 2006 report and accounts, we believe that the market forInsurance Linked Securities is now beginning to mature; our involvement withFremantle is an excellent example. This innovation increases the range ofoptions at our disposal in our asset liability management toolkit and reducesour dependence on traditional reinsurance solutions. "Although this is a relatively small part of our overall catastrophe hedgingprogramme, it widens our access to the capital markets while offering structuralfeatures which we consider to be attractive compared with traditional products.In particular this gives us a multi year, multi event hedge, which is cashcollateralised and provides enhanced capital efficiency for Brit Insurance. "I would also like to add that we are delighted with the positive response ofinvestors as evidenced by the over subscription for the Fremantle notes." The programme and this first issue have been brought to the securities market byABN AMRO London. It was developed in conjunction with MMC Securities Ltd., anaffiliate of Guy Carpenter & Company Inc. and Risk Management Solutions Inc. whoalso act as the Event Calculation Agent. Enquiries Brit Insurance Holdings PLC 020 7984 8500 Dane Douetil, Group Chief ExecutiveCarne Curgenven, Communications Director Haggie Financial 020 7417 8989 Peter Rigby/Juliet Tilley -Ends- Notes to Editors • Brit Insurance is a major UK-domiciled general insurance and reinsurance group writing UK and international business. Its underwriting operations comprise, principally, three customer-facing centres: UK, London Market and Reinsurance. All three have access to two regulatory vehicles through which Brit Insurance underwrites: UK insurance company, Brit Insurance Limited and Lloyd's syndicate 2987 which is managed by Brit Syndicates Limited. Brit Insurance has UK underwriting offices in London, Reading, Birmingham, Bristol, Glasgow, Leeds, Darlington, Ilford and Manchester. • The qualifying events and attachment points for the first series of Fremantle Notes are: Attachment (US$ billion) California Earthquake 10.00+New Madrid Earthquake 20.00+US Hurricane (Florida) 15.00+US Hurricane (Gulf states & East Coast states) 12.00+US Hurricane (Bypassing) 12.00+EU Windstorm * 7.00UK Windstorm * 4.00Japan Typhoon * 12.00Japan Earthquake * 24.25 + These events are based on values reported by Property Claims Services * Indicative only: non-US events are defined under parametric criteria such as wind speeds or seismic activity. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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