23rd Oct 2006 12:11
Hiscox PLC23 October 2006 Monday 23 October 2006For immediate release Hiscox plc Announcement of corporate reorganisation On 11 September 2006 Hiscox plc ("Hiscox") confirmed in the announcement of its interim results that its Board had approved a corporate reorganisation to introducea new Bermudian domiciled holding company for the Group ("Hiscox Ltd"). Hiscox todayannounces that a circular setting out full details of the corporate reorganisation together with a prospectus in relation to the admission of Hiscox Ltd to listing and trading on the London Stock Exchange's main market for listed securities havebeen sent to shareholders. Key features of the corporate reorganisation • A new Bermudian domiciled holding company for the Group, Hiscox Ltd, has been established• Shareholders of Hiscox will receive one share in Hiscox Ltd for each share held in Hiscox• Application will be made for Hiscox Ltd to be listed on the London Stock Exchange and it is expected to replace Hiscox as a member of the FTSE 250 Index• Shares in Hiscox Ltd will be tradable in CREST through depository interests• It is not expected that Hiscox's existing dividend policy will be affected and shareholders will have the right to elect to receive UK sourced dividends• The corporate reorganisation is expected to be neutral in tax terms for UK resident shareholders• Hiscox Ltd will report consolidated results under IFRS in sterling Background to the corporate reorganisation Hiscox's strategy is to build the Hiscox group of companies ("Group") on the complementary foundations of internationally traded insurance and reinsurancebusiness, balanced by local retail insurance business. In 2005, Hiscox formedHiscox Bermuda as a reinsurer in the Bermudian market and also established HiscoxUSA in New York as the base through which the Group underwrites and distributesspecialist products in the USA. These developments were in response to arecognition that Hiscox needed to have operations on the ground in the US wherethe non-life markets are considered to be the largest in the world and inBermuda which had become one of the major reinsurance centres. In addition, asignificant proportion of the business that is written in Hiscox GlobalMarkets, the Group's international market business unit substantially based inLloyd's, emanates from the USA. US business accounted for 36.3 per cent of theGroup's gross earned premiums in 2005. With the formation of Hiscox Bermuda andHiscox USA and the strong growth of these divisions anticipated by thedirectors, the amount of US and Bermudian originated business is expected toincrease significantly. The Board has now decided that it is appropriate to move the domicile of theGroup to Bermuda for the following reasons: • as the major issues and risks are expected increasingly to arise in Hiscox's Bermudian and US businesses, the Board believes that the centre for decision making needs to be in close proximity to the originating markets for those risks; • it is anticipated that such a move will demonstrate Hiscox's commitment to the Bermudian and US markets and consequently lead to an increased flow of business from insurance brokers active in those markets. Indeed, since the opening of Hiscox Bermuda and Hiscox USA a number of new brokers have begun to show new business to the Group; and • many of the Group's principal competitors already enjoy the substantial potential tax benefits that would become available to Hiscox Ltd and that this scheme should improve the prospects for the Group's share price. Overview of the corporate reorganisation The corporate reorganisation is proposed to be effected by way of a scheme ofarrangement under section 425 of the Companies Act (the "Scheme"). The Scheme issubject to various conditions including the passing of the requisiteshareholders resolutions and the approval of the Court. If these conditions aresatisfied and the Scheme is approved and implemented in full, Hiscox Ltd willown the entire issued share capital of Hiscox. Hiscox Ltd will then be listed onthe London Stock Exchange in place of Hiscox and is expected to replace Hiscox as a member of the FTSE 250 Index. Existing shareholders will receive one HiscoxLtd share for each share held in Hiscox. The listing of the existing Hiscox shares will then be cancelled. The effective date for the Scheme and date of admission to listing is expected to be 12 December 2006. The Scheme requires the approval of shareholders at a Court meeting. If theScheme is approved by the requisite majority at the Court meeting, anapplication will be made to the Court to sanction the Scheme. Shareholders willalso be asked to approve resolutions implementing various matters in connectionwith the Scheme at the Court meeting and Extraordinary General Meeting to beheld at 11.00 am on 15 November 2006. It is intended that the Scheme be neutral in tax terms for UK-residentshareholders. In particular, a UK-resident Hiscox shareholder who receivesHiscox Ltd shares under the Scheme should not be charged for capital gains taxor corporation tax on chargeable gains as a result of the exchange of his Hiscoxshares for Hiscox Ltd shares. Hiscox Ltd will, shortly after the Scheme becomes effective, put in place adividend access mechanism which is designed to preserve the current UK taxtreatment of UK-resident Hiscox shareholders in relation to dividends to be paidby Hiscox Ltd. Under this dividend access mechanism, holders of Hiscox Ltdshares may elect to be paid dividends from Hiscox via a trustee rather than fromHiscox Ltd. Hiscox Ltd will send further details of the plan to shareholders andan explanation of how holders of Hiscox Ltd shares may elect to receivedividends from Hiscox shortly after the Scheme becomes effective. For those shareholders who want their Hiscox Ltd shares to be settled throughthe CREST system, a depositary arrangement involving the issue of depositaryinterests representing the underlying shares in Hiscox Ltd will be put in place.Pursuant to this arrangement a depositary, Capita IRG Trustees Limited, willhold the uncertificated shares in Hiscox Ltd and issue depositary interestsrepresenting the underlying shares which will be held on trust for the holdersof the depositary interests. The depositary interests will be independentsecurities constituted under English law and may be held and transferred throughthe CREST system. Hiscox will write to participants in the Hiscox Employee Share Schemes in duecourse to explain the effect of the corporate reorganisation on theirparticipation in more detail. Hiscox Ltd has adopted new employee share schemes,which are, in all material respects, the same as the current Hiscox employeeshares schemes. Board of Hiscox Ltd Robert Hiscox, Bronek Masojada, Stuart Bridges and Robert Childs, Hiscox'scurrent executive directors, will continue in their roles as the executivedirectors of Hiscox Ltd. Carol Franklin Engler and Sir Mervyn Pedelty, currentlynon-executive directors of Hiscox, have each been appointed a non-executivedirector of Hiscox Ltd. In the event that the Scheme becomes effective AnthonyHowland Jackson, Derek Netherton and Adrian Auer will resign as non-executivedirectors of Hiscox and will not become directors of Hiscox Ltd. The Board wouldlike to thank each of them for their hard work and contribution to Hiscox'ssuccess during their directorships. Daniel Healy, Dr James King, Andrea Rosenand Dirk Stuurop have each been appointed a non-executive director of Hiscox Ltd.Details of the new directors are set out below. New directors of Hiscox Ltd Daniel M. Healy (Non-executive Director) (Aged 62)Daniel M. Healy joined North Fork Bancorporation in 1992 as Executive VicePresident and Chief Financial Officer. He has been a member of its Board ofDirectors since 2000. Previously he was a partner with KPMG LLP specialising infinancial services, technology and other commercial enterprises. He was ManagingPartner of the San Jose, California and Long Island, New York offices and heldother positions in that firm during his tenure. He is a member of the Board ofDirectors and Executive Committee of Harlem RBI, a not for profit organisation,promoting education to underprivileged children in East Harlem, New York. Dr. James A.C. King (Non-executive Director) (Aged 67)James King is chairman of the Bank of N.T. Butterfield & Son Limited. He alsochairs Keytech Limited, the Bermuda Telephone Company Ltd, the Argus Group ofCompanies and Grotto Bay Properties Ltd. Dr. King is a graduate of theUniversity of Toronto, and a fellow of the Royal College of Surgeons, Canada,and the American College of Surgeons. Andrea S. Rosen (Non-executive Director) (Aged 52)Andrea S. Rosen was previously Vice Chair of TD Financial Group and President ofthe TD Canada Trust from 2002 to 2005. Prior to this she held various positionswithin the TD Financial Group from 1994 to 2002, including Executive VicePresident of TD Commercial Banking and Vice Chair of TD Securities. She was VicePresident of Varity Corporation from 1991 to 1994 and held various positionswith Wood Gundy Limited from 1981 to 1990. Dirk A. Stuurop (Non-executive Director) (Aged 58)Dirk A. Stuurop is a private investor and managing partner of LighthouseHoldings LLC, a real estate development firm. He has also been Vice Chairman ofthe Board of RAM Holdings Limited, a Bermudian domiciled reinsurance operation,since 2004. Dirk was President of Stuurop & Company, a privately owned firmproviding strategic advice to executive managements and boards of directors. In1999 he retired as Chairman of Global Financial Institutions at Merrill Lynchwhere he worked from 1982. He then served as Chairman of Worldinsure Ltd., aprivately owned provider of solutions to the Life Insurance Industry, from 2000to 2002. He also served as Senior Executive Director to Banc of AmericaSecurities in 2003. Expected timetable of key events Circular and prospectus sent to shareholders 23 October 2006 Court Meeting 11.00 am on 15 November 2006 Extraordinary General Meeting 11.15 am on 15 November 2006 Last day for dealings in Hiscox shares 11 December 2006 Scheme record time 6.00 pm on 11 December 2006 Effective date of Scheme 12 December 2006 Cancellation of Hiscox shares,admission of Hiscox Ltd sharesto the Official List and commencementof dealings in Hiscox Ltd shares on the London Stock Exchange 12 December 2006 This timetable is based on Hiscox's expectations as at the date of the prospectus and may be subject to change. Each of UBS Limited and N M Rothschild & Sons Limited is acting for Hiscox and Hiscox Ltd in connection with the corporate reorganisation and no-one elseand will not be responsible to anyone other than Hiscox plc and Hiscox Ltd forproviding the protections afforded to each of their respective clients or for providing advice in relation to the corporate reorganisation or any other mattersreferred to in this document. Enquiries: Hiscox plcRobert Hiscox Chairman 020 7448 6011Bronek Masojada Chief Executive 020 7448 6012Stuart Bridges Finance Director 020 7448 6013Rebecca Olejnik Corporate Communications 020 7448 6332 MaitlandPhilip Gawith 020 7379 5151Richard Farnsworth 020 7379 5151 UBS Investment Bank John Woolland 020 7567 8000Lucy Phillips 020 7567 8000 N M Rothschild & Sons LimitedJonathan Eddis 020 7280 5000 Notes to editors: About Hiscox plc The Hiscox Group is a specialist insurance group listed on the London StockExchange. The Group operates through six insurance underwriting divisions:Hiscox Global Markets, Hiscox UK, Hiscox Europe, Hiscox Guernsey, Hiscox USA andHiscox Bermuda. In its unaudited consolidated interim results for the six months to 30 June2006, the Hiscox Group reported gross premiums written of £625.1 million. As at30 June 2006, the Group's net asset value was £588.4 million. For further information, visit www.hiscox.com The circular and prospectus are available for inspection at the UK ListingAuthority's Document Viewing Facility, which is situated at: Financial Services Authority25 The North ColonnadeCanary WharfLondon E14 5HS Telephone: 020 7066 1000 Copies of the circular and prospectus are also available for inspection at theregistered office of Hiscox plc (1 Great St Helen's, London EC3A 6HX) and HiscoxLtd (Canon's Court, 22 Victoria Street, Hamilton HM 12, Bermuda) and at theoffices of Allen & Overy LLP, One Bishops Square, London E1 6AO. Copies of theprospectus may be obtained, free of charge, from Hiscox plc or Hiscox Ltd (asabove). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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