Demerger of Risk Carrier Business

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL

TAWA PLC

Proposed Demerger of TAWA plc's Risk Carrier Business

Via

Reduction of Capital,

and

Notice of General Meeting

Following a strategic review to evaluate the best options for maximising Shareholder value, the Board has today announced its intention to demerge Tawa's operating divisions into two independent groups. The Board believes that the Services Business and the Risk Carrier Business will be better placed to pursue their respective strategies as separate and distinct legal entities.

In order to achieve this separation, the Board is seeking Shareholder approval for the Demerger. There are several steps required to implement the Demerger, as follows:

· the Reorganisation - this involves the transfer of certain of the business and assets of the Risk Carrier Business to TAL, currently a wholly-owned subsidiary of Tawa, so that TAL holds all of the assets comprising the Risk Carrier Business;

· the Reduction of Capital- Tawa does not currently have sufficient distributable reserves to implement the Demerger and accordingly Tawa will be applying to the Court for a capital reduction which has the effect of increasing distributable reserves; the Reduction of Capital will involve the cancellation of Tawa's share premium account, the cancellation of 190,695 Tawa Existing Ordinary Shares held in treasury and the reduction in the nominal value of each Tawa Existing Ordinary Share; and

· the Demerger - the Demerger will be effected after the Reduction of Capital, by declaring a dividend in specie of TAL Ordinary Shares to Qualifying Tawa Shareholders.

If the Demerger proceeds, Shareholders will continue to own Tawa Ordinary Shares and Shareholders (other than Tawa US Shareholders) who are registered on the Share Register at the Demerger Record Time will receive:

One TAL Ordinary Share for every one Tawa Ordinary Share,

then held by them.

It is proposed that, following the Demerger, Tawa will be the holding company for the Continuing Tawa Group whose business will comprise the Services Business. Further details of the mechanics of the Demerger are set out in Part III, including details of the Retained Risk Carrier Companies, which will remain part of the Continuing Tawa Group.

The Board believes that the Demerger will deliver additional value to Shareholders by:

· allowing the separate valuation of each business based on a typical EBITDA multiple valuation for the Services Business and based on a net asset valuation for the Risk Carrier Business;

· allowing Tawa and TAL to pursue their strategic objectives independently with greater individual control over resources and opportunities;

· developing bespoke management structures, focussed on the particular needs of each company;

· allowing the Services Business to become a focussed managed services business;

· increasing the potential for the Board to declare dividends in respect of the Services Business; and

· allowing the Services Business to separately raise capital as required.

Tawa currently has a strong and experienced operational management team. Following the Demerger, this team will form the core of the operational management of the Services Business and will be continuing the operational management of the run-off insurance companies within the TAL Group for at least 3 years, ensuring appropriate continuity for both businesses. It is intended that Mr Artur Niemczewski, will be appointed as the new Chief Executive Officer of the Services Business from 1 February 2014 and will lead Tawa with effect from the Demerger Effective Date when it is intended that he is appointed to the Board and take up the position of Chief Executive Officer of Tawa. Mr Colin Bird will resign from the Board with effect from the Demerger Effective Date.

The Board recognises that the Demerger will result in Qualifying Tawa Shareholders holding shares in two distinct legal entities, one publicly listed and one unlisted and further acknowledges that holding unlisted securities may create difficulty for some Shareholders. FinP has agreed to provide a share exchange offer (the Share Exchange Offer) whereby Qualifying TAL Shareholders will have the opportunity to exchange some or all of their TAL Ordinary Shares for Tawa Ordinary Shares held by FinP.

A General Meeting of the Company will be held to approve the Demerger and change of the Company's name, amongst other proposed resolutions. This will be held at the offices of DLA Piper UK LLP, 3 Noble Street, London EC2V 7EE on 10 January 2014 at 10.00 a.m.

A Circular containing details of the Proposed Reduction in Capital, Demerger of Tawa plc's Risk Carrier Business and actions to be taken by Shareholders in respect of the Demerger and a Notice containing details of the General Meeting of the Company, will be sent to Shareholders today and is available to be viewed on the Company's website at www.tawaplc.com. The same definitions apply throughout this announcement as are used in the Circular.

Gilles Erulin, CEO of Tawa, commented "We have been working for the last 18 months on turning our listed vehicle into a pure play insurance and reinsurance service provider, freeing it up from the natural or even unexpected volatility of the riskier business we invest in. The new scope of Tawa, with the positive results of the integration of Pro and Chiltington, the growing STRIPE community and the Asta performances gathers all the right ingredients for future growth and profitability. I am certain that, the new Pro Insurance Solutions plc structure, under the stewardship of Artur, will enhance our service offerings to our clients and will enable us to attract and retain further talents to our organisation. I am confident the new Pro Insurance Solutions plc structure will satisfy shareholder aspiration for sustainable shareholder value creation"

Enquiries

Tawa Existing Ordinary Shares

The Tawa Existing Ordinary Shares have not been and will not be registered under the US Securities Act, or under the securities laws of any state or other jurisdiction of the United States and may not be offered or sold within the United States, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no offer of the Tawa Existing Ordinary Shares in the United States.

The Tawa Existing Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Tawa Existing Ordinary Shares or the accuracy or adequacy of this announcement. Any representation to the contrary is a criminal offence in the United States.

TAL Ordinary Shares

The TAL Ordinary Shares have not been and will not be registered under the US Securities Act, or under the securities laws of any state or other jurisdiction of the United States and may not be offered or sold within the United States, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no offer of the TAL Ordinary Shares in the United States and Tawa US Shareholders will not receive TAL Ordinary Shares in connection with the Demerger.

The TAL Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the distribution of the TAL Ordinary Shares or the accuracy or adequacy of this announcement. Any representation to the contrary is a criminal offence in the United States.

FORWARD LOOKING STATEMENTS

Certain statements contained herein constitute forward-looking statements. The forward-looking statements contained herein include statements about the expected effects of the Reduction of Capital and the Demerger, the expected timing and scope of the Reduction of Capital and the Demerger and other statements other than in relation to historical facts. Forward-looking statements including, without limitation, statements typically containing words such as "intends", "anticipates", "targets", "estimates", "believes", "should", "plans", "will", "expects" and similar expressions or statements that are not historical facts are intended to identify those expressions or statements as forward-looking statements. The statements are based on the assumptions and assessments by the Board and are naturally subject to uncertainty and changes in circumstances. By their nature, forward looking statements involve risk and uncertainty and the factors described in the context of such forward-looking statements in this announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, the satisfaction or waiver of the conditions to the Demerger, local and global political and economic conditions, future revenues of Tawa being lower than expected, expected cost savings from the Reduction of Capital and the Demerger or other future transactions not being realised fully or in line with expected timeframes, competitive pressures in the industry increasing, foreign exchange rate fluctuations and interest rate fluctuations (including those from any potential credit rating decline) and legal or regulatory developments and changes. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements.

Neither Tawa, nor any of its respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied by any forward-looking statements contained herein will actually occur. Other than in accordance with their legal or regulatory obligations (including under the AIM Rules, the Disclosure and Transparency Rules of the Financial Conduct Authority and the City Code on Takeovers and Mergers), Tawa is not under any obligation and expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 (1) The times and dates set out in the expected timetable of principal events above and mentioned throughout this announcement may be adjusted by Tawa in consultation with Peel Hunt, in which event details of the new times and dates will be notified to the London Stock Exchange, and where appropriate, to Shareholders.

(2) All references in this announcement to times are to London time unless otherwise stated.

* These dates are indicative only and will depend, amongst other things, on the dates on which the Court confirms the Reduction of Capital and on which the Reduction of Capital becomes effective.

Tawa PLC

Proposed Demerger of TAWA plc's Risk Carrier Business

Via

Reduction of Capital,

and

Notice of General Meeting

1. Introduction

As you may be aware since the acquisitions by Tawa of Pro Insurance Solutions and the Chiltington Group and the investment in Asta, Tawa comprises two main operating divisions: the Services Business (the provision of underwriting support, claims management, agency management, consulting services and system solutions to reinsurers) and the Risk Carrier Business (comprising the management of insurance companies in run-off and investments in broking and a managing general agency).

Following a strategic review to evaluate the best options for maximising Shareholder value, the Board has today announced its intention to demerge Tawa's operating divisions into two independent groups. The Board believes that the Services Business and the Risk Carrier Business will be better placed to pursue their respective strategies as separate and distinct legal entities. 

In order to achieve this separation, the Board is seeking Shareholder approval for the Demerger. There are several steps required to implement the Demerger, as follows:

· the Reorganisation - this involves the transfer of certain of the business and assets of the Risk Carrier Business to TAL, currently a wholly-owned subsidiary of Tawa, so that TAL holds all of the assets comprising the Risk Carrier Business;

· the Reduction of Capital - Tawa does not currently have sufficient distributable reserves to implement the Demerger and accordingly Tawa will be applying to the Court for the capital reduction which has the effect of increasing distributable reserves; the Reduction of Capital will involve the cancellation of Tawa's share premium account, the cancellation of 190,695 Tawa Existing Ordinary Shares held in treasury and the reduction in the nominal value of each Tawa Existing Ordinary Share; and

· the Demerger  - the Demerger will be effected after the Reduction of Capital, by declaring a dividend in specie of TAL Ordinary Shares to Qualifying Tawa Shareholders.

The Demerger is conditional, inter alia, upon the approval of Shareholders at the General Meeting and the confirmation of the Reduction of Capital by the Court. Pursuant to AIM Rules, the Demerger requires Shareholder approval and accordingly the Demerger Resolution is being proposed.

The Demerger is expected to become effective on 31 March 2014.

If the Demerger proceeds, Shareholders will continue to own their Tawa Ordinary Shares and Shareholders (other than Tawa US Shareholders) who are registered on the Share Register at the Demerger Record Time will receive:

One TAL Ordinary Share for every one Tawa Ordinary Share,

then held by them.

Immediately following the Demerger becoming effective, the issued share capital of each of Tawa and TAL (excluding (i) the number of Tawa Ordinary Shares held by Tawa US Shareholders and (ii) the number of Tawa Existing Ordinary Shares held in treasury) will be the same.

It is proposed that, following the Demerger, Tawa will be the holding company for the Continuing Tawa Group whose business will comprise the Services Business.

It is also proposed that Tawa change its name to Pro Insurance Solutions plc and change its ticker to PROG. The Tawa Ordinary Shares will continue to be traded on AIM. TAL will continue to be an unquoted private limited company.

The Board recognises that the Demerger will result in Qualifying Tawa Shareholders holding shares in two distinct legal entities, one publicly listed and one unlisted and further acknowledges that holding unlisted securities may create difficulty for some Shareholders. FinP has agreed to provide a share exchange offer (the Share Exchange Offer) whereby Qualifying TAL Shareholders will have the opportunity to exchange some or all of their TAL Ordinary Shares for Tawa Ordinary Shares held by FinP. Further details of these arrangements are contained in paragraph 10 of this announcement

The purpose of this announcement is to:

(i) set out the background to and reasons for the Proposals;

(ii) explain why the Board believes that the Proposals are in the best interests of Shareholders as a whole;

(iii) explain the steps required to be taken to implement the Proposals;

(iii) explain the Resolutions to be put to Shareholders at the General Meeting to be held on 10 January 2014; and

(iv) recommend that Shareholders vote in favour of the Resolutions.

2. Background to and reasons for the Demerger

The Tawa Group is a specialised investor in the insurance industry and has, since its formation in 2001, acquired six insurance companies in the run-off sector. Tawa has also reinsured a run-off portfolio through the establishment of a dedicated reinsurance vehicle in Bermuda. In April 2012 Tawa acquired the HIR Group which enabled the Tawa Group to offer a platform for European run-off portfolio transfers under European Union regulations.

Tawa also operates as an incubator for new projects, supporting professional teams aspiring to create new businesses in the insurance industry, and has to date launched three companies as part of this business initiative and consequently has investments in Lodestar Marine Ltd (a Marine business MGA) and Q360 Ltd (a reinsurance broker) as well as an investment in Stripe Global Services Ltd (a web based data processing system).

Focus on Services Business

In the last few years, Tawa has expanded significantly in the servicing arena of the international insurance industry with the acquisition of Pro Insurance Solutions, the Chiltington Group, the creation of, and one-third participation, in a consortium for the acquisition of Asta and the establishment of a 66 person service platform in the US. The Services Business is the focus of the Tawa Group and the Board believes that the Risk Carrier Business would be better suited to being owned and managed as a separate legal entity.

Perceived impact of Risk Carrier Business on the Tawa Group

Following unsuccessful attempts to raise new equity, in September 2012 the Board announced that it was seeking potential offerors by means of a formal sale process in accordance with Rule 2.6 of the Takeover Code. As a result, a number of initial approaches were made by various parties; some potential offerors were attracted to the Risk Carrier Business, others to the Services Business, but all were willing only to value the Tawa Group at a level which fell short of what the Board felt could be recommended to Shareholders. It appears to the Board that the public markets better appreciate the profit driven Services Business and that the private markets better appreciate the Risk Carrier Business.

The Risk Carrier Business is currently valued at a significant discount to its stated net asset value (£77 million as at 30 June 2013). On 29 November 2013 Tawa issued a statement to the effect that claims against QX Re's reinsurance facility had increased by more than was expected and that it was highly likely to have to provide in full against the value of its investment in QX Re. On a pro forma basis therefore, the net asset value of the Risk Carrier Business as at 30 June 2013 has fallen by £18 million to £59 million. The net asset value of the Tawa Group as at 30 June 2013 would therefore have been £71 million compared to Tawa's market capitalisation on 16 December 2013 of £17 million. Notwithstanding the possible write down in equity of QX Re, the Directors believe that the Tawa Group as a whole is undervalued by the market. As a consequence the Board has considered a number of options with a view to maximising Shareholder value. These have included seeking new equity capital, accessing private equity funding and continuing to build the businesses.Potential Benefits of the Demerger

Against this background, and recognising that the results of the Risk Carrier Business have, in recent years, prevented the Board from declaring dividends, the Board, having taken appropriate advice, believes that the Demerger should deliver additional value to Shareholders over time and has therefore concluded that the Demerger is in the best interests of Tawa as a whole. The Board has designed the Demerger with the intention of delivering additional value to Shareholders by:

· allowing the separate valuation of each business based on a typical EBITDA multiple valuation for the Services Business and based on a net asset valuation for the Risk Carrier Business;

· allowing Tawa and TAL to pursue their strategic objectives independently with greater individual control over resources and opportunities;

· developing bespoke management structures, focussed on the particular needs of each company;

· allowing the Services Business to become a focussed managed services business;

· increasing the potential for the Board to declare dividends in respect of the Services Business; and

· allowing the Services Business to separately raise capital as required.

The Demerger will create two distinct entities with different strategic, operational and economic characteristics and with separate management teams and boards of directors.

3. Information on the Services Business

The corporate entities forming the Services Business include Pro UK (including a branch in Zurich), Pro US and the Chiltington Group, which includes Ass Assekuranz Service - und Sachverständigengesellchaft mbH in Germany and Chiltington Internacional SA in Argentina. The 380 staff and the four territories covered (UK, Continental Europe, USA and South America) give the Services Business the capacity to provide international service to Tawa's key clients including in Asia where Tawa recently opened a Singapore-based run-off management operation to manage one of its client's businesses.

The Services Business is now operating under a single brand, Pro, having replaced the Chiltington brand. Pro is a well-established provider of services to the insurance industry, including underwriting support, claims management, broking support and consulting services, which are provided to a broad array of international clients across the insurance market. Services are provided from the UK (250 staff) USA (70 staff), Germany (40 staff) and Argentina (20 staff).

As part of its expansion into servicing the Lloyd's market, in January 2012 Tawa organised a consortium with Skuld and Investment Limited and Paraline International Ltd. to acquire Asta, the leading turnkey Lloyd's managing agency services company. Each consortium member owns one third of the voting rights and 30 per cent. of the economic interest in Asta, with the remaining 10 per cent being owned by Asta management. The consortium operates under the terms of the Asta Shareholders Agreement. After 15 January 2015, each Asta shareholder has the benefit of a "Shoot Out" clause, which, if triggered by any of the three shareholders who wants to transfer its shares, would enable the other Asta shareholders to acquire those transferring shares. This may therefore enable Tawa to gain a controlling interest in Asta or realise its interest in Asta.

The Services Business has combined historic revenues of approximately £35 million based on the audited results for the financial year ended 31 December 2012 and £18 million based on the unaudited interim results for the six months to 30 June 2013. The Services Business made a loss before tax of £0.3 million for the year ended 31 December 2012 and reported a pre tax profit of £1.9 million based on the unaudited interim results for the six months to 30 June 2013. Approximately 13 per cent. of revenues in the six months to 30 June 2013 arose through services provided to the Risk Carrier Business. The agreements under which these services are provided are on an arm's length basis and will continue for a minimum of 3 years following the Demerger.

At the beginning of 2013 Tawa commissioned an international consultancy firm to conduct a strategic review of its overall business with a view to continuing its development while enhancing Shareholder value. Following this review a number of projects are underway to develop the Services Business, with an objective of consolidating its market positioning and securing higher margin business. The Services Business is aiming to achieve significant growth over the next three years and its management will be strengthened following the appointment of Mr Artur Niemczewski, as the new chief executive officer of the Services Business. It is intended that Mr Artur Niemczewski will be appointed to the Board with effect from the Demerger Effective Date and become Chief Executive Officer of Tawa at that time.

The Directors believe the key strengths of the Services Business are:-

· the Pro brand which is well regarded and respected in the insurance market;

· its blue chip client base and strength of offering to major insurers;

· its established track record of delivering solutions for complex mission critical systems;

· its on-going long term contracts which represented approximately 40 per cent. of Tawa's revenues in respect of the six month period ended 30 June 2013; and

· its interest in Asta.

4. Information on the Risk Carrier Business

Earlier this year the Tawa Group disposed of KX Re. Together with retained assets the sale resulted in a realisation of 76 per cent. of undiscounted net asset value, which is within the range currently used by run-off professionals in valuing such assets. The net asset value of the Risk Carrier Business was £77 million (as at 30 June 2013). On 29 November 2013, Tawa issued a statement to the effect that claims against QX Re's reinsurance facility had increased by more than was expected and that it was highly likely to have to provide in full against the value of its investment in QX Re. On a pro forma basis therefore, the net asset value of the Risk Carrier Business at 30 June 2013 has fallen by £18 million to £59 million. Remaining investments are in PXRE (USA) (NAV £26 million as at 30 June 2013) and Island Capital (Bermuda) (NAV £14 million as at 30 June 2013). On 25 November 2013, PXRE (USA) paid a $12 million dividend to WTH.

Following completion of the Reorganisation, the Risk Carrier Business will be entitled to the receivables from CX Re, the level of which is dependent on the outcome of litigation relating to the availability of tax losses which have been surrendered to Tawa's financial partners. Work continues on the run-off of the Risk Carrier Business entities. Whilst retaining the potential to generate value, these entities carry discrete and substantial risks - PXRE (USA) on the outcome of World Trade Center claims; Island Capital (Bermuda) on the recovery of significant subrogated claims and QX Re on the outcome of the litigation in respect of the rescission of a reinsurance contract.

In light of the above, the Board believes that the risk profile of the Risk Carrier Business is no longer suited to a listed company. Moreover the Board believes the discount of Tawa's market capitalisation to its net asset value prevents Tawa from raising equity.

Following the Demerger, TAL will be a distinct legal entity and the Board anticipates that the TAL Group business strategy will encompass the following areas:

· continuation of the run-off and downscaling of the Risk Carrier Business entities to seek to return value to TAL Shareholders;

· continuation of the efforts to maximise recoverables, for example the recovery by Island Capital (Bermuda) of the subrogated claims;

· conduct of the litigation to which the TAL Group is exposed to, pursuant to the terms of the Reorganisation; and

· continuation of the monitoring and development of Lodestar Marine Ltd. TAL will aim to continue assisting this business with a view to it becoming profitable.

TAL has informed Tawa that it has no plans to invest in new projects or initiatives and will seek to return as much value as possible to TAL Shareholders and will manage TAL in a manner to achieve this. The expected dividend policy of TAL is set out in paragraph 11 of this announcement.

5. Summary of how the Proposals are to be effected

Reorganisation

The Reorganisation is intended to effect the transfer of the business and assets of the Risk Carrier Business to TAL (other than the Retained Risk Carrier Companies and those business and assets of the Risk Carrier Business already owned by TAL). TAL is a private limited company. In connection with the Reorganisation, TAL has agreed, in exchange for the transfer of the business and assets of the Risk Carrier business, to assume conduct of certain litigation and guarantee obligations of Tawa which relate to the Risk Carrier Business, in order to seek to protect the Services Business from the outcomes, positive or negative, of such litigation and guarantee obligations. 

The Demerger Framework Agreement provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities in respect of any guarantee, indemnity or other undertaking provided by Tawa to the Risk Carrier Business with TAL and financial responsibility for the obligations and liabilities in respect of any guarantee, indemnity or other undertaking provided by TAL to the Services Business with Tawa, as from 1 January 2014.

The Reorganisation is subject to certain regulatory clearances.

Demerger

The Demerger is to be effected by Tawa declaring a dividend of the TAL Ordinary Shares to Qualifying Tawa Shareholders at a value equal to the book value of Tawa's shareholding in TAL. Tawa does not currently have sufficient distributable reserves to declare the dividend in specie to effect the Demerger. The Reduction of Capital will create sufficient distributable reserves to enable the dividend in specie to be declared and paid by cancelling Tawa's share premium account, cancelling the Tawa Existing Ordinary Shares held in treasury and reducing the nominal value of each Tawa Existing Ordinary Share.

The Demerger is subject to certain third party consents.

The Demerger is conditional, inter alia, on:-

· the approval by Shareholders of the Proposal Resolutions;

· the confirmation of the Reduction of Capital by the Court;

· the tax clearance being obtained from HMRC (which is not expected to be withheld);

· certain third party consents;

· consent from the Tawa Group's bank to continue to provide and amend (as necessary in the context of the Demerger) the existing debt facilities, further details of which are set out in paragraph 6 of this announcement; and

· no other events or developments having occurred or existing that, in the judgment of the Board, in its sole and absolute discretion, would make it inadvisable to effect the Demerger.

It should be noted that, although it is currently Tawa's intention that the Demerger should be concluded, Tawa is entitled not to proceed with the Demerger if at any time prior to the Board resolving to recommend the Demerger the Board considers that it would not be in the best interests of Shareholders as a whole.

Tawa will not have a shareholding in TAL following the Demerger. It is expected that Mr Gilles Erulin will be the only director common to both Tawa and TAL. With effect from the Demerger Effective Date, Mr Colin Bird will resign as a director of Tawa and will be appointed as a director of TAL.

6. Financial effects of the Demerger

The expected benefits of the Demerger are set out in paragraph 2 of this announcement. The illustrative effect of the Demerger on Tawa's assets and liabilities as at 30 June 2013 (as adjusted for the provision against the equity value of QX Re referred to above) would be to reduce net assets (excluding any goodwill write off) by an estimated £59 million. There will be no change to the illustrative net asset value of the Services Business (£12 million as at 30 June 2013). The illustrative effect of the Demerger on TAL's assets and liabilities as at 30 June 2013 would be to increase net assets by an estimated £57 million.

The Board expects one-off cash costs arising on the implementation of the Proposals to be approximately £1 million comprising restructuring, accountancy, legal, financial and corporate broking advice. These costs will be shared between Tawa and TAL. The Demerger has no impact on the Tawa Group's overall working capital levels.

As part of the Demerger it is intended that the Tawa Group's existing debt facilities be amended as necessary to accommodate the structure of the Demerger and will continue to constitute separate and independent facilities which will service the Risk Carrier Business and the Services Business as follows:-

a fully drawn committed facility of £10 million to 19 January 2015 in favour of Tawa; and

a fully drawn committed facility of approximately $15 million to 28 March 2015 in favour of a TAL Group company.

Tawa has received from its bank, an in principle commitment to continue to provide the said facilities and consent to the Demerger subject to agreeing legally binding terms and documents, such agreement and provision of the said facilities being a condition to the Demerger. 

In addition Tawa and TAL currently have a Euro 8 million facility with FinP at their disposal, of which approximately Euro 3.3 million has been drawn down. TAL will have access to this facility following the Demerger Effective Date and Tawa will have access to the same facility through arrangements to be agreed and approved by the boards of both TAL and Tawa which will enable them to draw in aggregate a maximum of Euro 8 million. Protocols for the withdrawal of funds by Tawa and TAL will also be agreed and approved by both boards.

7. Board structures

Tawa currently has a strong and experienced operational management team. Following the Demerger, this team will form the core of the operational management of the Services Business and will be continuing the operational management of the run-off insurance companies within the TAL Group for at least 3 years, ensuring appropriate continuity for both businesses. It is intended that Mr Artur Niemczewski, will be appointed as the new Chief Executive Officer of the Services Business from 1 February and will lead Tawa into the future with effect from the Demerger Effective Date when it is intended that he is appointed and take up the position of Chief Executive Officer of Tawa. Mr Colin Bird will resign from the Demerger Effective Date.

With effect from the completion of the Demerger, the directors of Tawa, to be renamed Pro Insurance Solutions plc, are expected to be:

· Mr Timothy Joseph Carroll - Non-Executive Chairman

· Mr Artur Niemczewski - Chief Executive Officer

· Mr Gilles Marie Jacques Erulin - Non- Executive Director

· Mr Loic Philippe Marie-Joseph Brivezac - Non-Executive Director

· Mr Anthony John Hamilton - Non-Executive Director

With effect from completion of the Demerger, the directors of TAL are expected to be:

· Mr Colin Graham Bird - Chairman

· Mr Gilles Marie Jacques Erulin - Chief Executive Officer

· Mr David Vaughan - Executive Director

Following the Demerger, Mr Niemczewski will be appointed as Chief Executive Officer of Pro Insurance Solutions plc.

Mr Niemczewski will take the position of Chief Executive Officer for the Services Business with effect on 1 February 2014, following leading the successful turnaround and sale of Garwyn Group Ltd as Chief Executive Officer.

With nearly twenty years' experience within insurance and the financial industry, Mr Niemczewski is a successful and passionate business transformation leader with a track record in improving business performance. 

Over the past two years, Mr Niemczewski has led the restructuring and revitalisation of Garwyn Group Ltd, the UK's largest specialist liability loss adjuster. Under his leadership the Garwyn team have re-established their market-leading position and technical excellence in liability claims, revitalised client service and relationships, and implemented modern technology. The transformation programme culminated in a successful sale of Garwyn to a complementary trade investor.

Prior to his role at Garwyn, Mr Niemczewski was Managing Director of Xchanging Broking Services Ltd at Xchanging Plc. Mr Niemczewski served as Chief Executive of Multi-National Division for Marsh UK Ltd of Marsh, Inc and Chief Operating Officer of Willis International Holdings Ltd at Willis Group. While at Willis, Artur gained extensive international experience covering most commercial insurance markets across North and South America, Asia, and Continental Europe, including a secondment with Willis Germany.

Mr Niemczewski served as Director of Strategy at AXA Insurance, where he spearheaded the restructuring of AXA's UK property and casualty business. He started his career as a strategy consultant with McKinsey & Company.

Mr Niemczewski holds a PhD in Nuclear Engineering and an MSc in Public Policy from Massachusetts Institute of Technology (MIT), and an MSc in Mechanical Engineering from Warsaw University of Technology.

Mr Niemczewski entered into a service agreement with the Company on 12 December 2013 under which he will be appointed as Group Chief Executive Office with effect from the Demerger Effective Date. The agreement states that Mr Niemczewski's employment shall continue until terminated by not less than 52 weeks' notice, with the ability to pay him in lieu of all or part of his notice period and/or to place him on garden leave for up to 26 weeks of his notice period. Mr Niemczewski will have an annual salary of £280,000 plus the opportunity to obtain a bonus of up to 100% of annual salary. Mr Niemczewski is entitled to various benefits under the agreement such as: (i) 12 per cent. salary contribution to Tawa 's pension scheme; (ii) life, health and income protection insurance plans; and (iii) entitlement to participate in the Company's Long Term Incentive share plan. There are provisions in the agreement requiring Mr Niemczewski to keep information about the Company confidential and to protect the Company's intellectual property rights. The service agreement contains various post-employment covenants relating to non-competition, non-dealing with customers, non-solicitation of customers, non-solicitation of employees and non-use of names or styles likely to be confused with any name or style used by Tawa or any group company. There are no change of control provisions in this service agreement however the Long Term Incentive share plan does include change of control provisions.

In terms of the appointment of Artur Pawel Niemczewski (aged 48) to the Board, there is no further information that is required to be disclosed pursuant to Schedule 2 paragraph (g) of the AIM Rules for Companies, save for the following:

Mr Niemczewski is currently a Director of:

· Arthur Fleming & Co. Ltd

· Bella Consulting Ltd

· Martin Fleming Ltd

In the last 5 years, Mr Artur Pawel Niemczewski has been a Director of:

· Xchanging Broking Services Ltd

· Garwyn Group Ltd

· Garwyn EBT Ltd

· Garwyn Ltd

8. Relationship with FinP

The Tawa Relationship Deed will continue save for certain amendments to reflect the effect of the Demerger as set out in the Amended and Restated Relationship Agreement.

9. TAL Articles

The TAL Articles include a number of provisions which are intended to protect minority TAL Shareholders. These provisions include tag-along rights and an obligation on the TAL Directors to call an annual general meeting.

In addition, TAL will benefit from the statutory provisions of the Act applicable to private limited companies, such as statutory pre-emption rights on the allotment of TAL Ordinary Shares for cash.

10. Share Exchange Offer

The purpose of this paragraph is to provide details of a facility to be offered by FinP to certain TAL Shareholders. Tawa is not involved in the provision and/or administration of the Share Exchange Offer and if you are in any doubt as to the action to be taken you should consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are in the United Kingdom or, if not, another appropriately authorised independent adviser. 

FinP has agreed to provide the Share Exchange Offer to Qualifying TAL Shareholders (other than certain Overseas TAL Shareholders). Under the terms of the Share Exchange Offer Qualifying TAL Shareholders (other than certain Overseas TAL Shareholders) may elect to exchange TAL Ordinary Shares acquired by them pursuant to the Demerger for Tawa Ordinary Shares held by FinP.

The Share Exchange Offer is only available to Shareholders on the register at 5 p.m. on 19 December 2013. Acquirers of Tawa Existing Ordinary Shares after 5 p.m. on 19 December 2013 will not be able to take advantage of the Share Exchange Offer.

FinP has agreed to make available at least 15 million Tawa Ordinary Shares pursuant to the Share Exchange Offer (15 million Tawa Ordinary Shares representing approximately 13 per cent. of Tawa's current issued share capital and approximately 19 per cent. of FinP's interest in Tawa's current issued share capital). Each Qualifying TAL Shareholder can propose one ratio at which it wishes to exchange all or part of its holding of TAL Ordinary Shares for Tawa Ordinary Shares held by FinP provided that the maximum ratio is no more than two Tawa Ordinary Shares held by FinP for one TAL Ordinary Share. It is intended that the Share Exchange Offer will be open for a period of 21 days following the Demerger Effective Date. Following the end of this period, FinP's information agent will compile the Share Exchange Offer elections on a rank basis. FinP reserves the right, in its absolute discretion not to pro-rate elections which are made at the same ratio. In addition, FinP reserves the right, in its absolute discretion, not to accept elections in respect of some or all of the TAL Ordinary Shares in order to ensure maximum participation in number of Qualifying TAL Shareholders.

The number of Tawa Ordinary Shares FinP will make available pursuant to the Share Exchange Offer will be at least 15 million. FinP may, in its absolute discretion, decide to make available further of its Tawa Ordinary Shares for use in connection with the Share Exchange Offer.

The availability of the Share Exchange Offer will be subject to a number of conditions, including:

· the Demerger having become effective;

· any regulatory and governmental approvals required for the operation of the Share Exchange Offer having been obtained;

· no legal proceedings, regulatory or other prohibitions or other events preventing or materially affecting the ability of FinP to effect the Share Exchange Offer; and

· no material adverse change having occurred in respect of (i) Tawa and/or TAL and (ii) financial markets generally.

The Directors and certain officers who are Qualifying Tawa Shareholders intend not to participate in the Share Exchange Offer.

The Directors make no recommendation to Shareholders regarding the Share Exchange Offer. If you are in any doubt as to the action to be taken you should immediately consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are in the United Kingdom or, if not, another appropriately authorised independent adviser.

Further details of the Share Exchange Offer will be sent to all TAL Qualifying Shareholders (other than certain Overseas TAL Shareholders) prior to the Demerger Effective Date.

The Share Exchange Offer will not affect the number of TAL Ordinary Shares received by Qualifying TAL Shareholders who do not make an election under the Share Exchange Offer. 

11. Dividend policies

Continuing Tawa Group

Following the Demerger, and provided the Services Business develops as expected, the Continuing Tawa Group may generate sufficient profits and free cash flow to enable the Board to consider paying dividends relating to the financial year ending 31 December 2015. The declaration and payment of dividends by Tawa will be dependent upon its financial position, cash requirements, future prospects, profits available for distribution and other factors regarded by the Board as relevant at the time.

TAL

Following the Demerger, the TAL Directors do not anticipate paying dividends in the near future whilst the existing investments are in the process of being realised. It is intended that funds generated by the realisation of assets within the TAL Group will be paid to TAL Shareholders in the form of dividends or returns of capital.

12. Share Scheme

Once approved, the Demerger will apply to all Qualifying Tawa Shareholders, including holders of Tawa Existing Ordinary Shares acquired before the Demerger Record Time upon the vesting of awards granted under the Share Scheme. Awards granted under the Share Scheme will not automatically vest as a consequence of the Demerger. This is because such awards are subject to certain performance criteria which are required to have been met within certain periods in order for the awards to vest.

There are currently 1,418,137 awards outstanding under the Share Scheme. In relation to the outstanding awards, one of the four performance conditions has been satisfied which means that under normal circumstances 198,539 awards (equal to approximately 14 per cent. of the outstanding awards and 0.18 per cent. of the current issued share capital of Tawa) would vest in May 2014. The Board has exercised its discretion under the terms of the Share Scheme to amend the Share Scheme to allow the 198,539 awards (to which the satisfied performance condition relates) to vest early. These awards will vest conditional upon the Demerger becoming effective, if the Demerger does not occur then the conditional vesting will not be effective and the awards will continue to subsist and vest in accordance with the Share Scheme.

It is intended that the awards will be satisfied by the delivery of 198,539 Tawa Ordinary Shares held as treasury shares. Following the Reduction of Capital and the satisfaction of the awards from Tawa Ordinary Shares held in treasury the Company will have 119,318 Tawa Existing Ordinary Shares held as treasury shares. The Share Scheme will continue for the benefit of Continuing Tawa Group employees following the Demerger.

13. General Meeting

A General Meeting of the Company will be held to approve the Demerger and change of the Company's name, amongst other proposed resolutions. This will be held at the offices of DLA Piper UK LLP, 3 Noble Street, London EC2V 7EE on 10 January 2014 at 10.00 a.m.

The four resolutions that are to be proposed at the General Meeting are:

(1) Approval of the Reduction of Capital

(2) Approval of off-market share buy-backs

(3) Approval of the Demerger

(4) Approval of the change of name of Tawa to Pro Insurance Solutions plc

14. Recommendations

The Directors, having consulted with Peel Hunt, consider that the Resolutions are in the best interests of the Company and Shareholders. Accordingly, each of the Directors recommend that Shareholders vote in favour of the Resolutions as each Director has undertaken to do in respect of Tawa Existing Ordinary Shares in which he is interested, amounting in aggregate to 1,888,020 Tawa Existing Ordinary Shares, representing approximately 1.7 per cent of the issued share capital of Tawa on 19 December 2013 (being the latest practicable date prior to the publication of this announcement).

Tawa has received irrevocable undertakings to vote in favour of the Resolutions from FinP and certain members of Tawa management in respect of 83,216,342 Tawa Existing Ordinary Shares, representing approximately 73.4 per cent. of the issued share capital of Tawa on 19 December 2013 (being the latest practicable date prior to the publication of this announcement).

Appendix

The following definitions apply in this announcement unless the context otherwise requires: