Half Yearly Report

PRESS RELEASE 20 SEPTEMBER 2013

FOR IMMEDIATE RELEASE

INTERIM RESULTS ANNOUNCEMENT

Tawa plc

Unaudited interim results for the six months ended 30 June 2013

Tawa plc ("Tawa" or "the Group") today announces unaudited interim results for the six months ended 30 June 2013.

Activity Highlights

· Tawa on track for the 2013 plan:

o Experiencing higher than expected growth on the service business hence better profitability;

o Supporting the development of incubated companies; and

o Successfully working on the reduction of reserves in its risk carriers, whilst still suffering a high level of lead paint claims.

· Integration of Tawa servicing entities on track, with 'one Team' project roll out, the rebranding of Chiltington entities to the "Pro" brand, and new appointments and organisational changes to strengthen servicing teams and accelerate integration;

· As announced, on 16 April 2013, Tawa completed the sale of the risk carrier KX Re and its direct subsidiary OX Re to Catalina Holdings (Bermuda) Limited, finalising a cash-on-cash return on the investment of $46.6 million.

Finance Highlights

· External revenues of $20.7 million (30 June 2012: $16.1 million);

· Reduced operating loss for the half year: $5.7 million (30 June 2012: loss $6.5 million);

· A final accounting loss of $21.3 million has been recognised upon the sale of KX Re resulting in an overall Group loss of $27.0 million for the period;

· Increased positive earnings from the service division of $1.7 million (30 June 2012: profit $0.6 million);

· Group net assets: $152.1 million (31 December 2012: $178.5 million); and

· Net assets per share in US dollars: $1.34/£0.85 per share (31 December 2012: $1.57/£1.01).

Tawa's first goal for 2013 was a continuation of its efforts to grow the service business and restore profitability. Emphasis on reducing the cost base, coupled with significant new contract business, has ensured positive earnings growth in this division. The incubators Q360 and Lodestar Marine are now establishing growing income streams to absorb some of the expense of continued investment, and the Group's share in its associate Asta delivered a profit in the half year.

The second goal of reducing volatility of its risk carriers has been demonstrated through the sale of KX Re, though this represents just one aspect of this focus.

Gilles Erulin, Chief Executive, commented:

"A lot of work had been going on in the turnaround of our various subsidiaries, especially in the servicing division. Our long-standing clients, complemented by very large new clients, have responded well to the efforts of our staff to adapt to their changing needs. The interim results provide indications that these turnaround effects are bearing fruit. The same is true for our incubator investments, especially Lodestar Marine".

--ENDS-

Enquiries:

Notes for Editors:

Tawa plc was formed in 2001 and is a specialised investor in the insurance industry. In the last few years, Tawa has moved from being a pure run-off risk owner towards being a multi-segment investor in the insurance market, expanding significantly in the servicing arena of the international insurance industry.

Tawa invests in acquiring run-off portfolios ("Portfolios", "Risk Carriers") and investing in servicing business. The Group also operates as an incubator for new projects and has invested alongside professional teams to create two new businesses, Q360 and Lodestar Marine, in addition to developing its own products to serve the insurance market as a whole such as STRIPE®.

On the portfolio front, Tawa has been an acquirer of  insurance entities in run-off  including CX Reinsurance Company Limited, Hamburger Internationale Rückversicherung AG (HIR), LGIC Holdings, LLC, PXRE Reinsurance Company, Island Capital Limited, Island Capital (Europe) Ltd and Pavant SAS (formerly Pavant International Re S.A). As an alternative technique to assuming run-off risks, Tawa established a dedicated reinsurance vehicle, QX Reinsurance Company Limited, in Bermuda to reinsure portfolios. Through HIR, a German reinsurance company, Tawaoffers a vehicle for European run-off portfolios transfers under the European Union portfolios transfer directive.

On the service side, Tawa acquired Pro Insurance Solutions Ltd ("Pro") in 2009 and the Chiltington Consulting Group in April 2012. Both service companies have a trading name of Pro.

Pro is a leading global provider of outsourcing and consultancy services, focusing solely on the (re)insurance market. Located in 4 major markets, Pro provides round the clock service for underwriting support, claims management, broking and consulting services to a wide range of international clients, from single entities to complex pools with complex assumed and reinsurance portfolios.

Pro's virtual services platform offers a "one-stop shop" solution for broking and underwriting teams, by supplying premises, systems and infrastructure.

As part of its expansion in the Lloyd's market, in January 2012, Tawa became the owner of 33% of Asta, the leading turnkey agency management services company in Lloyd's.

In July 2007 Tawa plc was listed on the AIM market.

Further information can be found on the Company's website: www.tawaplc.co.uk.

Highlights

For the 2013 year, Tawa plc ("Tawa") had set itself the following key strategic goals: grow the service business and restore its profitability; while continuing to reduce the volatility of the risk carriers. On the first goal, work streams continue with better integrated platforms across the various subsidiaries and regions, and cost synergies. Emphasis on reducing the cost base, coupled with significant new contract business, has ensured a better than forecast result for this segment. Whilst the Group still absorbs the expense of the continuing investment in broker and MGA start-ups, both are beginning to generate a growing income stream. On the run-off portfolios, whilst dealing with the lead paint development continues to be the primary focus, the previously announced sale of KX Reinsurance Company Limited ("KX Re") and its direct subsidiary OX Reinsurance Company Limited ("OX Re") is illustrative of the volatility reduction effort which also encompasses portfolio downscaling and potential sales of some assets.

· Loss for the period attributable to owners of the Company was $27.0 million (30 June 2012: loss $6.5 million);

· The Group's total equity has decreased by $26.4 million since 31 December 2012 to $152.1 million as at 30 June 2013;

· Net assets per share in sterling decreased from £1.01 to £0.85 ($ decreased from $1.57 to $1.34); and

· The Group's net tangible assets are $128.3 million (31 December 2012: $154.6 million).

On 16 April 2013, Tawa completed the sale of the risk carrier KX Re and its direct subsidiary OX Re to Catalina Holdings (Bermuda) Limited. This disposal resulted in an accounting loss in 2013 of $21.3 million under IFRS accounting. However, the sale finalised a cash-on-cash return of $46.6 million (total purchase and interest costs of $71.7 million against total capital extractions, management fees and sale price of $118.3 million) for the Group since the acquisition of KX Re in May 2007. The sale also enabled management to deleverage the platform. The cash-on-cash numbers are considered a better indicator of how Tawa's investment portfolio creates value for its shareholders.

Financial review

During the first six months of 2013, Tawa recognised net losses of $27.0 million compared to net losses of $6.5 million in the six months to 30 June 2012. The half-year 2013 figures include a loss of $21.3 million recognised upon the sale of KX Re, thus the underlying loss of $5.7 million from operational activities indicates improved performance against the prior year. During the period Group net assets decreased by $26.4 million, from $178.5 million ($1.57/£1.01 per share) at 31 December 2012 to $152.1 million ($1.34/£0.85 per share) at 30 June 2013 mainly as a result of the KX Re sale.

Dividend and dividend policy

No dividend will be distributed in 2013 in relation to the results for the 2012 financial year. The Group does not propose the payment of a dividend to shareholders in relation to the six month period to 30 June 2013 (June 2012: £nil).

Operational results

Tawa has the following divisions with clearly identified lines of business, namely:

· risk carriers/insurance divisionwhich holds the Group's acquired insurance entities in run-off (risk carriers). Profitability is achieved by effectively managing these assets and liabilities;

· service providers which comprise a platform that generates income from consulting and outsourcing. Consulting typically includes work provided directly for clients and the outsourcing division includes work done on behalf of clients on Tawa's platform; and

· corporate division which comprises incubators, all Group overheads, corporate costs, acquisition activities and financing.

Risk carriers/insurance division

Tawa generates value from run-offs in a variety of ways, depending on the nature of each run-off entity in question. These strategies include:

· Buying net assets at a significant discount to economic value and accelerating capital extraction; and

· Buying volatile books of business and applying its management techniques to create value and reduce volatility.

This division comprises the results from the following run-off companies in which Tawa held the following interests at the reporting date:

CX Re was initially a subsidiary of the Group but on 21 March 2006 Tawa disposed of 87.35% of its shareholding. In accordance with IFRS, the retained shareholding of 12.65% has been accounted for as an associate since that date. Although the Company disposed of 87.35% of CX Re the deferred consideration receivable on the sale will reflect the current net asset value of CX Re. At 30 June 2013, the total deferred consideration was $47.8 million (June 2012: $48.0 million).

The risk carriers' net loss of $1.2 million (June 2012: profit of $1.9 million), excluding taxation which is subject to group relief and any intergroup fees which are eliminated on consolidation, is summarised below:

(1) ICG includes the results of ICL and ICE.

(2) HIR Group includes the results of HIR and PIR.

No dividends were paid during the period (2012: A dividend of $2.4 million was paid by OX Re).

Service providers

Tawa's servicing platform comprises income from both consulting and outsourcing. Consulting typically refers to work provided directly for its clients and the outsourcing division refers to work Tawa does on behalf of clients on its operating platform.

This division comprises the results from the following service companies, in which Tawa had the following interests at the reporting date:

(1) Chiltington group of companies reported under this segment comprises all entities with the exception of the risk carrier HIR.

The service providers' net profit of $1.7 million (June 2012: profit of $0.6 million), excluding any taxation which will be eliminated on consolidation under group relief, is summarised below:

(1) Pro includes the results of Pro and Pro IS.

No dividends were paid during the period (2012: A dividend of $3.2 million was paid by Pro).

Corporate division

This division incorporates corporate costs and Group overheads, incubator costs, acquisition activities and financing resulting in a loss of $27.5 million (June 2012: loss of $9.0 million) as summarised below:

The ongoing investment in incubators remains significant. Operating costs of Q360 Limited $1.9 million (June 2012: $2.0 million), Lodestar Marine Limited $1.7 million (June 2012: $1.1 million) and STRIPE® $0.4 million (June 2012: $0.4 million) were partly offset by combined revenues of $2.2 million (June 2012: $0.3 million). As these investments represent development of new projects, it is accepted that the generation of positive cash flows will take varying amounts of time and the Group is implementing measures to control costs.

Tawa's associate Asta Capital Limited returned a trading profit for the period of $6.8 million, before finance costs of $1.2 million and adjustment for goodwill. It reported a final overall profit for the period of $3.8 million, of which Tawa has a 33.33% share. Tawa's share of the result for the period was $1.3 million profit (June 2012: loss of $0.8 million).

Prospects

The remainder of 2013 will see a continuation of efforts to grow the service business both in size and earnings. Volatility reduction and downscaling will continue for the risk carriers. At Group level, Tawa's agenda remains: deleveraging, cost savings and the restoration of an internal and external investment capacity.