24th May 2007 07:00
NOT FOR RELEASE INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN Royal & Sun Alliance Insurance Group plc ("R&SA") through its wholly-ownedsubsidiary RSA Overseas Holdings B.V. ("RSA B.V.") today announces a cash tenderoffer (the "Tender Offer") for all of the outstanding shares in Codan A/S("Codan") it does not own (the "Codan Minority Shares"). The Tender Offer isopen to all Codan shareholders (except those in Canada, Australia or Japan orany other jurisdictions in which the making of the Tender Offer or theacceptance thereof would be contrary to the laws of the relevant jurisdiction)at a price of DKK 605 per share, valuing the Codan Minority Shares at DKK 6,414million (£584 million). Consistent with R&SA's objective of maintaining financial flexibility and ratingagency capital, the Tender Offer will be funded through a combination of around£300m of equity and existing resources. The transaction will simplify the Groupstructure and capital position. The Codan Board has unanimously recommended the Tender Offer to Codan'sshareholders. The three directors who are R&SA employees did not participate inthe deliberations or the Codan Board resolution. Andy Haste, Group CEO commented "We have a strong portfolio of businesses and are committed to deliveringsustainable profitable performance. Codan is a core part of the Group. Theacquisition of the minority shareholding demonstrates the strategic importanceof Codan and enhances our platform for delivering profitable growth. Thetransaction is expected to be mildly earnings accretive in 2008 and I amconfident in the long term prospects for this business. We have made a strong start to the year and we reaffirm our expectation that theGroup will deliver a combined operating ratio of better than 95% for 2007." Tender Offer -- The consideration offered under the Tender Offer is DKK 605 in cash per Codan share. The Tender Offer, unless extended, will expire on 21 June 2007 at 20:00 (CET). If the conditions of the Tender Offer are either met or waived at this time, settlement is expected on or before 29 June 2007. -- The offer price represents a premium of 15% to Codan's closing share price of DKK 525 on 23 May 2007 and 18% to the 6-month volume weighted average. -- As Codan is core to the R&SA Group and its objective of delivering sustainable profitable performance, RSA B.V. welcomes any additional shares it can obtain. Consequently, this Tender Offer is not subject to a specific acceptance level. -- If, upon settlement RSA B.V. owns more than 90% of Codan's outstanding share capital, RSA B.V. intends to initiate compulsory acquisition procedures and seek to de-list Codan shares from the Copenhagen Stock Exchange (the "CSE"). -- Completion of any compulsory acquisition procedures is expected to be early January 2008. -- Copies of the Offer Document are available from ABN AMRO and on the R&SA website www.royalsunalliance.com. Equity placing Consistent with the objective of maintaining financial flexibility and ratingagency capital, R&SA is today undertaking a private placing of new R&SA ordinaryshares of 27.5p each (the "Ordinary Shares") to raise around £300m in connectionwith the Tender Offer (the "Placing"). JPMorgan Cazenove and Merrill Lynch are acting as joint lead managers andbookrunners (together the "Managers") to the Placing. The Placing will be fullyunderwritten by J.P.Morgan Securities Limited ("JPMSL") and Merrill Lynch(together with JPMorgan Cazenove the "Banks") and will be conducted inaccordance with the terms and conditions set out in the Appendix to thisannouncement. The Placing will be effected, subject to the satisfaction of certain conditions,by way of an accelerated bookbuild placing of Ordinary Shares (the "PlacingShares") to be launched immediately following this announcement. Thebookbuilding is expected to close today at 17:00 GMT but may be closed earlieror later at the discretion of the Managers. The Placing price of the PlacingShares will be determined by the Managers at the close of the bookbuild andannounced as soon as practicable thereafter. For further information: \* TAnalysts Press----------------------------------------------------------------------------Shona Cotterill Phil Wilson-Brown/Sarah Hilyer----------------------------------------------------------------------------+44 (0) 20 7111 7212 +44 (0) 20 7111 7047/7327----------------------------------------------------------------------------Andrew Wigg Matthew Newton (Finsbury)----------------------------------------------------------------------------+44 (0) 20 7111 7138 +44 (0) 20 7251 3801----------------------------------------------------------------------------\* T Notes to editors: 1. The R&SA Group is a leading general insurer with operations in 27 countries.It is committed to delivering sustainable profitable performance, targetedgrowth and continuous operational improvement. The business has strong positionswithin each of its markets and is well positioned to continue delivering aprofitable performance. In 2006 the Group delivered an operating result of £780million and in 2007 expects to deliver a combined ratio better than 95%. 2. Codan (together with its subsidiaries and subsidiary undertakings, the "CodanGroup") is the third largest insurer in the Nordic region and a material part ofthe R&SA Group. As reported in the R&SA Annual Report and Accounts for the yearended 31 December 2006, the Codan Group's net written premiums totalled £1.4bn,representing 25% of the net written premiums of the R&SA Group. Its mainoperations are in Denmark, Sweden, Latvia and Lithuania, with smaller operationsin Norway and Finland. 3. As reported in the R&SA Annual Report and Accounts for the year ended 31December 2006, the Codan Group made a pre-tax profit of £174 million and hadgross assets of £4,494 million. Codan has today reaffirmed its expectation ofdelivering a combined ratio of between 91-93% for 2007 (90-92% under DanishIFRS). 4. As of market close on 23 May 2007 RSA B.V. held 71.66% of Codan sharecapital, or 75.34% of the share capital excluding shares held as treasury sharesby Codan (the "Treasury Shares"). On 13 March 2007, Codan announced that it held4.89% of its share capital as Treasury Shares and Codan is currently in theprocess of canceling these shares. 5. The Codan management team will continue to be headed by its current ChiefExecutive, Rickard Gustafson. 6. The consideration per Codan share is subject to an adjustment for dividendsand other distributions, if any, declared or paid by Codan prior to thesettlement of the Tender Offer. 7. For more information about the Tender Offer, including information on allterms and conditions and instructions on how to accept the Tender Offer,reference is made to the Tender Offer document (released today through the CSE). 8. For more information on the declaration by the Codan Board in respect of theTender Offer, reference is made to Codan's announcement released today throughthe CSE. 9. The Offer Document, including the acceptance form and the advertisementpublished pursuant to Danish law requirements, will be distributed to Codan'sregistered shareholders by Codan, except to shareholders resident injurisdictions in which the Tender Offer or the acceptance thereof would becontrary to applicable law (including, but not limited to Canada, Australia andJapan). 10. The Tender Offer as well as acceptance thereof shall be subject to Danishlaw. 11. The Placing Shares will, when issued, be credited as fully paid and willrank pari passu in all respects with the existing issued Ordinary Shares,including the right to receive all dividends and other distributions declared,made or paid in respect of such Ordinary Shares after the date of issue of thePlacing Shares. 12. Application will be made to the Financial Services Authority (the "FSA") foradmission of the Placing Shares to the official list maintained by the FSA andto the London Stock Exchange (the "LSE") for admission to trading of the PlacingShares on the LSE's market for listed securities (together "Admission"). It isexpected that Admission will take place on or before 30 May 2007 and thatdealings in the Placing Shares on the LSE's main market for listed securitieswill commence at the same time. 13. In relation to the Tender Offer, R&SA has been advised by ABN AMRO, JPMorganCazenove and Merrill Lynch. For any questions on the Tender Offer documentplease contact ABN AMRO on +45 3396 1200. 14. All references to the "Group" and the "R&SA Group" refer to Royal & SunAlliance Insurance Group plc, including its subsidiaries and subsidiaryundertakings. For the avoidance of doubt, this includes the Codan sharescurrently held by RSA B.V. but not the Codan Minority Shares. 15. Exchange rate as at 23 May 2007 £1 = 10.99 DKK. Disclaimer This announcement is for information purposes only and does not constitute anoffer or an invitation to acquire or dispose of any securities or investmentadvice in any jurisdiction. In particular, this announcement does not constitutean offer to sell or issue or the solicitation of an offer to buy or subscribefor securities in the United States or any other jurisdiction and should not berelied upon in connection with any decision to dispose of Codan shares oracquire any shares issued pursuant to the proposed placing by R&SA. Thesecurities referred to in this announcement have not been and will not beregistered under the U.S. Securities Act of 1933 (the "U.S. Securities Act") andmay not be offered, sold or transferred within the United States except pursuantto an exemption from, or in a transaction not subject to, the registrationrequirements of the U.S. Securities Act. Any public offering of securities to bemade in the United States will be made by means of a prospectus that may beobtained from R&SA and that will contain detailed information about R&SA and itsmanagement, as well as financial statements. This announcement may contain "forward-looking statements" (as defined in the USPrivate Securities Litigation Reform Act of 1995) with respect to certain of theR&SA Group's (including R&SA and RSA B.V.) and/or Codan's plans and theircurrent goals and expectations relating to its future financial condition,performance and results. By their nature, all forward-looking statements involverisk and uncertainty because they relate to future events and circumstanceswhich are beyond the control of the R&SA Group (including R&SA and RSA B.V.)and/or Codan, including amongst other things, UK domestic and global economicbusiness conditions, market-related risks such as fluctuations in interest ratesand exchange rates, the policies and actions of regulatory authorities, theimpact of competition, inflation, deflation, the timing impact and otheruncertainties of future acquisitions or combinations within relevant industries,as well as the impact of tax and other legislation and other regulations in thejurisdictions in which the R&SA Group (including R&SA and RSA B.V.), Codan andtheir respective affiliates operate. As a result, the actual future financialcondition, performance and results of the R&SA Group's (including R&SA and RSAB.V.) and/or Codan may differ materially from the plans, goals and expectationsset forth in any forward-looking statements. Neither the R&SA Group (includingR&SA and RSA B.V.) or Codan undertakes any obligation to update anyforward-looking statements, save in respect of any requirement under applicablelaw or regulation. No statement in this announcement is intended to be a profit forecast and nostatement in this announcement should be interpreted to mean that earning pershare of R&SA or Codan for the current or future financial years wouldnecessarily match or exceed the historical published earnings per share ofeither company. The Banks, each of which is authorised and regulated by the FSA, are acting forR&SA in connection with the Placing and no-one else and will not be responsibleto anyone other than R&SA for providing the protections afforded to theirrespective clients or for providing advice in relation to the Placing or anymatter referred to in this announcement. Appendix - Terms and conditions of equity placing Important information on the Placing NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTOTHE UNITED STATES, CANADA, AUSTRALIA OR JAPAN IMPORTANT INFORMATION FOR PLACEESONLY REGARDING THE PLACING MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PARTIN THE PLACING. THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN AREDIRECTED ONLY AT PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING,HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THEPURPOSES OF THEIR BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERSRELATING TO INVESTMENTS AND ARE (1) QUALIFIED INVESTORS AS DEFINED IN SECTION86(7) OF FSMA, BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2.1(e)(i),(ii) OR (iii) OF DIRECTIVE 2003/71/EC (THE "PROSPECTUS DIRECTIVE") AND (2) INTHE UNITED KINGDOM FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES ANDMARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER") ORARE PERSONS WHO FALL WITHIN ARTICLE 49(2)(a) TO (d) ("HIGH NET WORTH COMPANIES,UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER (ALL SUCH PERSONS TOGETHER BEINGREFERRED TO AS "RELEVANT PERSONS"). THIS APPENDIX AND THE TERMS AND CONDITIONSSET OUT HEREIN AND THE ANNOUNCEMENT OF WHICH IT FORMS PART) MUST NOT BE ACTED ONOR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT ORINVESTMENT ACTIVITY TO WHICH THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUTHEREIN RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLYWITH RELEVANT PERSONS. PERSONS DISTRIBUTING THIS APPENDIX (AND THE ANNOUNCEMENTOF WHICH IT FORMS PART) MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. THISAPPENDIX DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANYSECURITIES IN R&SA PLC. THERE IS NO PUBLIC OFFERING OF SECURITIES OF RHINO PLC IN THE UNITED STATES. ANYSECURITIES OF RHINO PLC OFFERED OR SOLD IN THE UNITED STATES ARE NOT BEING, ANDWILL NOT BE, REGISTERED UNDER THE US SECURITIES ACT AND ARE NOT, AND WILL NOTBE, OFFERED AND SOLD, IN THE UNITED STATES, EXCEPT ON THE BASIS OF APPLICABLEEXEMPTIONS FROM REGISTRATION. FOLLOWING THE PLACING, IT MAY BE DIFFICULT FORPLACEES IN THE UNITED STATES TO ENFORCE THEIR RIGHTS AND ANY CLAIM ARISING OUTOF THE US FEDERAL SECURITIES LAWS AGAINST RHINO PLC SINCE RHINO PLC IS LOCATEDOUTSIDE OF THE UNITED STATES, AND SOME OR ALL OF THEIR OFFICERS AND DIRECTORSMAY BE RESIDENT OUTSIDE OF THE UNITED STATES. PLACEES IN THE UNITED STATES MAYNOT BE ABLE TO SUE A FOREIGN COMPANY OR ITS OFFICERS OR DIRECTORS IN A FOREIGNCOURT FOR VIOLATIONS OF THE US SECURITIES LAWS. FURTHER, IT MAY BE DIFFICULT TOCOMPEL A FOREIGN COMPANY AND ITS AFFILIATES TO SUBJECT THEMSELVES TO A USCOURT'S JUDGMENT. EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISORS AS TO LEGAL, TAX, BUSINESS ANDRELATED ASPECTS OF A PURCHASE OF PLACING SHARES. This announcement and any offer if made subsequently is only addressed to anddirected at persons in member states of the European Economic Area ("EEA") whoare "qualified investors" within the meaning of Article 2(1)(e) of theProspectus Directive (Directive 2003/71/EC) ("Qualified Investors"). By participating in the Bookbuilding and the Placing, Placees will be deemed tohave read and understood this Appendix in its entirety, to be participating,making an offer and acquiring Placing Shares on the terms and conditionscontained herein and to be providing the representations, warranties,acknowledgements and undertakings contained herein. In particular each such Placee represents, warrants and acknowledges that it: 1. is a Relevant Person and undertakes that it will acquire, hold, manage ordispose of any Placing Shares that are allocated to it for the purposes of itsbusiness; 2. in the case of a Relevant Person in a member state of the EEA which hasimplemented the Prospectus Directive (each a "Relevant Member State") whoacquires any Placing Shares pursuant to the Placing: (i) it is a Qualified Investor; and (ii) in the case of any Placing Shares acquired by it as a financialintermediary, as that term is used in Article 3(2) of the Prospectus Directive, (a) the Placing Shares acquired by it in the Placing have not been acquired onbehalf of, nor have they been acquired with a view to their offer or resale to,persons in any Relevant Member State other than Qualified Investors or incircumstances in which the prior consent of Merrill Lynch and JPMorgan Cazenove(together, the "Managers") has been given to the offer or resale; or (b) where Placing Shares have been acquired by it on behalf of persons in anymember state of the EEA other than Qualified Investors, the offer of thosePlacing Shares to it is not treated under the Prospectus Directive as havingbeen made to such persons; and 3. is acquiring the Placing Shares for its own account or is acquiring thePlacing Shares for an account with respect to which it exercises sole investmentdiscretion, and that it (and any such account) is outside the United States, orit is a dealer or other professional fiduciary in the United States acting on adiscretionary basis for non-US beneficial owners (other than an estate ortrust), in reliance on Regulation S under the Securities Act; or if it is in theUnited States, it is a QIB. This announcement (including this Appendix) does not constitute an offer to sellor issue or the solicitation of an offer to buy or subscribe for Placing Sharesin any jurisdiction including, without limitation, the United Kingdom, theUnited States, Canada, Australia or Japan. This announcement and the informationcontained herein is not for publication or distribution, directly or indirectly,to persons in the United States, Canada, Australia, Japan or in any jurisdictionin which such publication or distribution is unlawful. The Placing Shares referred to in this announcement have not been and will notbe registered under the Securities Act or with any securities regulatoryauthority of any State or other jurisdiction of the United States, and may notbe offered, sold or transferred within the United States except pursuant to anexemption from, or in a transaction not subject to, the registrationrequirements of the Securities Act. Any offering to be made in the United Stateswill be made to a limited number of QIBs pursuant to an exemption fromregistration under the Securities Act or in a transaction not involving anypublic offering. The Placing Shares are being offered and sold outside theUnited States in accordance with Regulation S under the Securities Act. The distribution of this announcement and the Placing and/or issue of thePlacing Shares in certain jurisdictions may be restricted by law. No action hasbeen taken by the Company, the Managers , or any of their respective Affiliates,that would permit an offer of the Placing Shares or possession or distributionof this announcement or any other offering or publicity material relating tosuch Placing Shares in any jurisdiction where action for that purpose isrequired. Persons into whose possession this announcement comes are required bythe Company and the Managers to inform themselves about and to observe any suchrestrictions. In this Appendix, unless the context otherwise requires, the "Company" meansRoyal and Sun Alliance Insurance Group plc and "Placee" includes a person(including individuals, funds or others) on whose behalf a commitment to acquirePlacing Shares has been given. No prospectus No prospectus or other offering document has been or will be submitted to beapproved by the Financial Services Authority (the "FSA") in relation to thePlacing and the Placees' commitments will be made solely on the basis of theinformation contained in this announcement, the Pricing Announcement and anyinformation publicly announced to a Regulatory Information Service by or onbehalf of the Company on or prior to the date of this announcement (the"Publicly Available Information"). Each Placee, by participating in the Placing,agrees that it has neither received nor relied on any information,representation, warranty or statement made by or on behalf of any of theManagers or the Company other than the Publicly Available Information and noneof the Managers, the Company nor any person acting on such person's behalf norany of their Affiliates has or shall have any liability for any Placee'sdecision to accept this invitation to participate in the Placing based on anyother information, representation, warranty or statement. Each Placeeacknowledges and agrees that it has relied on its own investigation of thebusiness, financial or other position of the Company in accepting aparticipation in the Placing. Nothing in this paragraph shall exclude theliability of any person for fraudulent misrepresentation. Details of the Placing Agreement and the Placing Shares The Managers and JPMSL (together the "Banks") have entered into a placingagreement (the "Placing Agreement") with the Company under which the Managershave undertaken, on the terms and subject to the conditions set out in thePlacing Agreement, acting severally, and not jointly or jointly and severally,to use their reasonable endeavours to procure Placees for, and the Banks (otherthan JPMorgan Cazenove) have undertaken to underwrite the Placing. The Placing Shares will, when issued, be credited as fully paid and will rankpari passu in all respects with the existing issued ordinary shares of 27.5pence per share in the capital of the Company, including the right to receiveall dividends and other distributions declared, made or paid in respect of suchOrdinary Shares after the date of issue of the Placing Shares. Application for admission to listing and trading Application will be made to the FSA for admission of the Placing Shares to theofficial list maintained by the FSA (the "Official List") and to the LondonStock Exchange for admission to trading of the Placing Shares on the LondonStock Exchange's market for listed securities (together "Admission"). It isexpected that Admission will take place on or before 31 May 2007 and thatdealings in the Placing Shares on the London Stock Exchange's main market forlisted securities will commence at the same time. Bookbuilding The Managers will today commence the Bookbuilding to determine demand forparticipation in the Placing by Placees. This Appendix gives details of theterms and conditions of, and the mechanics of participation in, the Placing. Nocommissions will be paid to Placees or by Placees in respect of any PlacingShares. The Managers and the Company shall be entitled to effect the Placing by suchalternative method to the Bookbuilding as they may, in their sole discretion,determine. Principal terms of the Bookbuilding and Placing 1. Participation in the Placing will only be available to persons who maylawfully be, and are, invited by the Managers to participate. Each of theManagers is entitled to enter bids in the Bookbuilding. 2. The Bookbuilding will establish a single price (the "Placing Price") payableto the Managers by all Placees whose bids are successful. The Placing Price andthe aggregate proceeds to be raised through the Placing will be agreed betweenthe Managers and the Company following completion of the Bookbuilding and anydiscount to the market price of the ordinary shares of the Company will bedetermined in accordance with the Listing Rules. The Placing Price will beannounced (the "Pricing Announcement") on a Regulatory Information Servicefollowing the completion of the Bookbuilding. 3. To bid in the Bookbuilding, Placees should communicate their bid by telephoneto their usual sales contact at Merrill Lynch or JPMorgan Cazenove respectively.Each bid should state the number of shares in the Company which a prospectivePlacee wishes to acquire at either the Placing Price which is ultimatelyestablished by the Company and the Managers or at prices up to a price limitspecified in its bid. Bids may be scaled down by the Managers on the basisreferred to in paragraph 7 below. Each of the Managers is arranging the Placingseverally, and not jointly, or jointly and severally, as agent of the Company. 4. The Bookbuilding is expected to close no later than 5.00 p.m. (GMT) on 24 May2007 but may be closed earlier or later at the discretion of the Managers. TheManagers may, in agreement with the Company, accept bids that are received afterthe Bookbuilding has closed. The Company reserves the right to reduce or seek toincrease the amount to be raised pursuant to the Placing, in its discretion. 5. Allocations will be confirmed orally by the relevant Manager as soon aspracticable following the close of the Bookbuilding. The relevant Manager's oralconfirmation of an allocation will give rise to a legally binding commitment bythe Placee concerned, in favour of the relevant Manager and the Company, underwhich it agrees to acquire the number of Placing Shares allocated to it on theterms and subject to the conditions set out in this Appendix and the Company'sMemorandum and Articles of Association. 6. The Company will make a further announcement following the close of theBookbuilding detailing the number of such shares to be issued and the price atwhich such shares have been placed. 7. Subject to paragraphs 4 and 6 above, the Managers may choose to accept bids,either in whole or in part, on the basis of allocations determined at itsdiscretion (in agreement with the Company) and may scale down any bids for thispurpose on such basis as they may determine. They may also, notwithstandingparagraphs 4 to 6 above, subject to the prior consent of the Company (a)allocate Placing Shares after the time of any initial allocation to any personsubmitting a bid after that time and (b) allocate Placing Shares after theBookbuilding has closed to any person submitting a bid after that time. 8. A bid in the Bookbuilding will be made on the terms and subject to theconditions in this Appendix and will be legally binding on the Placee on behalfof which it is made and except with the relevant Manager's consent will not becapable of variation or revocation after the time at which it is submitted. EachPlacee will have an immediate, separate, irrevocable and binding obligation,owed to the relevant Manager, to pay to it (or as it may direct) in clearedfunds an amount equal to the product of the Placing Price and the number ofPlacing Shares such Placee has agreed to acquire. 9. Except as required by law or regulation, no press release or otherannouncement will be made by the Managers or the Company using the name of anyPlacee (or its agent), in its capacity as Placee (or agent), other than withsuch Placee's prior written consent. 10. Irrespective of the time at which a Placee's allocation(s) pursuant to thePlacing is/are confirmed, settlement for all Placing Shares to be acquiredpursuant to the Placing will be required to be made at the same time, on thebasis explained below under "Registration and Settlement". 11. All obligations under the Bookbuilding and Placing will be subject tofulfilment of the conditions referred to below under "Conditions of the Placing"and to the Placing not being terminated on the basis referred to below under"Termination of the Placing". 12. By participating in the Bookbuilding each Placee will agree that its rightsand obligations in respect of the Placing will terminate only in thecircumstances described below and will not be capable of rescission ortermination by the Placee. 13. To the fullest extent permissible by law, none of the Banks nor any of theirAffiliates shall have any liability to Placees (or to any other person whetheracting on behalf of a Placee or otherwise). In particular, none of the Banks norany of their Affiliates shall have any liability (including, to the extentpermissible by law, any fiduciary duties) in respect of the Managers' conduct ofthe Bookbuilding or of such alternative method of effecting the Placing as theManagers and the Company may agree. Registration and Settlement If Placees are allocated any Placing Shares in the Placing they will be sent acontract note or electronic confirmation which will confirm the number ofPlacing Shares allocated to them, the Placing Price and the aggregate amountowed by them to the relevant Manager. Each Placee will be deemed to agree thatit will do all things necessary to ensure that delivery and payment is completedin accordance with either the standing CREST or certificated settlementinstructions which they have in place with the relevant Manager. Settlement of transactions in the Placing Shares following Admission will takeplace within the CREST system. Settlement through CREST will be on a T +3 basisunless otherwise notified by the Managers and is expected to occur on or before31 May 2007. Settlement will be on a delivery versus payment basis. However, inthe event of any difficulties or delays in the admission of the Placing Sharesto CREST or the use of CREST in relation to the Placing, the Company and theManagers may agree that the Placing Shares should be issued in certificatedform. The Managers reserve the right to require settlement for the PlacingShares, and to deliver the Placing Shares to Placees, by such other means asthey deem necessary if delivery or settlement to Placees is not practicablewithin the CREST system or would not be consistent with regulatory requirementsin a Placee's jurisdiction. Interest is chargeable daily on payments not received on the due date inaccordance with the arrangements set out above, in respect of either CREST orcertificated deliveries, at the rate of 2 percentage points above prevailingLIBOR. If Placees do not comply with their obligations the relevant Manager may selltheir Placing Shares on their behalf and retain from the proceeds, for its ownaccount and benefit, an amount equal to the Placing Price of each share soldplus any interest due. Placees will, however, remain liable for any shortfallbelow the Placing Price and for any stamp duty or stamp duty reserve tax(together with any interest or penalties) which may arise upon the sale of theirPlacing Shares on their behalf. If Placing Shares are to be delivered to a custodian or settlement agent,Placees must ensure that, upon receipt, the conditional contract note is copiedand delivered immediately to the relevant person within that organisation. Conditions of the Placing The Placing is conditional upon the Placing Agreement becoming unconditional andnot having been terminated in accordance with its terms. The obligations of the under the Placing Agreement are, and the Placing is,conditional on, inter alia: (a) Admission occurring no later than 8 a.m. (London time) on 31 May 2007 (orsuch later time and/or date as may be agreed between the Company and theManagers, not being later than 5 June 2007); (b) save to the extent not materially adverse in the context of the Placing, thewarranties given by the Company in the Placing Agreement being true and accurateand not misleading in any respect on and as of the date of the Placing Agreementand at any time prior to Admission; and (c) the fulfilment by the Company of its obligations under the Placing Agreementwhich are required to be performed or satisfied on or prior to Admission, saveto the extent that any non-compliance is not material in the context of thePlacing. If the conditions in the Placing Agreement are not satisfied or waived inaccordance with the Placing Agreement within the stated time periods (or suchlater time and/or date as the Company and the Managers may agree), or thePlacing Agreement is terminated in accordance with its terms, the Placing willlapse and the Placee's rights and obligations shall cease and terminate at suchtime and each Placee agrees that no claim can be made by or on behalf of thePlacee (or any person on whose behalf the Placee is acting) in respect thereof. By participating in the Bookbuilding, each Placee agrees that its rights andobligations cease and terminate only in the circumstances described above andunder "Termination of the Placing" below and will not be capable of rescissionor termination by it. The Managers may, at their joint agreement and discretion and upon such terms asthey jointly think fit, waive compliance by the Company, or extend the time and/or date for fulfilment by the Company, with the whole or any part of any of theCompany's obligations in relation to the conditions in the Placing Agreement,save that certain conditions including the condition relating to Admissionreferred to in paragraph (a) above may not be waived. Any such extension orwaiver will not affect Placees' commitments as set out in this Appendix. Neither of the Managers nor any of their Affiliates nor the Company shall haveany liability to any Placee (or to any other person whether acting on behalf ofa Placee or otherwise) in respect of any decision any of them may make as towhether or not to waive or to extend the time and/or date for the satisfactionof any condition to the Placing nor for any decision any of them may make as tothe satisfaction of any condition or in respect of the Placing generally. Termination of the Placing The Banks may, at their absolute discretion (acting in good faith) and afterconsultation with the Company where practicable, by joint notice in writing tothe Company, terminate the Placing Agreement at any time prior to Admission if,inter alia: (a) they become aware that the Company is in breach of any of its obligationsunder the Placing Agreement, save to the extent that any breach is notmaterially adverse in the context of the Placing; or (b) they become aware that any of the warranties given by the Company in thePlacing Agreement is, or if repeated at any time up to and including Admission(by reference to the facts and circumstances then existing) would be, untrue,inaccurate, incorrect or misleading, save to the extent not materially adversein the context of the Placing; or (c) there has been a material adverse change, or development reasonably likelyto involve a material adverse change, in the condition (financial, operational,legal or otherwise) or in the earnings, business affairs, solvency or, so far asthe directors of the Company are aware, prospects of the Company and the Group,whether or not arising in the ordinary course of business, since the date of thePlacing Agreement; or (d) the Banks request the Company to make a public announcement pursuant toClause 8.5 of the Placing Agreement and the Company declines to make such anannouncement; or (e) there has been or, in the good faith opinion of the Banks, it is reasonablylikely that there will occur: (i) any material adverse change in the international financial, political,economic or stock market conditions, (ii) any outbreak or escalation of hostilities, war, act of terrorism ordeclaration of emergency or martial law or other calamity or crisis; or (iii) trading in any securities of the Company has been suspended or limited bythe London Stock Exchange on any exchange or over-the-counter market, or iftrading generally on the London Stock Exchange has been suspended or limited; or (iv) a material disruption has occurred in commercial banking or securitiessettlement or clearance services in the United States or in Europe; or (v) the application of the Company for Admission is withdrawn or is refused bythe FSA or the London Stock Exchange; or (vi) a banking moratorium has been declared by the United Kingdom, in each case the effect of which (either singly or together with any of theevents in (i) to (vi) above) is such as would in the opinion of the Banks(acting in good faith) make it impracticable or inadvisable to market thePlacing Shares or to enforce contracts for sale of the Placing Shares or whichmay prejudice the success of the Placing or dealings in the Placing Shares inthe secondary market. If the Placing Agreement is terminated in accordance with its terms, the rightsand obligations of each Placee in respect of the Placing as described in thisannouncement (including this Appendix) shall cease and terminate at such timeand no claim can be made by any Placee in respect thereof. By participating in the Placing, each Placee agrees with the Company and theBanks that the exercise by the Company or the Banks of any right of terminationor any other right or other discretion under the Placing Agreement shall bewithin the absolute discretion of the Company or the Banks (as the case may be)and that neither the Company nor the Banks need make any reference to suchPlacee and that neither the Company, the Banks nor any of their respectiveAffiliates shall have any liability to such Placee (or to any other personwhether acting on behalf of a Placee or otherwise) whatsoever in connection withany such exercise. By participating in the Placing, each Placee agrees that its rights andobligations terminate only in the circumstances described above and will not becapable of rescission or termination by it after oral confirmation by theManagers following the close of the Bookbuilding. Representations and further terms By submitting a bid in the Bookbuilding, each prospective Placee (and any personacting on such Placee's behalf) represents, warrants, acknowledges and agrees(for itself and for any such prospective Placee) that: 1. it has read this announcement (including this Appendix) in its entirety andthat its purchase of the Placing Shares is subject to and based upon all theterms, conditions, representations, warranties, acknowledgements, agreements andundertakings and other information contained herein; 2. it has not received a prospectus or other offering document in connectionwith the Placing and acknowledges that no prospectus or other offering documenthas been or will be prepared in connection with the Placing; 3. if the Placing Shares were offered to it in the United States, it representsand warrants that in making its investment decision, (i) it has consulted itsown independent advisers or otherwise has satisfied itself concerning, withoutlimitation, the effects of United States federal, state and local income taxlaws and foreign tax laws generally and the US Employee Retirement IncomeSecurity Act of 1974, the US Investment Company Act of 1940 and the SecuritiesAct, (ii) it has had access to such financial and other information (includingthe business, financial condition, prospects, creditworthiness, status andaffairs of the Company, the Placing and the Placing Shares, as well as theopportunity to ask questions) concerning the Company, the Placing and thePlacing Shares that it believes is necessary or appropriate in order to make aninvestment decision in respect of the Company and the Placing Shares and (iii)it is aware and understands that an investment in the Placing Shares involves aconsiderable degree of risk and no US federal or state or non-US agency has madeany finding or determination as to the fairness for investment or anyrecommendation or endorsement of the Placing Shares; 4. (i) it has made its own assessment of the Company, the Placing Shares and theterms of the Placing based on Publicly Available Information, (ii) none of theBanks, their respective Affiliates or the Company has made any representation toit, express or implied, with respect to the Company, the Placing or the PlacingShares or the accuracy, completeness or adequacy of the Publicly AvailableInformation and (iii) it has conducted its own investigation of the Company, thePlacing and the Placing Shares, satisfied itself that the information is stillcurrent and relied on that investigation for the purposes of its decision toparticipate in the Placing; 5. the content of this announcement is exclusively the responsibility of theCompany and that none of the Banks nor any person acting on their behalf isresponsible for or has or shall have any liability for any information orrepresentation relating to the Company contained in this announcement or thePublicly Available Information nor will be liable for any Placee's decision toparticipate in the Placing based on any information, representation, warranty orstatement contained in this announcement, the Publicly Available Information orotherwise. Nothing in this Appendix shall exclude any liability of any personfor fraudulent misrepresentation; 6. it is not, and at the time the Placing Shares are acquired will not be aresident of Australia, Canada or Japan, and each of it and the beneficial ownerof the Placing Shares is, and at the time the Placing Shares are acquired willbe, (i) not in the United States and acquiring the Placing Shares in an'offshore transaction' in accordance with Rule 903 or Rule 904 of Regulation Sunder the Securities Act or (ii) a QIB acquiring the Placing Shares inaccordance with an exemption from registration under the Securities Act who hasreturned an "investor letter" substantially in the form provided, and has suchknowledge and experience in financial and business matters as to be capable ofevaluating the merits and risks of an investment in the Placing Shares, will notlook to the Banks for all or part of any such loss it may suffer, is able tobear the economic risk of an investment in the Placing Shares, is able tosustain a complete loss of the investment in the Placing Shares and has no needfor liquidity with respect to its investment in the Placing Shares andrepresents and, in the case of (ii) above, warrants that it is acquiring thePlacing Shares for its own account or for one or more accounts as to each ofwhich it exercises sole investment discretion and each of which is a QIB, forinvestment purposes and not with a view to any distribution or for resale inconnection with, the distribution thereof in whole or in part, in the UnitedStates; 7. the Placing Shares have not been registered or otherwise qualified, and willnot be registered or otherwise qualified, for offer and sale nor will aprospectus be cleared in respect of any of the Placing Shares under thesecurities laws of the United States, Australia, Canada or Japan and, subject tocertain exceptions, may not be offered, sold, taken up, renounced or deliveredor transferred, directly or indirectly, within the United States, Australia,Canada or Japan; 8. it and/or each person on whose behalf it is participating: (i) is entitled to acquire Placing Shares pursuant to the Placing under the lawsof all relevant jurisdictions; (ii) has fully observed such laws; (iii) has capacity and authority and is entitled to enter into and perform itsobligations as an acquirer of Placing Shares and will honour such obligations; and (iv) has obtained all necessary consents and authorities (including, withoutlimitation, in the case of a person acting on behalf of a Placee, all necessaryconsents and authorities to agree to the terms set out or referred to in thisAppendix) to enable it to enter into the transactions contemplated hereby and toperform its obligations in relation thereto; 9. the Placing Shares have not and will not be registered under the SecuritiesAct, or under the securities laws of any state of the United States, and arebeing offered and sold on behalf of the Company in offshore transactions (asdefined in Regulation S under the Securities Act) and to QIBs in accordance withan exemption from, or transaction not subject to, the registration requirementsunder the Securities Act; 10. the Placing Shares offered and sold in the United States are "restrictedsecurities" within the meaning of Rule 144(a)(3) under the Securities Act; 11. so long as the Placing Shares are "restricted securities" within the meaningof Rule 144(a)(3) under the Securities Act, it will not deposit the PlacingShares into any unrestricted depositary receipt facility maintained by anydepositary bank in respect of the Company's Ordinary Shares and it understandsthat the Placing Shares will not settle or trade through the facilities of DTC,the NYSE, NASDAQ or any other US exchange or clearing system; 12. it will not reoffer, sell, pledge or otherwise transfer the Placing Sharesexcept (i) in an offshore transaction in accordance with Rule 903 or 904 ofRegulation S under the Securities Act; (ii) pursuant to an exemption from, or atransaction not subject to, registration under the Securities Act (ifavailable), or(iii) pursuant to an effective registration statement under theSecurities Act and that, in each such case, such offer, sale, pledge, ortransfer will be made in accordance with any applicable securities laws of anystate of the United States; 13. if it is acquiring Placing Shares for the account of one or more QIBs, ithas full power to make the acknowledgements, representations, warranties andagreements herein on behalf of each such account; 14. if it is a pension fund or investment company, its acquisition of PlacingShares is in full compliance with applicable laws and regulations; 15. no representation has been made as to the availability of any otherexemption under the Securities Act for the reoffer, resale, pledge or transferof the Placing Shares; 16. participation in the Placing is on the basis that it is not and will not bea client of any of the Banks and that the Banks have no duties orresponsibilities to a Placee for providing protections afforded to theirrespective clients or for providing advice in relation to the Placing nor inrespect of any representations, warranties, undertakings or indemnitiescontained in the Placing Agreement; 17. it will make payment to the Managers in accordance with the terms andconditions of this announcement on the due times and dates set out in thisannouncement, failing which the relevant Placing Shares may be placed withothers on such terms as the Managers determine; 18. the person who it specifies for registration as holder of the Placing Shareswill be (i) the Placee or (ii) a nominee of the Placee, as the case may be. TheBanks and the Company will not be responsible for any liability to stamp duty orstamp duty reserve tax resulting from a failure to observe this requirement. Itagrees to acquire Placing Shares pursuant to the Placing on the basis that thePlacing Shares will be allotted to a CREST stock account of one of the Banks whowill hold them as nominee on behalf of the Placee until settlement in accordancewith its standing settlement instructions with it; 19. the allocation, allotment, issue and delivery to it, or the person specifiedby it for registration as holder, of Placing Shares will not give rise to astamp duty or stamp duty reserve tax liability under (or at a rate determinedunder) any of sections 67, 70, 93 or 96 of the Finance Act 1986(depositoryreceipts and clearance services) and that it is not participating in the Placingas nominee or agent for any person or persons to whom the allocation, allotment,issue or delivery of Placing Shares would give rise to such a liability; 20. it and any person acting on its behalf falls within Article 19(5) and/or 49(2) of the Financial Services and Markets Act 2000 (Financial Promotion) Order2005, as amended, and undertakes that it will acquire, hold, manage and (ifapplicable) dispose of any Placing Shares that are allocated to it for thepurposes of its business only; 21. it has not offered or sold and will not offer or sell any Placing Shares topersons in the United Kingdom prior to Admission except to persons whoseordinary activities involve them in acquiring, holding, managing or disposing ofinvestments (as principal or agent) for the purposes of their business orotherwise in circumstances which have not resulted and which will not result inan offer to the public in the United Kingdom within the meaning of section 85(1) of the Financial Services and Markets Act 2000 (the "FSMA"); 22. it is a qualified investor as defined in section 86(7) of FSMA, being aperson falling within Article 2.1(e)(i), (ii) or (iii) of the ProspectusDirective; 23. it has only communicated or caused to be communicated and it will onlycommunicate or cause to be communicated any invitation or inducement to engagein investment activity (within the meaning of section 21 of the FSMA) relatingto Placing Shares in circumstances in which section 21(1) of the FSMA does notrequire approval of the communication by an authorised person; 24. it has complied and it will comply with all applicable provisions of theFSMA with respect to anything done by it or on its behalf in relation to thePlacing Shares in, from or otherwise involving the United Kingdom; 25. it has not offered or sold and will not offer or sell any Placing Shares topersons in the European Economic Area prior to Admission except to persons whoseordinary activities involve them in acquiring, holding, managing or disposing ofinvestments (as principal or agent) for the purpose of their business orotherwise in circumstances which have not resulted and which will not result inan offer to the public in any member state of the European Economic Area withinthe meaning of the Prospectus Directive (which means Directive 2003/71/EC andincludes any relevant implementing measure in any member state); 26. it has complied with its obligations in connection with money laundering andterrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act2000, and the Money Laundering Regulations (2003) (the "Regulations") and, ifmaking payment on behalf of a third party, that satisfactory evidence has beenobtained and recorded by it to verify the identity of the third party asrequired by the Regulations; 27. the Company, the Banks and others will rely upon the truth and accuracy ofthe foregoing representations, warranties, acknowledgements and agreements; 28. the Placing Shares will be issued subject to the terms and conditions ofthis Appendix; and 29. this Appendix and all documents into which this Appendix is incorporated byreference or otherwise validly forms a part will be governed by and construed inaccordance with English law. All agreements to acquire shares pursuant to theBookbuilding and/or the Placing will be governed by English law and the Englishcourts shall have exclusive jurisdiction in relation thereto except thatproceedings may be taken by the Company or the Banks in any jurisdiction inwhich the relevant Placee is incorporated or in which any of its securities havea quotation on a recognised stock exchange. By participating in the Placing, each Placee (and any person acting on suchPlacee's behalf) agrees to indemnify and hold the Company and the Banks harmlessfrom any and all costs, claims, liabilities and expenses (including legal feesand expenses) arising out of or in connection with any breach of therepresentations, warranties, acknowledgements, agreements and undertakings inthis Appendix and further agrees that the provisions of this Appendix shallsurvive after completion of the Placing. Please also note that the agreement to allot and issue Placing Shares to Placees(or the persons for whom Placees are contracting as agent) free of stamp dutyand stamp duty reserve tax in the UK relates only to their allotment and issueto Placees, or such persons as they nominate as their agents, direct by theCompany. Such agreement assumes that the Placing Shares are not being acquiredin connection with arrangements to issue depositary receipts or to transfer thePlacing Shares into a clearance service. If there were any such arrangements, orthe settlement related to other dealings in the Placing Shares, stamp duty orstamp duty reserve tax may be payable, for which neither the Company nor theBanks would be responsible. If this is the case, it would be sensible forPlacees to take their own advice and they should notify the relevant Manageraccordingly. In addition, Placees should note that they will be liable for anycapital duty, stamp duty and all other stamp, issue, securities, transfer,registration, documentary or other duties or taxes (including any interest,fines or penalties relating thereto) payable outside the UK by them or any otherperson on the acquisition by them of any Placing Shares or the agreement by themto acquire any Placing Shares. The representations, warranties, acknowledgements and undertakings contained inthis Appendix are given to the Banks for itself and on behalf of the Company andare irrevocable. The Banks are acting exclusively for the Company and no one else in connectionwith the Bookbuilding and the Placing, and the Banks will not be responsible toanyone (including any Placees) other than the Company for providing theprotections afforded to their respective clients or for providing advice inrelation to the Bookbuilding or the Placing or any other matters referred to inthis press announcement. Each Placee and any person acting on behalf of the Placee acknowledges that noneof the Banks owes fiduciary or other duties to any Placee in respect of anyrepresentations, warranties, undertakings or indemnities in the PlacingAgreement. Each Placee and any person acting on behalf of the Placee acknowledges andagrees that each of the Managers may (at its absolute discretion) satisfy itsobligations to procure Placees by itself agreeing to become a Placee in respectof some or all of the Placing Shares or by nominating any connected orassociated person to do so. When a Placee or any person acting on behalf of the Placee is dealing with anyof the Managers, any money held in an account with any Manager on behalf of thePlacee and/or any person acting on behalf of the Placee will not be treated asclient money within the meaning of the relevant rules and regulations of theFinancial Services Authority which therefore will not require the Managers tosegregate such money, as that money will be held by it under a bankingrelationship and not as trustee. Past performance is no guide to future performance and persons needing adviceshould consult an independent financial adviser. All times and dates in this announcement may be subject to amendment. Therelevant Managers will notify Placees and any persons acting on behalf of thePlacees of any changes. DEFINITIONS In this announcement, unless the context otherwise requires: "Affiliate" means in respect of a person, any holding company or subsidiaryundertaking of such person or any subsidiary undertaking of any such holdingcompany, or any of their respective associated undertakings; "Banks" means Merrill Lynch, JPMorgan Cazenove and JPMSL; "Bookbuilding" means the process to be carried out by the Managers to establishdemand at different prices from potential Placees for the Placing Shares; "Company" means Royal and Sun Alliance Insurance Group plc, a companyincorporated and registered under the laws of England whose registered office isat 9th Floor, One Plantation Place, 30 Fenchurch Street, London EC3M 3BD; "FSA" means the Financial Services Authority acting in its capacity as thecompetent authority for the purposes of Part VI of the FSMA and in the exerciseof its functions in respect of the admission of securities to the Official Listotherwise than in accordance with Part VI of the FSMA; "Managers" means Merrill Lynch and JPMorgan Cazenove; "Merrill Lynch" means Merrill Lynch International Limited, a companyincorporated and registered under the laws of England and Wales whose registeredoffice is at Merrill Lynch Financial Centre, 2 King Edward Street, London EC1A1HQ; "Group" means the Company and its subsidiary undertakings; "JPMorgan Cazenove" means JPMorgan Cazenove Limited, a company incorporated andregistered under the laws of England and Wales and whose registered office is at20 Moorgate, London, EC2R 6DA; "JPMSL" means J.P. Morgan Securities Limited, a company incorporated andregistered in England and Wales and whose registered office is at 125 LondonWall, London EC2Y 5AJ "Listing Rules" means the listing rules produced by the FSA under Part VI of theFSMA and forming part of the FSA's Handbook of rules and guidance, as amendedfrom time to time; "London Stock Exchange" means London Stock Exchange plc; "Ordinary Shares" means ordinary shares of 27.5p each in the capital of theCompany; "Placees" means persons (including individuals, funds or others) on whose behalfa commitment to acquire Placing Shares has been given and Placee means any oneof them; "Placing Price" means the price per Ordinary Share at which the Placing Sharesare to be placed with Placees; "QIB" means qualified institutional buyer within the meaning of Rule 144A of theSecurities Act; "Regulation S" means Regulation S promulgated under the Securities Act; "Regulatory Information Service" means any of the regulatory informationservices included within the list maintained on the London Stock Exchange'swebsite; "Securities Act" means the United States Securities Act of 1933; "United Kingdom" or "UK" means the United Kingdom of Great Britain and NorthernIreland; and "United States" means the United States of America, its territories andpossessions, any State of the United States and the District of Columbia. Copyright Business Wire 2007Related Shares:
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