1st Dec 2006 07:02
Hiscox PLC01 December 2006 NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN OR INTO, THE UNITED STATES OF AMERICA Hiscox completes sidecar transaction with WL Ross & Co - Transaction will allow Hiscox to capitalise on strong underwriting conditions- First sidecar transaction for the Lloyd's market London, UK - Hiscox has announced today that, in order to take advantage ofstrong underwriting opportunities particularly in US catastrophe risks, HiscoxSyndicate 33 ("Syndicate 33 ") has entered into a Quota Share reinsurancearrangement with Panther Re Bermuda Limited ( "Panther Re"), a $360 million(gross) Bermuda reinsurance company newly formed by WL Ross & Co. This followsthe announcement by Hiscox on 1 September 2006, that it was in discussions thatcould lead to the creation of a new reinsurer. The Quota Share agreement willallow Syndicate 33, which is managed and 72.5% owned by Hiscox, to grow its bookof property catastrophe reinsurance business during 2007 and 2008. Under the Quota Share reinsurance agreement Panther Re will assume a 40% prorata share of Syndicate 33's property catastrophe reinsurance business for the2007 underwriting year and a similar pro rata share to be agreed for the 2008underwriting year. Panther Re's sole activity will be to participate in theproperty catastrophe reinsurance business of its only client, Syndicate 33.Under the Quota Share agreement Syndicate 33 will be entitled to a cedingcommission and a profit commission based on the underwriting results of PantherRe. The financing behind Panther Re comprises $144 million of equity and $216million of term loans. WLR Recovery Fund III, L.P., a fund managed by WL Ross &Co LLC, is the lead equity investor in the business. The net proceeds of thefinancing will be placed in trust for Syndicate 33 as security for thereinsurance. Standard & Poor's Rating Services has assigned a BBB+ preliminary senior securedbank loan rating to Panther Re's proposed $72 million Term A loan and its BB+preliminary subordinated bank loan rating to Panther Re's proposed $144 millionTerm B loan. Moody's Investor Service has assigned a Baa3 rating to Panther Re'sproposed $72 million Term A loan and a Ba2 rating to Panther Re's proposed $144million Term B loan. Moody's Investor Services has also assigned a provisional(P)A3 insurance financial strength rating to Panther Re. A. M. Best Company hasassigned a BBB- rating to the Term A loan and a BB rating to the Term B loan. Goldman Sachs acted as sole financial advisor to Hiscox and lead arranger andsole bookrunner in relation to the financing. Bronek Masojada, Chief Executive Officer of Hiscox, said: "This is the firstLloyd's syndicate sidecar and we are delighted to have concluded the deal withas eminent an investor as WL Ross & Co. "Creating access to more capital will allow us to take advantage of what weperceive will be a favourable market for writing catastrophe reinsurancebusiness in 2007 and 2008. Syndicate 33 will also benefit by increasing itsmarket presence and having more control over pricing and terms and conditions. "This transaction further underlines our commitment to growing our business inLondon whilst simultaneously growing our retail business in the UK, Europe andthe USA." Wilbur L. Ross Jr., CEO of WL Ross & Co. said: "WL Ross & Co has been workingclosely with the management of Hiscox for the last three months on thistransaction and has great respect for their reinsurance expertise. Panther isour largest single investment in reinsurance. We continue to believe thatreinsurance rates and attachment levels now adequately reflect the risks ofnatural catastrophe." Ends For further information please contact: Name Company Telephone EmailBronek Masojada, Chief Executive Hiscox 020 7448 6012 [email protected] Bridges, Finance Director Hiscox 020 7448 6013 [email protected] Dupplin, Director of M & A Hiscox 020 7448 6319 [email protected] Sebastian St John Clarke,Group Communications Hiscox 020 7448 6458 [email protected] Bartch Maitland 020 7379 5151 [email protected] L. Ross, Jr WL Ross & Co. +1 917 414 5318 [email protected] Notes to editors About HiscoxHiscox plc is a specialist insurance group listed on the London Stock Exchange.There are three main underwriting parts of the Group - Hiscox Global Markets,Hiscox UK and Europe, and Hiscox International. Hiscox Global Marketsunderwrites mainly internationally traded business in the London Market -generally large or complex business which needs to be shared with other insurersor needs the international licences of Lloyd's. Hiscox UK and Hiscox Europeoffer a range of specialist insurance for professionals and business customers,as well as high net worth individuals. Hiscox International includes offshoreoperations in Bermuda and Guernsey and Hiscox USA. For more information go to www.hiscox.com About WL Ross & Co.WL Ross & Co. LCC manages over $4.5 billion in assets for institutionalinvestors in the US, Europe and Asia, where it has investments in the steel,coal, textile, automotive and financial service industries. WL Ross & Co.'sexperience in investing in insurance companies includes Montpelier Re, BlueOcean Re, Insuratex and Tong Yang Life. The principal, Wilbur L. Ross Jr., isknown for successfully restructuring companies in industries such as steel,coal, telecommunication, foreign investment and textiles. Wilbur L. Ross Jr. ison the board of International Textile Group, and International Coal Group in theUS, Blue Ocean Re, Montpelier Re Holdings Ltd, and Insuratex, Ltd. in Bermuda,and Mittal Steel Company, Nikko Electric Industry Co. Ltd., OhizumiManufacturing Co, International Auto Components, Plascar S.A. in Brazil andWagon PLC in Europe and Asia. This press release contains "forward looking statements" which include allstatements that do not relate solely to historical or current facts. All forwardlooking statements rely on assumptions concerning future events and are subjectto a number of uncertainties and other factors which could cause actual resultsto differ materially from such statements. This announcement does not constituteor form any part of any offer or invitation to subscribe for, underwrite orotherwise acquire, or any solicitation of any offer to purchase or subscribe forsecurities whether in the United States or elsewhere.Any failure to comply with this restriction may constitute a violation of USsecurities law. No securities have been or will be registered under the USSecurities Act of 1933, as amended (the "Securities Act") in connection withthis transaction and therefore may not be offered or sold in the United Statesunless they are registered under the Securities Act or pursuant to an availableexemption therefrom. No public offering of securities is being made in theUnited States. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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