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					HUR Bulletin No.22 2009                                                                     7 September 2009
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                                     Auction Disclosure Bulletin
                                            Pre-Auction

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HUR Analysts         AUCTION DISCLOSURE BULLETIN
Alistair.Wood        This Bulletin contains all the Disclosures made to the Lloyd’s Auction Office up to close
@hpcgroup.co.uk
Tel: 020 7863 6570   of business on 4 September 2009. It also contains other Auction news, our usual
John.Francis         disclosures and syndicate and market news that we now circulate on a quarterly basis.
@hpcgroup.co.uk      Members who follow our website will have already seen a large proportion of these
Tel: 020 7863 6548
William.Lewis
                     items.
@hpcgroup.co.uk
Tel: 020 7863 6572   In the past, converting Members have received these bulletins both as a donor Member
                     and as a conversion vehicle. We have now endeavoured to remove this duplication. If
                     you should require more than one copy please contact us to request one.

                     CONTENTS                                                                            PAGE
                     AUCTION NEWS
                     Capacity Offers                     Offers Outside Auctions                               2
                     Pre-Emptions                        Lloyd’s Approval Required                             2
                     Syndicate Ratings                   Update                                                2

                     AUCTION DISCLOSURES
                     Atrium Syndicates 570 & 609         Syndicate Business Forecasts
                     Beaufort Syndicate 318              Revised Business Forecast & Pre-Emption               3
                     Chaucer Syndicate 1176              Results & Business Forecasts                          3
                     HCC Syndicate 4040                  Capacity Offer                                        4
                     HCC Syndicate 4040                  Results of Capacity Offer                             4
                     Hiscox Syndicate 33                 Proposed Transfer of Business
                     KGM Syndicate 260                   Syndicate Business Forecast
                     Kiln Syndicates 510, 557 & 807      Staff Pre-Emption
                     MAP Syndicate 2791                  2010 Pre-Emption                                      5
                     Omega Syndicate 958                 Capacity Offer Announcement                           5
                     Omega Syndicate 958                 Results of Capacity Offer                             6
                     Omega Syndicate 958                 New Underwriter                                       6
                     QBE Syndicate 386                   Capacity Utilisation                                  7
                     Sportscover Syndicate 3334          Syndicate Affected                                    7

                                                     1
HUR Bulletin No.22 2009                                                                      7 September 2009


                      SYNDICATE DISCLOSURES
                      Amlin SPS Syndicate 6106            Update on 2010 Account                                7
                      Argo Syndicate 1200                 Notes on 2010 Account                                 7

                      SYNDICATE NEWS
                      Chaucer Syndicate 4242              Change in PC Terms                                    8
                      Chaucer Syndicate 4242              Change of Auditors for 2009                           8
                      HCC Syndicate 4040                  Minority Buy-Out Latest                               8
                      KGM Syndicate 260                   Change to Claims Director                             9
                      Quarter 2 2009 Estimates            2007 & 2008 Accounts                                  9

                      MARKET NEWS
                      Amlin                               Interim Results                                   10
                      AA                                  British Insurance Premium Index                   10
                      Beazley                             Interim Results                                   10
                      Lloyd’s                             A M Best Rating                                   11
                      Lloyd’s                             Equitas Part VII Transfer Approved                11

                      HAL DISCLOSURES
                      HAL Directors & Staff               2010 Underwriting Intentions                      11
                      HAL                                 Conflicts of Interest                             12
                      HUR 2010 Syndicate Ratings          Ratings, Pre-Emptions, De-Emption &               12
                                                          Stakeholder %

                      AUCTION NEWS
                      Capacity Offers – Offers Outside Auctions
                      Members are reminded that over recent years managing agents have made offers
Reminder regarding
offers outside the    outside the auction process for syndicate capacity at prices that could exceed prices
auctions.             achieved at auction. Should Members sell their capacity they will not be eligible to
                      receive any such offer.
                      Pre-Emptions – Lloyd’s Approval Required
                      Members are reminded that the pre-emptions and de-emptions proposed by syndicates
All pre-emptions
need approving by     are subject to Lloyd’s approval and may therefore be changed after the September
Lloyd’s.              auctions have concluded. In this instance, the capacity may be tradeable in the Fourth
                      Auction in November. Capacity is therefore traded on the basis of 2009 allocations, until
                      the business plans are approved.
                      Syndicate Ratings – Update
                      Hampden's latest Syndicate Ratings are in the schedule at the back of this Bulletin. This
                      also includes the latest pre-emption and de-emption information. Two syndicates were
                      rated Provisionally Not Rated (PNR) in our recent 2009 Syndicate Profiles publications:
                      •   Syndicate 4040 – This syndicate is subject to a potential Minority Buy-Out, so
Two syndicates            remains PNR; and
remain
Provisionally Not     •   Syndicate 6106 – Whilst Amlin has now confirmed that it wishes SPS Syndicate
Rated.                    6106 to go ahead for 2010, we have yet to receive the full business plan for 2010, so
                          it also remains PNR. As soon as we receive the business plan and have assessed it,
Three syndicates’
                          we will inform Members of our rating.
ratings changed for   The rating changes for 2010 are that Syndicates 318 and 779 have both been changed
                                                      2
HUR Bulletin No.22 2009                                                                           7 September 2009

2010.                  from a “B” rating to a “C” rating and Syndicate 2791 from “B” rating to “A” rating.

                       AUCTION DISCLOSURES
                       (Text as per Managing Agents Auction disclosures. Fuller versions are available on the Lloyd’s
                       website at www.lloyds.com or the Hampden website at www.hampden.co.uk.)
                       Atrium Syndicates 570 & 609 – Syndicate Business Forecasts (D2009012) – 7 September
                       2009
                       Atrium has reviewed the current Syndicate Business Forecasts (“SBF”) for both
                       Syndicates 570 and 609 taking into account current and anticipated market conditions.
                       As a result, we anticipate that revised business forecasts will be submitted to Lloyd’s
                       this month. Our submission will be subject to final board approval which could lead to
                       further amendments to the changes outlined below.
                       At this point, we consider that there are no proposed material changes in connection for
                       the 2010 SBF for either syndicate other than those disclosed below:
                       •     For Syndicate 609, we anticipate a reduction in the premium income in the energy
                             class from £48.6m to £44.6m and an increase in premium income in the aviation
Atrium announced a
business forecast            hull and liability class from £31.2m to £35.5m. The movement in overall planned
change in premium            premium income is an increase from £242.4m to £245.0m; and
income/
                       •     For Syndicate 570, we anticipate an increase in premium income in the Marine,
                             Aviation and Transport class from £17.0m to £21.1m. The movement in the
                             overall planned premium income is an increase from £123.4m to £127.5m.
                       We will provide updated summaries to Members’ Agents and direct capital providers
                       when the SBF is approved by the board and submitted to Lloyd’s. The Syndicates’ SBFs
                       are subject to final approval by the Franchise Performance Directorate.
                       Beaufort Syndicate 318 – Revised Business Forecast & Pre-Emption (D2009007) – 3
                       September 2009
                       Beaufort Underwriting Agency Ltd will be submitting a revised 2010 Syndicate
                       Business Forecast (‘SBF’) to Lloyd’s in respect of Syndicate 318. This follows a review of
                       the underlying assumptions included within the initial submission, with particular
                       reference to anticipated market conditions for 2010.
                       As a result, premium income estimates for 2010 year of account for the core Worldwide
Beaufort reduces       Property account have been reduced by approximately £20m, in view of the levels of
Syndicate 318’s pre-   rate increases likely for 2010 now being less than was originally projected. However,
emption.
                       with rates in the Airline sector continuing to rise, a small increase to forecast premium
                       income in respect of the Aviation account of approximately £3m has been allowed.
                       Therefore, overall Gross Premiums for the 2010 year of account are now expected to be
                       £197m, down from our initial forecast figure of £214m.
                       On the basis of the original SBF proposal, a pre-emption offer of 25% was made to
                       Members which, if fully taken up, would have increased the Syndicate’s capacity to
                       some £252m for the 2010 year of account. The Board of Beaufort has reviewed the level
                       of capacity required to support the revised business forecast and has concluded that
                       this level of increase is no longer appropriate. Accordingly, a revised pre-emption offer
                       of 11.5% will now apply, taking the Syndicate’s capacity to £225m for the 2010 year of
                       account.
                       Members have previously indicated their support for the Syndicate’s proposed pre-
                       emption of 25%, on the basis that this was subject to any revision downwards, or if the
                       amount subsequently approved by the Franchise Board was less. Accordingly, it has
                       been agreed with the Franchise Board that the views of members need not be sought in
                       respect of this change.
                                                         3
HUR Bulletin No.22 2009                                                                        7 September 2009


                      Chaucer Syndicate 1176 – Results & Business Forecasts (D2009006) – 3 September 2009
                      The latest forecast results for the 2007 and 2008 years of account of Syndicate 1176 that
                      have been included in the second quarter 2009 QMR are as follows:
                      Year of          Capacity             Current Forecast                 Previous Forecast
Syndicate 1176’s
2007 & 2008           Account           (£m)                     (%)                               (%)
forecasts improve.    2007               27.5                +42.5 to +52.5                   +40.0 to +50.0
                      2008               27.5                +30.0 to +45.0                   +20.0 to +40.0
                      The above forecasts include the deduction of Names’ expenses, which comprise
                      personal expenses, including Managing Agent’s fees and profit commissions, but
                      exclude the fees of Members’ Agents. These forecasts are subject to the usual caveats
                      applicable to Lloyd's syndicate results forecasts, and accordingly are subject to revision
                      in due course.
                      Business forecast
                      In June 2009, Chaucer Syndicates Limited submitted the 2010 Syndicate Business
                      Forecast (SBF) for Syndicate 1176, which proposed an underwriting capacity of £31.5m.
                      Allocation of Syndicate Capacity to the Active Underwriter
                      Having received the requisite levels of approval from the members of Syndicate 1176,
The Underwriter
                      and subject to completion of contractual negotiations, Chaucer Syndicates Limited
takes additional
capacity.             intends to allocate an additional £160,000 of capacity to a corporate name controlled by
                      Michael Dawson, the current Active Underwriter, for the 2010 year of account.
                      Restrictions to prevent the transfer of that capacity persist until coming into line for the
                      2010 year of account. The capacity will not have voting rights.
                      This will increase the proposed capacity for 2010 to £31.66m from £31.5m. The proposed
                      2010 capacity is subject to SBF approval by Lloyd’s.
                      If Michael Dawson ceases to be Active Underwriter of the Syndicate, then that capacity
                      will be cancelled, except in certain circumstances. In addition, if the corporate name has
                      insufficient Fund’s at Lloyd’s to support all or part of the capacity, then that part which
                      is unsupported will revert to Chaucer Syndicates Limited for cancellation.
                      The purpose of the capacity allocation is to both act as a retention mechanism for the
                      Active Underwriter and to align further his interests with those of the capital providers
                      as a whole.
                      Hiscox Syndicate 33 – Proposed Transfer of Business (D2009013) – 7 September 2009
                      The board of Hiscox Underwriting Limited (HUL), the Hiscox owned UK service
                      company, has informed HSL that it intends renewing the Hiscox Events account (event
Change in business
plan for selected
                      cancellation insurance) and pilot's loss of licence account, currently underwritten by
sectors involving     Syndicate 33, into Syndicate 3624 for 2010, subject to business plan approval from
£7m of income.        Lloyd's. The business which accounts for approximately £7m of Stamp GWP in 2009
                      and 2010 is completely sourced through the Hiscox owned distribution network. This
                      proposed change will be reflected in the next SBF submission on 18th September.
                      HCC Syndicate 4040 – Capacity Offer (D2009003) – 22 July 2009
                      Nameco (No. 808) Limited, a member of the HCC group of companies which provides
Capacity Offer made
by HCC on             87.43% of the syndicate allocated capacity of Syndicate 4040 for the 2009 year of
Syndicate 4040 at     account, made an offer to acquire all Syndicate capacity for the 2010 and each
15p.                  subsequent year of account that it does not already own.
                      HCC Syndicate 4040 – Results of Capacity Offer (D2009004) – 27 August 2009
                      The offer by Nameco (No. 808) Limited (“Nameco 808”) – a member of the HCC group
                      of companies which currently provides 87.43 per cent of the syndicate allocated

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HUR Bulletin No.22 2009                                                                          7 September 2009

                          capacity of Syndicate 4040 (the “Syndicate”) for the 2009 year of account - to acquire all
                          of the prospective participations in respect of the Syndicate for the 2010 and each
                          subsequent year of account (“capacity”) not already owned by Nameco 808 (the
                          “Offer”) closed at 4.00pm on 18 August 2009.
                          As at the time of the Offer closing, acceptances had been received from 185 of the 205
185 Members out of
205 accept the Offer.
                          other members of the Syndicate in respect of £6,143,586 of capacity, representing in
                          aggregate 91% of the non-Nameco 808 capacity of £6,780,917.
                          The member’s syndicate premium limits in respect of the Syndicate for the 2009 year of
                          account of acceptors of the Offer, when taken together with the member’s syndicate
                          premium limit in respect of the Syndicate for the 2009 year of account of Nameco 808,
                          represent 99% of the total syndicate allocated capacity of the Syndicate for the 2009 year
                          of account.
                          On 19 August 2009 an application was made for consent to make a minority buy-out of
Minority Buy-Out          the third party capacity currently remaining on Syndicate 4040. Given that the minority
applied for by HCC.       buy-out application will not have been determined before the commencement of
                          auctions 1 and 2, Lloyd’s has suspended trading of Syndicate 4040 capacity, pending its
                          decision on the application.
The Offer will lapse      If Lloyd’s does not grant permission for a minority buy-out on or before 24 September
if this is not granted.   2009 and the Offer lapses, persons who had accepted the Offer and who wish to dispose
                          of their Capacity will have an opportunity to do so in auction 3 on 29/30 September
                          2009.
                          There is now a period of 21 days (commencing on 19 August) in which non-accepting
                          members may make representations to Lloyd’s, following which a Lloyd’s committee
                          will meet to consider the application.
                          KGM Syndicate 260 – Syndicate Business Forecast (D2009014) – 7 September 2009
                          The KGM Board has reviewed the current 2010 Syndicate 260 business forecast for
                          syndicate 260 in the light of current and anticipated market conditions.
KGM’s Syndicate
260 will now not be       For 2010 we now anticipate maintaining our 2009 syndicate capacity of £72,499,808 and
pre-empting.              therefore not proceeding with the proposed 2010 pre-emption of 7.441%. A revised
                          syndicate business forecast will be submitted to Lloyd’s later this month.
                          Kiln Syndicates 510, 557 & 807 – Staff Pre-Emption (D2009011) – 7 September 2009
                          The Syndicate Pre-emption Byelaw (“the Byelaw”) permits the allocation of syndicate
                          managed capacity to "agency staff" participating via a Limited Liability Partnership
                          (LLP). The R J Kiln & Co “agency staff” are in the process of setting up an LLP for the
                          2010 year of account.
                          It is too early to confirm the level of participation for the 2010 year of account.
                          However, we would wish, should there be demand, to allocate capacity to staff and
Staff pre-emption         consequently we are writing to seek members’ consent to enable us to take advantage of
for Kiln syndicates.      the ability under the Byelaw to allocate up to 2% of capacity on syndicates 510, 557 and
                          807 for the 2010 year of account.
                          It is expected that the following conditions would be required before consent is granted,
                          namely the capacity would be non-voting, dropped capacity will be cancelled by the
                          Managing Agency and not reallocated to the Aligned Corporate Member and the
                          aggregate capacity allocated will not exceed more than 2% of the stamp capacity (for
                          each syndicate) in any one year of account.
                          In accordance with the Byelaw, please take this as notice of our intention to allocate
                          capacity as detailed above, and request that you confirm your approval in principle by
                          the end of the consultation period on the 22nd September.

                                                          5
HUR Bulletin No.22 2009                                                                        7 September 2009

                        MAP Syndicate 2791 – 2010 Pre-Emption (D2009010) – 4 September 2009
                        Pre-emption to £500m Capacity for 2010
                        Following support from capital providers for the proposed pre-emption of syndicate
                        2791 for 2010 to £500m (equivalent to a 23.771% increase on 2009 capacity), MAP has
The pre-emption on      formally offered the members of the syndicate their pre-emption entitlement in
Syndicate 2791is
subject to FPD
                        accordance with the Syndicate Pre-emption Byelaw. That offer is conditional on the
approval.               proposed increase being approved by the Franchise Performance Directorate (FPD) as
                        part of MAP’s business plan submission. In the event that a lower increase is approved
                        by the FPD, pre-emption entitlements being offered will reduce accordingly.
                        Staff Pre-emption
                        MAP has further received the support of its capital providers to enable it to allocate up
Staff pre-emption on
Syndicate 2791.
                        to 2% of capacity on syndicate 2791 to staff participating on syndicate 6103, to enable
                        them to achieve some additional diversification relief. At this stage, we are unable to
                        determine the amount of the staff pre-emption, however in the context of syndicate
                        2791’s overall capacity, it is likely to be de minimis.
                        Omega Syndicate 958 – Capacity Offer Announcement (D2009001) – 2 June 2009
                        Omega announced on 2 June 2009 that it would be making an offer on behalf of Omega
                        Dedicated Limited (“ODL”), a wholly-owned subsidiary of Omega, to acquire capacity
                        on Syndicate 958 not already owned by the Omega group for the 2010 and each
                        subsequent year of account (the “Capacity Offer”).
                        The Capacity Offer is a limited offer to acquire capacity up to a limit between £50
Omega made an           million and £125 million of Syndicate 958’s allocated capacity for 2009 (“Syndicate
Offer of 40p per £ of
                        Capacity”), not already owned by the Omega group, equating approximately to
capacity on
Syndicate 318 in        between 20 per cent. and 50 per cent. of Syndicate Capacity. The Capacity Offer
June.                   comprises a Share Offer with a Cash Alternative (as described below).
                        The final amount of capacity that Omega will acquire will depend upon the level and
                        type of acceptances as between the Share Offer and the Cash Alternative. The maximum
                        amount of capacity which Omega may acquire is £125 million (the “Maximum
                        Amount”).
                        Overview
                        •    Capacity Offer to acquire additional capacity on Lloyd's Syndicate 958 by way of
                             a Share Offer with a Cash Alternative
                        •    Depending upon the level and type of acceptances as between the Share Offer and
                             the Cash Alternative the limit of the Capacity Offer is between £50 million and
                             £125 million
                        •    Share Offer of 0.332 of a new common share per £1 of capacity equating to a value
                             of 45 pence per £1.00 of capacity
                        •    Cash Alternative of 40p per £1 of capacity
                        •    Capacity Offer to close on 1 July 2009
                        •    Application by Omega for admission to the Official List of the UK Listing
                             Authority with effect from 7 July 2009
                        Omega Syndicate 958 – Results of Capacity Offer (D2009002) – 2 July 2009
                        Overview
                        •    Omega has received valid acceptances in respect of approximately £45.7 million of
                             capacity, representing approximately 21.9 per cent. of the outstanding capacity on
                             Syndicate 958 not already owned by the Company (equating to 18.3 per cent. of
                             all outstanding capacity on Syndicate 958)
                        •    As a result of the Capacity Offer, Omega will own and provide capital support to
                             34.7 per cent. of the total capacity on Syndicate 958 for the 2010 and each

                                                        6
HUR Bulletin No.22 2009                                                                       7 September 2009

Offer acceptances of         subsequent year of account
£45.7m, so Omega’s      •    Members elected to receive new common shares of US$0.10 each under the Share
share of the                 Offer in respect of approximately £5.4 million of capacity. The consideration
syndicate is now
34.7%.                       under the Share Offer amounts to 0.332 of a new Common Share in the capital of
                             the Company per £1.00 of Capacity, representing in aggregate 1,786,540 new
                             Common Shares
                        •    Members elected to receive cash under the Cash Alternative in respect of
                             approximately £40.4 million of Capacity. The consideration payable under the
                             Cash Alternative amounts to 40p in cash per £1.00 of Capacity. Approximately
                             £16.1 million in cash will be paid to Members under the Cash Alternative
                        Omega Syndicate 958 – New Underwriter (D2009008) – 4 September 2009
                        Omega previously announced on 10th March 2009 that Daria Vanous would be
                        succeeding John Robinson as Active Underwriter of Syndicate 958 for the 2010 year of
Daris Vanous is
                        account. Given that the significant majority of planned business for 2009 has now been
becoming
Underwriter of          written, at this juncture the focus of work on Syndicate 958 is now on finalising the
Syndicate 958 earlier   business plan for 2010, which is subject to approval by Lloyd’s, and preparing for the
than planned.
                        renewal of business during the fourth quarter. Consequently, Omega announces that
                        Ms. Vanous is assuming the role of Active Underwriter of Syndicate 958 with
                        immediate effect and that Mr. Robinson is now standing down as the Active
                        Underwriter and as a director of Omega Underwriting Agents Limited (OUAL). Mr.
                        Robinson will continue in his role as Chief Underwriting Officer and as a director of
                        Omega Insurance Holdings Limited.
                        Members’ agents have now given their approval for the Syndicate’s capacity to be
                        increased by 12% for the 2010 year of account. This will result in the Syndicate having
                        an effective capacity for 2010 of GBP 280m (2009 - GBP 250m). At the time of the
The pre-emption for     request for the pre-emption members of the Syndicate were provided with details of the
2010 reduced to 12%
and subject to
                        latest plan for 2010 (“the Latest plan”). That plan showed forecast stamp written
Lloyd’s approval.       premium income on a Lloyd’s basis of GBP 257.5m. This figure is based upon Lloyd’s
                        2010 business plan exchange rates.
                        Daria Vanous, together with the OUAL Board, is continuing to keep this latest plan
                        under regular review. This review takes into account additional market information as
                        it becomes available. The OUAL Board will meet to agree the final plan prior to its
                        submission to Lloyd’s which is due on the 18th September.
                        As was stated in the Capacity offer document issued by Omega in June and again in the
                        pre-emption request letter sent to members’ agents in July, all syndicate business plans
                        and associated ICAs are to be approved by Lloyd’s. Such approvals are required prior
                        to any business being able to be underwritten by the syndicate for the 2010 year of
                        account. Lloyd’s have the right to require changes to business plans submitted prior to
                        approval being granted. Members are therefore reminded that information contained in
                        the final plans to be submitted on 18th September are subject to review by Lloyd’s and
                        that following the conclusions of that review the plan may be subject to amendment.
                        Similarly any subsequent changes felt necessary to the plan would require Lloyd’s prior
                        approval.
Roger Morgan            At the same time in light of having served in excess of 10 years on the OUAL Board as
succeeded by John       non executive Chairman, Roger Morgan has tendered his resignation from the board of
Powell as Chairman
of OUAL.                OUAL. The new Chairman of the Board, subject to Lloyd’s approval, is John Powell
                        who currently serves on that Board as a non executive. Daria Vanous has also been
                        appointed as a director of OUAL.



                                                        7
HUR Bulletin No.22 2009                                                                        7 September 2009

                        QBE Syndicate 386 – Capacity Utilisation (D2009009) – 4 September 2009
                        As advised in our letter to members’ agents of 19th June 2009, it is proposed to increase
Pre-Emption of 7.4%
on Syndicate 386 is     Syndicate 386’s capacity from £339.9m to £365.0m for 2010, representing a 7.4% pre-
subject to Lloyd’s      emption. This was supported by an original 2010 Syndicate Business Forecast (SBF)
approval.               submission to Lloyd’s in June, with a projected gross income (net of commissions) for
                        the year of £339.4m, representing a projected capacity utilisation of 93.0%.

                        The final SBF submission due to Lloyd’s on 18th September 2009 remains subject to
                        approval by both QBE Underwriting Limited and Lloyd’s, however is materially
                        unchanged from the original, albeit with a revised projected gross income of £357.5m,
                        resulting in a projected capacity utilisation of 97.9%.
                        Sportscover Syndicate 3334 – Syndicate Affected (D2009005) – 27 August 2009
                        The current limited tenancy arrangement in respect of Syndicate 3334 expires at 31
                        December 2010. Existing supporters of the Syndicate are, therefore, free to trade
The current Limited
                        capacity in the 2009 auction process although any capital providers intending to
Tenancy Agreement
on Syndicate 3334       purchase capacity on the Syndicate for 2010 should be aware that, currently, there will
expires at the end of   be no security of tenure beyond that year. Any renewal of the existing limited tenancy
2010.
                        arrangements will be at the discretion of the managing agent at the time.
                        Subject to the necessary approval, it is proposed that the capacity of Syndicate 3334 will
                        be increased from £20 million to £25 million for 2010.

                        SYNDICATE DISCLOSURES
                        Amlin SPS Syndicate 6106 – Update on 2010 Account
                        Amlin is working on its business planning for the 2010 account of Syndicate 6106. Last
                        year, interest was expressed in continuing to participate in this special purpose
                        syndicate reinsuring Amlin Syndicate 2001’s reinsurance book beyond the 2009 year of
                        account. Amlin could not give any definite commitment at that time both because of
Amlin wishes to         Lloyd’s rules and uncertainties as to the trading environment.
continue with SPS
Syndicate 6106 for      Based upon its analysis of market conditions, Amlin would like to re-constitute SPS
2010.                   6106 for the 2010 year of account. Amlin would be looking for a minimum of the
                        current £50m of capacity on the same 15% quota share basis of the present arrangement.
                        However, depending on rate developments later in the year in the run up to 1/1
                        renewals, there might be an opportunity to increase the capacity to up to £70m. Amlin
                        will keep Members advised of developments in this regard.
                        Argo Syndicate 1200 – Notes on 2010 Account
                        Year of account forecasts: The Syndicate open year of account forecast ranges at Q2
                        2009 remain unchanged. As Argo have previously advised, at Q1 2009, Syndicate 1200
2008 estimates
deteriorated at Q2
                        2008 year of account ultimate claims were revised upwards due to deterioration in the
2009 but could          results of North American Property Binders, Property Fac, UK and European Property
improve if it is a      Binders and Personal Accident. The Syndicate 1200 2008 year of account mid-point
benign catastrophe
                        results forecast was reduced to minus 7.2% return on premium capacity, reflecting the
season.
                        result of the reserving exercise, which was completed during Q2 2009. Argo asks
                        Members to note that this results forecast includes a claim provision of £18.6m in
                        respect of future catastrophe events. Should we experience a no cat 2009 season this
                        will improve results by approximately 5.7% of capacity. The 2008 year of account
                        premium is now 75% earned.
                        Annually accounted result 2009 year to date: The Syndicate 1200 result for the 2009
                        year to date was a loss of £32.6m (a loss of £5.1m before a non monetary adjustment of
                        £14.1m and a foreign exchange loss of £13.4m). This compares to a profit of £6.3m at the
                                                        8
HUR Bulletin No.22 2009                                                                            7 September 2009

                        same period of 2008.
                        2010 year of account business plan: This shows a profit of £36.8m on gross premium
                        written of £416.1m, giving a 94% combined ratio. Argo has repositioned the portfolio,
                        withdrawing from US Liability and downsizing the North American Property Binders,
                        Personal Accident and International Treaty classes.
                        Argo are continuing to optimise their portfolio and will be releasing the final 2010
                        business plan on the 18th September, 2009 which they expect will show an improved
                        result from the first draft as a result of certain measures designed to increase
2010 business plan      profitability by reducing volatility in the property portfolio. In addition, Argo are
has been                focusing on those parts of the Personal Accident account which maximized their profit
repositioned to
reduce volatility.      potential. Finally, Argo plan to increase their liability writings in those lines where they
                        have had historic success, as long as market conditions are right to do so.
Longer term plan is
to increase liability   Argo’s proposed syndicate ECA is £215m generating a 17% return on capital. Capital
business.               providers will have their own individual ECA which is likely to produce a more
                        advantageous return on capital figures.

                        SYNDICATE NEWS
                        Chaucer Syndicate 4242 – Change in PC Terms
                        Profit commission is charged by both Chaucer, the managing agency, and ICAT.
                        Chaucer charges 5% PC and ICAT originally planned to charge 7.5%, making the total
                        PC 12.5%. However, for those Members who are currently underwriting on the
                        syndicate and continue for the 2010 Account, and those Members who join the
                        syndicate for the 2010 Account, the terms of the managing agency profit commission
                        have been amended. The reason for the change is that ICAT seeks to maintain its
                        return on capital to capital providers, despite increased reinsurance costs compared to
                        the original business plan.
                        ICAT will not charge its 7.5% profit commission if the syndicate result, before the
                        deduction of the Chaucer PC, falls below $9.64m for the 2009 Account, which based on
PC terms amended        the business plan rate of exchange ($1.5:£1) equals 7.7% of capacity. If the profits fall
to include hurdle for
the PC payable to       between 7.7% and 8.3% of capacity, 100% of the excess over 7.7% shall then be payable
ICAT.                   to ICAT. ICAT will then charge 7.5% on profits in excess of 8.3% of capacity. Chaucer
                        will continue to charge PC of 5% on all profits.
                        Chaucer Syndicate 4242 – Change of Auditors for 2009
                        Chaucer has recommended that Members should appoint KPMG LLP as the syndicate
Syndicate 4242’s
auditors to change.     auditor for Syndicate 4242. Chaucer previously planned to reappoint Ernst & Young
                        LLP as the syndicate’s recognised accountant for 2009, but they now recognise that in
                        order to facilitate a smoother process it would be more beneficial for the syndicate to
                        align with that of the ICAT Group.
                        HCC Syndicate 4040 – Minority Buy-Out Latest
                        Members had until 18 August 2009 to accept the offer by Nameco (No. 808) Limited
                        (“Nameco 808”) to acquire all of the prospective participations in respect of Syndicate
                        4040 (the “Syndicate”) for the 2010 and each subsequent year of account not already
                        owned by Nameco 808.
Members have 21         Those Members who did not accept this Offer now have 21 days following from 19 August 2009
days from 19 August
to object to the        to make representations to Lloyd’s (for the attention of the Conversion Official) concerning
Minority Buy-Out.       HCC’s application to effect a minority buy-out in respect of the Syndicate for the 2010 year of
                        account.



                                                          9
HUR Bulletin No.22 2009                                                                                                          7 September 2009

                      KGM Syndicate 260 – Change to Claims Director
                      The employment of Martyn Hardy, KGM Claims Director, ceased by mutual agreement
                      on 31 May 2009. The KGM Board has enacted a Committee with authority to manage
                      communications to all key stakeholders, ensure cover for all Claims Director duties &
Claims director has   responsibilities during the transition period, to establish criteria for and manage the
left and been
replaced by a
                      recruitment process of a suitable replacement, to ensure that any and all conflicts of
committee in the      interest arising from the transition arrangements are covered and that all Executive and
interim.              Board reporting requirements are met. This Committee may assign duties and
                      responsibilities to individuals, subject to its own over-riding duties and responsibilities.
                      The members of the Committee are Colin Hart (CEO and Active Underwriter), Adam
                      Seager (Risk & Compliance Director) and Nina Fenwick (Group HR Manager).
                      Quarter 2 2009 Estimates – 2007 & 2008 Accounts
                      Below is a schedule setting out the latest 2007 and 2008 account estimates as at the end
                      of the second quarter of 2009:
                          Syndicate     Managing      2007       Worst         Best    Mid      Previous     2008       Worst    Best     Mid      Previous
                                         Agent      Account       %             %       %          %       Account       %        %        %          %
                                                    Capacity                                               Capacity
                                                     £000s                                                  £000s

                                   33   Hiscox        874,151     17.0         25.0     21.3        13.8     699,608      0.0      7.5      3.8         3.8
                                  218   Equity        420,055      3.5          8.5      6.0         6.0     420,441      2.4      7.4      4.9         4.9
                                  260   KGM            49,936    (12.5)        (7.5)   (10.0)      (6.6)      53,567     (7.7)    (2.7)    (5.2)       (1.4)
                                  308   Kiln           14,663      4.2          9.2      6.7         5.4      14,663     10.1     15.1     12.6        10.1
                                  318   Beaufort      201,581     (6.4)        (1.4)    (3.9)      (3.1)     201,514    (15.2)   (10.2)   (12.7)      (12.8)
                                  386   QBE           339,316     37.0         42.0     39.5        25.8     339,653     14.9     19.9     17.4        12.4
                                  510   Kiln          733,718      7.5         12.5     10.0         9.9     587,453      3.0      8.0      5.5         6.4
                                  557   Kiln          119,671     12.1         17.1     14.6        16.8     119,293      7.6     12.6     10.1         9.6
                                  570   Atrium        124,736     10.0         15.0     12.5        12.5     125,352      0.0     10.0      5.0         5.0
                                  609   Atrium        214,862      0.0          5.0      2.5         2.5     215,348      2.5     12.5      7.5         5.0
                                  623   Beazley       163,122     11.5         16.5     14.0        14.0     158,230      5.5     10.5      8.0         8.0
                                  727   Meacock        73,492     10.0         17.0     13.5        13.5      73,682      3.5     13.5      8.5         8.5
                                  779   Jubilee        37,973      3.6          8.6      6.1         6.1      30,000      2.1      7.1      4.6         3.8
                                  780   Advent        150,527     13.5         18.5     16.0        16.0     135,000    (20.0)   (15.0)   (17.5)      (17.5)
                                  807   Kiln          120,242      5.6         10.6      8.1         9.1     120,329      2.7      7.7      5.2         6.1
                                  958   Omega         275,000     12.5         17.5     15.0        15.0     248,895      0.0     10.0      5.0         5.0
                              1176      Chaucer        27,509     42.5         52.5     47.5        45.0      27,509     30.0     45.0     37.5        30.0
                              1200      Heritage      259,749      5.0          9.0      7.0         7.0     325,400     (8.0)     2.0     (3.0)       (3.0)
                              2007      Novae         360,000      2.5          7.5      5.0         5.0     360,000     (5.0)     0.0     (2.5)        0.0
                              2010      Cathedral     299,738     10.0         15.0     12.5        12.5     299,715      2.5      7.5      5.0         5.0
                              2121      Argenta        89,447      8.0         13.0     10.5         9.5     112,421      1.0      6.0      3.5         4.8
                              2525      Max            41,868     16.3         21.3     18.8        13.1      41,848     (3.8)     3.8      0.0         0.0
                              2526      Max            31,797     16.1         21.1     18.6        12.9      31,689      4.4     11.9      8.1         6.3
                              2791      MAP           459,166     19.0         24.0     21.5        21.5     400,588      4.0      9.0      6.5         5.0
                              3245      Heritage       54,833      7.5         12.5     10.0        10.0
                                        Sportscov
                              3334      er             15,000      3.0          8.0      5.5         7.5      14,987     10.0     20.0     15.0        17.5
                              4040      HCC            53,758     (9.4)        (4.4)    (6.9)      (5.8)      53,908      0.5      5.5      3.0         3.0
                              6101      Argenta       100,994      5.0         10.0      7.5         7.5     100,739     (3.5)     4.0      0.3         0.3
                              6102      Argenta        54,516      5.0         10.0      7.5         7.5      54,531     (3.5)     4.0      0.3         0.3
                              6103      MAP            42,696     35.0         40.0     37.5        41.5      39,452      7.5     12.5     10.0        10.0
                              6104      Hiscox                                                                34,475     22.5     30.0     26.3        17.5
                              6105      Ark                                                                   19,950      4.7      9.8      7.3        11.0
                          Other 100% Corp           10,655,722     7.4         12.7     10.1         8.7   10,645,515    (1.1)     5.1      2.0         2.6
                          Total                     16,459,838     8.7         14.0     11.3         9.8   16,105,755    (0.5)     5.8      2.7         3.0


                      MARKET NEWS
                      (The full details on most of the following items can be found at links on the Hampden Website –
                      www.hampden.co.uk. This information is also available in hardcopy upon request.)


                                                                          10
HUR Bulletin No.22 2009                                                                        7 September 2009

                        Amlin – Interim Results
                        Amlin announced its latest interim results on 24 August 2009, the highlights of which
                        were:
                        Highlights
                        •     Annualised first half return on equity of 27.4% (H1 2008: 20.6%), above our long
                              term target of 15%;
Amlin plc’s H1 2009     •     Profit before tax up 29.0% to £177.1m (H1 2008: £137.3m);
profit up on H1 2008.   •     Record profit after tax of £167.0m, up 54.5% (H1 2008: £108.1m);
                        •     Underlying profit before tax, excluding foreign exchange impact of net non-
                              monetary liabilities and gain on Amlin Bermuda sterling assets, up 52.8% to
                              £210.8m (H1 2008: £138.0m);
                        •     Combined ratio 73% (H1 2008: 67%) with an underwriting contribution of
                              £135.3m (H1 2008: £148.7m)
                        •     Improved investment return of 1.6% (H1 2008: 0.7%) generating an increased
                              investment contribution of £53.1m (H1 2008: £22.5m)
                        •     Earnings per share increased 54.4% to 35.2p (H1 2008: 22.8p)
                        •     Interim dividend increased 8.3% to 6.5p per share (H1 2008: 6.0p per share)
                        •     Acquisition of Fortis Corporate Insurance N.V. (now Amlin Corporate Insurance
                              N.V.) completed on 22 July 2009: integration proceeding well
                        •     Pricing environment continuing to improve in line with expectations
                        AA – British Insurance Premium Index
                        Car insurance premiums are rising at their fastest rate for nearly a decade and increased
                        by more than 1 per cent per month over the past quarter, according to the latest
                        benchmark AA British Insurance Premium Index was released on 30 July 2009.
                        Between April and June the average quoted premium for an annual comprehensive car
AA insurance index      insurance policy increased by 3.5% to £778.13 and, for the year ending June 2009,
shows motor
premiums rising in      premiums rose by more than 11%. Average quoted premium for third party, fire and
2009.                   theft (TPFT) insurance, typically bought by young and inexperienced drivers, rose by
                        4.6 % over the quarter to £968.22 and by 6.9% over the year. A growing number of
                        insurers are withdrawing TPFT cover and only around half will quote for drivers aged
                        under 21, who make 10 times more claims than drivers aged 35. The AA expects rates
                        to rise by 10% or more this year.
                        Beazley – Interim Results
                        Beazley announced its interim results on 27 July 2009. The financial highlights were as
                        follows:
                        •    Profit before tax and foreign exchange adjustments on non-monetary items of
                             £69.9m (2008: £46.0m);
                        •    Profit before tax of £20.1m (2008: £45.0m);
Beazley’s H1 2009       •    Gross written premiums up 46% to £596.4m; net written premiums up 17% to
profit up, excluding
foreign exchange
                             £341.5m;
adjustments.            •    Gross written premiums on a constant currency basis up 23.8%;
                        •    Rates on renewal business increased by 5% across the portfolio;
                        •    Stable claims environment and combined ratio of 90% (2008: 89%);
                        •    Annualised investment return of 2.9% (2008: 1.7%); and
                        •    Interim dividend of 2.3p (2008: 2.2p).
                        Lloyd’s – A M Best Rating
                        The 2009 edition of A.M. Best’s rating of the Lloyd’s market is now available on the
                        Lloyd’s website at www.lloyds.com. A.M. Best affirmed the A Insurer Financial
                        Strength Rating with stable outlook of the Lloyd’s market on 13 July 2009.

                                                        11
HUR Bulletin No.22 2009                                                                                           7 September 2009

                         Lloyd’s - Equitas Part VII Transfer Approved
                         The High Court made an order on 25 June 2009 approving the statutory transfer of the
                         1992 and prior non-life business of members and former members of Lloyd's to Equitas
                         Insurance Limited. Mr Justice Blackburne was firmly of the view that it was appropriate
                         to sanction the transfer scheme.
                         The transfer covers all the business reinsured by Equitas Reinsurance Limited at the
                         time of Reconstruction and Renewal in 1996, and includes the PCW syndicates' business
                         reinsured by Lioncover Insurance Company Limited and the Warrilow syndicates'
                         business reinsured by Centrewrite Limited. The transfer became effective on 30 June
                         2009. Further details are available on both Lloyd’s and the Equitas websites.
                         HAL DISCLOSURES
                         HAL Directors & Staff – 2010 Intentions
                         The initial intentions of the Directors and staff of Hampden Agencies are set out below:
                         Member (Position)                                2009 PIL (£)   2010 Intentions
                         Hanbury N J (Chairman)        Unlimited Member      1,215,918   Take up pre-emptions in full but may make certain
                                                                                         adjustments to SPSs to moderate excessive cat
                                                                                         exposure. May also buy further capacity at
                                                                                         auction and participate in new SPSs if
                                                                                         opportunities arise.
                         Hanbury N J (Chairman)        LLP 084               2,398,220   Take up pre-emptions in full but may make certain
                                                                                         adjustments to SPSs to moderate excessive cat
                                                                                         exposure. May also buy further capacity at
                                                                                         auction and participate in new SPSs if
HAL Director’s &                                                                         opportunities arise.
Staff underwriting       Hanbury N J (Chairman)        N J Hanbury Ltd       7,948,369   Take up pre-emptions in full but may make certain
intentions set out for                                                                   adjustments to SPSs to moderate excessive cat
2010.                                                                                    exposure. May also buy further capacity at
                                                                                         auction and participate in new SPSs if
                                                                                         opportunities arise.
                         Cant D A (Director)           Unlimited Member         15,000   Consider new opportunities.
                         Carrick N H D (Director)      Carrick U/W Ltd         378,748   Take up pre-emptions and possibly more.
                         Ridley, Sir Adam              ASLP 125              1,098,492   Take up pre-emptions – but consider portfolio
                         (Director)                                                      balance.
                         Strathclyde Lord (Director)   LLP 157               1,357,738   Will take up pre-emptions and may consider some
                                                                                         rebalancing in the auctions.
                         Wilcox S M (Director)         Unlimited Member        610,918   Take up pre-emptions and participate in auctions.
                         Wilcox S M (Director)         Nameco 811              882,725   Take up pre-emptions and participate in auctions.
                         D’Ambrumenil N (ME)           LLP 125               1,025,173   Take up pre-emptions – but consider portfolio
                                                                                         balance.
                         Raven A C M (ME)              Limited Member             Nil    Planning to recommence underwriting for 2010.
                         Nops N W L (HUR)              Unlimited Member       837,471    Take up pre-emptions, but may rebalance
                                                                                         particularly SPS involvements.
                         Page R A (ME)                 Unlimited Member        189,141   Take up pre-emptions – but consider line size.
                         Sedgwick Rough R (ME)         LLP 133                 744,348   Take up pre-emptions and possibly more.
                         Bengough A N                  LLP 154               2,455,659   Take up pre-emptions and buy where there is
                         (Consultant)                                                    value.
                         Coulthard D J (Consultant)    Unlimited Member      4,758,311   Take up most pre-emptions and start family
                                                                                         Nameco.
                         Green J (Consultant)          ASLP 080               342,558    Take up pre-emptions but consider portfolio
                                                                                         balance.
                         Hayter J (Consultant)         Nameco 425             197,428    Take up pre-emptions but consider portfolio
                                                                                         balance.
                         Hulbert-Powell C              Nameco 377             477,482    Take up pre-emptions but may rebalance.
                         (Consultant)
                         Keeling C A G                 Unlimited Member      3,628,420   Take up pre-emptions, but        may   rebalance
                         (Consultant)                                                    particularly SPS involvements.
                         (NB: ME denotes Members’ Executive)




                                                                    12
HUR Bulletin No.22 2009                                                                                                                                                                             7 September 2009

                                         HAL – Conflicts of Interests
                                         Members connected with the Lloyd’s market may be concerned that discussing their
                                         purchases and sales with their usual Members’ Executive might influence decisions that
                                         might be made by the Executive in respect of their other clients. In this respect, if any
                                         Connected Person does have concerns then execution only orders may be placed with
                                         David Cant (Compliance Director) on 0207 863 6573 or Mark Tottman (Operations
                                         Director) on 0207 863 6504.

                                         HUR 2010 Syndicate Ratings – Ratings, Pre-emptions, De-emptions & Stakeholder %
                                           Syndicate 2010 HAL  2009                                                Proposed Pre-                           2010 Total
                                                       Rating Aligned                                              emption / De-                            Capacity
                                                                                                                      emption
                                                                                                 %                        %                                    £'000s
                                                          33              B                     72.5                    33.333                                    1,000,000
                                                         218              B                     64.0                    7.500                                       486,249
                                                         260              C                     56.7                    0.000                                        72,500
                                                         308              C                     52.1                    36.400                                       20,000
                                                         318              C                     71.8                    11.500                                      225,045
                                                         386              A                     69.6                    7.387                                       365,000
                                                         510              B                     53.0                    46.034                                      920,000
                                                         557              B                       -                     0.000                                       119,577
                                                         570              B                     24.7                    15.619                                      145,000
                                                         609              A                     25.8                    37.665                                      275,000
                                                         623              B                       -                     62.338                                      239,986
                                                         727              B                     10.0                    8.371                                        80,000
                                                         779              C                     13.8                   -10.000                                       27,000
                                                         807              C                     51.2                    16.230                                      140,000
                                                         958              B                     34.8                    12.255                                      280,000
                                                        1176              B                     55.1                    0.000                                        31,506
                                                        1200              C                     83.6                    7.527                                       350,000
                                                        2010              B                     57.8                    16.670                                      350,000
                                                        2121              C*                    26.6                    34.615                                      175,000
                                                        2525              C                      2.0                    0.000                                        42,000
                                                        2526              C                     36.4                    0.000                                        31,815
                                                        2791              A                     21.1                    23.771                                      500,000
                                                        3334              C*                    67.8                    25.000                                       25,000
                                                        4040             PNR                    87.4                    0.000                                        53,928
                                                        4242              C*                    52.7                    18.420                                       99,055
                                                        6103              B*                      -                     77.165                                       70,000
                                                        6104              B*                      -                     38.963                                       60,000
                                                        6106             PNR                      -                      TBA                                         49,928
                                         Notes:
                                             • Syndicate 623/2623 combined alignment is 80.8%;
                                             • Syndicate 4040 aligned is before offer result; and
                                             •  Syndicates with aligned less then 25% are not shown in stakeholders report and are based on SBF
                                                information.

NOTICE: Underwriting at Lloyd’s involves a significant degree of risk and those investing in the market will be exposed to the risk of underwriting losses. They will remain ultimately liable for losses, even after death, until the
liabilities of all syndicates participated upon have been reinsured to close, subject to there being no reinsurance failure. Underwriting Membership may not be suitable for all, and if there is any doubt, independent advice should be
sought. Please note that services are not offered publicly to United States persons or in the United States, nor are they offered publicly in any other jurisdiction where such offers may be unlawful. These meeting notes are intended for
general information purposes only and should not be construed as investment advice. Unauthorised use, disclosure, or copying is strictly prohibited and may be unlawful. While all reasonable care has been taken to ensure that the
information contained in these meeting notes is accurate at the time of publication, Hampden Agencies Limited does not make any representations as to the accuracy or completeness of such information. Hampden Agencies is
authorised and regulated by the Financial Services Authority. These notes have been issued by Hampden Agencies Limited, which is a registered Lloyd’s Members’ Agent/Adviser, of 85 Gracechurch Street, London, EC3V 0AA.
Telephone: 020 7863 6500. Facsimile: 020 7863 6555. Calls to and from Hampden Agencies may be recorded. Registered No: 2970319 in England. Registered Office: 85 Gracechurch Street, London EC3V 0AA.
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