Amlin plc Acquisition of Fortis Corporate Insurance N.V.

Transcription

1 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION Fr Immediate Release 3 June 2009 Intrductin Amlin plc Acquisitin f Frtis Crprate Insurance N.V. Amlin plc ( Amlin r the Grup ) is pleased t annunce that it has entered int an agreement t acquire Frtis Crprate Insurance N.V. ( FCI r the Cmpany ), a leading prvider f crprate prperty and casualty insurance in the Netherlands and Belgium, frm the State f the Netherlands (the Seller ) fr 350 millin (the Acquisitin ). Amlin will als annunce separately tday a placing f 23,502,567 shares, representing apprximately 5 per cent. f Amlin s issued rdinary share capital, t institutinal investrs, in rder t finance part f the cnsideratin that is payable t the Seller (the Placing ). The balance f the cnsideratin will be funded frm Amlin s existing cash resurces. Key Acquisitin highlights Establishes a substantial Cntinental Eurpean platfrm, prviding Amlin with immediate scale in a key strategic market and pprtunities fr future expansin Psitins Amlin as a leading prvider f marine, liability and cmmercial prperty insurance in the Netherlands and Belgium Expected t enhance earnings and return n equity ( ROE ) in 2009 (1) and t cntribute t Amlin s crss cycle target ROE f at least 15% Diversifies Amlin s prtfli in terms f gegraphy, custmer base, business lines and distributin Enhances Amlin s verall business mix by increasing the prprtin f cmmercial lines insurance Intrduces an experienced management team t lead further Eurpean grwth Increases the scale f the Grup s investment activities and presents scpe fr significant reinsurance synergies Enlarged Grup will retain capital strength and flexibility fr further prfitable expansin where market cnditins are favurable Sharehlders apprval will be sught at a general meeting 1

2 Infrmatin n FCI FCI is a leading prvider f crprate prperty and casualty insurance and risk management slutins in the Netherlands and Belgium. Headquartered in Amstelveen, the Netherlands, the Cmpany als has ffices in Rtterdam, Antwerp, Brussels and Paris. FCI is regulated by the Dutch Central Bank (the DNB ) and is licensed t write mst lines f nn-life business acrss Eurpe with the exceptin f mtr (nly Belgium and the Netherlands) and credit insurance. Frmerly part f the Frtis Grup, FCI was created as a result f a merger in 1999 between Frtis-Industrial and Amev-Interllyd. On 3 Octber 2008 the Dutch gvernment became the 100% sharehlder f FCI as part f the natinalisatin f the Dutch entities f the Frtis Grup. Based n market estimates, FCI hlds a strng cmpetitive psitin. In the Netherlands, which represented 63% f grss written premiums ( GWP ) in 2008, FCI targets the cinsurance market. It is the market leader in Dutch marine insurance, and hlds a tp three psitin in liability and cmmercial prperty insurance. In Belgium, representing 36% f GWP, FCI is the market leader in marine and cmmercial prperty insurance and a tp three prvider f liability insurance. Year ended 31 December (2) ( millin, except percentages and ratis) Key incme statement data Grss written premium Net earned premium (3) Net incurred claims... (269) (321) (441) Net expenses... (120) (124) (139) Underwriting result (11) Investment incme (23) Finance csts... (4) (6) (4) Pre-tax prfit (38) Tax... (13) (8) 7 Pst-tax prfit (31) Key perating ratis Return n pening equity (4)... 17% 9% (11%) Claims rati (5) 62% 68% 77% Expense rati (6).. 28% 26% 25% Cmbined rati (7)... 90% 94% 102% In 2008 FCI wrte 763m f GWP in its specialist lines cmprising marine, cmmercial prperty, liability and fleet mtr. The lwer level f prfitability in the business reflects a number f challenges faced during the perid, including a sftening rating envirnment, an unusually high frequency f large claims, investment lsses in the Cmpany s equity and bnd prtflis, and the natinalisatin f the Frtis Grup s Dutch entities. The Directrs f Amlin (the Directrs ) are cnfident that (i) the prfit imprvement plan initiated by the Cmpany s management team during the current year including a re-underwriting f certain risks, (ii) the intrductin f Amlin best practices acrss underwriting, risk and investment management, and (iii) the remval f the uncertainty surrunding the Cmpany s future fllwing the natinalisatin, will tgether prvide the fundatin fr a return t histrical levels f prfitability. 2

3 Divisin Principal classes f business Prprtin f grss premiums written in 2008 Marine Prperty General carg and cmmdities, cean hull, builders risk, yacht, inland hull, ship wners liability Fire, cnstructin all risks, machinery breakdwn 49% 21% Liability General liability, prfessinal liability 15% Fleet mtr Cars physical damage, trucks physical damage, cars third party liability, trucks third party liability Other Captives 7% 8% The Bard f Amlin (the Bard ) believes that FCI has an experienced management team, with a prven lng-term recrd, led by Patrick Cene, Yves Warlp, Michiel Vervliet, Philippe van Osterzee and Jaap Gispen, three f whm have been with FCI since its inceptin. The team has a track recrd f identifying and develping new lines f prfitable business and entering new gegraphies. Mst recently, peratins in France were started in 2008 with the current aim f writing 30m f GWP by FCI had a full-time wrkfrce f 338 peple as at 31 December Backgrund t and reasns fr the Acquisitin As utlined previusly, Amlin has a strategic bjective t grw by acquisitin in the belief that it is excellently psitined t leverage its specialist insurance skills and experience acrss new prduct lines and int new territries. In pursuing this strategy, the Bard intends t build upn the Grup s recent achievements and develp its ptential faster than culd be achieved purely thrugh rganic grwth. In recgnitin f the Grup s current prfile and ambitins, the Bard has placed greater emphasis n identifying businesses which, inter alia: Have a significant cmpnent f nn-catastrphe expsed insurance business t rebalance Amlin s current bias twards catastrphe expsed reinsurance; Operate within markets which are pen t internatinal participants and within lines in which Amlin has r is seeking expertise; Share Amlin s prfit-fcused underwriting culture and can benefit frm its sphisticated risk management apprach; and Are successful and self-standing leaders within their wn markets, with mtivated emplyees and strng management teams The Bard believes that a cmbinatin with FCI meets the abve criteria very well and will bring cnsiderable benefits t Amlin sharehlders. The Acquisitin intrduces further diversity t Amlin s existing bk f business, leverages its expertise in key specialist lines where Amlin is seeking t expand, as well as prviding the Grup with immediate scale and infrastructure in Cntinental Eurpe, building upn its recent acquisitin f Angl French Underwriters. Fllwing the Acquisitin, Amlin will wn a leading prvider f insurance and risk management slutins t crpratins based in the Netherlands and Belgium. The 3

4 cmbinatin with FCI will reduce Amlin s catastrphe expsed business as a prprtin f its verall prtfli and intrduce a significant element f business with a mre attritinal claims prfile and less vlatile earnings characteristics. The Bard cnsiders that this re-balancing f its underwriting prtfli will prvide further capacity fr cycle-managed grwth in the Grup s cre catastrphe-expsed lines. Furthermre, the Directrs believe that this is a favurable pint in the insurance cycle at which t acquire FCI, as they expect an imprving rating envirnment ver the near-term acrss FCI s key business lines. FCI has suffered frm a perid f significant uncertainty since the Dutch entities f Frtis Grup N.V. were natinalised n 3 Octber 2008 by the State f the Netherlands. Fllwing the Acquisitin, the Bard expects that Amlin will bring a number f key benefits t FCI s brand and peratins. These benefits will prvide an imprved level f security and enhanced peratinal scale fr FCI s custmers and brkers nce the Cmpany becmes part f Amlin with its brader range f expertise and greater financial stability. Furthermre, the intrductin t FCI f Amlin s underwriting expertise and risk management prcesses is expected t accelerate the Cmpany s current prfit imprvement prgramme and future develpment. In summary, the Bard believes that the Acquisitin will prvide the fllwing benefits: Establishment f strng Cntinental Eurpean platfrm The Acquisitin will significantly advance Amlin s existing Eurpean strategy prviding scpe fr future rganic and acquisitin-led grwth; Amlin will becme a leading prvider f marine, liability and cmmercial prperty insurance in the Netherlands and Belgium; and FCI s management team will bring Eurpean expertise and strng industry credentials Diversificatin and expansin f Amlin s bk f business FCI will prvide greater diversity bth by class f business and gegraphically, adding business which is predminantly nn-crrelating with the Grup s existing expsures, particularly with respect t natural catastrphe expsures; The Acquisitin will als prvide access t a new custmer base via diversified distributin channels; and FCI s marine, prperty and fleet mtr lines f business represent cre areas f underwriting expertise fr Amlin and prduct lines where the Grup has been targeting expansin Delivery f cnsiderable perfrmance imprvements The sharing f Amlin s underwriting skills and risk management prcesses will imprve FCI s ability t drive imprvements in its underwriting perfrmance; The greater financial security and peratinal resurces that Amlin will bring t FCI will be a psitive factr fr the Cmpany s brkers and clients fllwing a perid f uncertainty; and Reinsurance synergies are expected wing t the greater diversificatin and ecnmies f scale acrss the cmbined prtfli f business resulting in reduced reinsurance requirements Imprves Amlin s financial prfile The additin f nn-crrelating insurance premium relating t less vlatile lines f business will imprve the balance f Amlin s business prfile and earnings stream; FCI will increase Amlin s grss financial investments by apprximately 1 billin giving the Grup significantly greater scale in its investment activities; and 4

5 The Acquisitin is expected t be earnings and ROE enhancing in 2009 (1) t cntribute t Amlin s crss cycle target ROE f 15% Financial effects f the Acquisitin The Bard expects that, in the absence f abnrmal lsses, the Acquisitin will be earnings enhancing fr Amlin in 2009 and beynd and will enhance net assets per share ver the medium term. This statement des nt cnstitute a prfit frecast and shuld nt be interpreted t mean that the earnings r net assets per Amlin share in the first full financial year fllwing the Acquisitin, nr in any subsequent perid, will necessarily match r be greater than thse fr the relevant preceding financial year. Amlin current trading On 13 May 2009, the Bard released an interim management statement fr the year t date. Amlin cntinues t trade in line with the Bard s expectatins as set ut in that interim management statement. FCI current trading Trading cnditins in the Dutch and Belgian markets are nw bttming ut after a perid f strng cmpetitin fr mst lines f business. In the year t date, FCI s premium incme is in line with the business plan. This plan anticipated a reductin in grss written premiums as a result f the reductins bth in ecnmic activity and FCI s actins t re-underwrite sme business lines with recent disappinting perfrmance. Althugh grss premium incme is likely t reduce as these measures take effect, the underwriters have been able t implement the re-underwriting steps as planned. There has been very little impact n premium vlumes as a result f the uncertainty regarding the wnership f FCI. In the marine area, rate increases have been achieved by FCI, particularly n the hull accunts, and actin is als being taken t increase deductibles. Fr the prperty bk, cmpetitin is less severe than in recent mnths and n further rate reductins are being given. The mtr and liability markets remain cmpetitive, with rates relatively stable. Cmmenting n the Acquisitin, Charles Philipps, Chief Executive f Amlin, said: This acquisitin represents a step-change in the develpment f ur rganisatin and demnstrates the scpe f ur ambitin t build a glbally diversified insurance and reinsurance business fcussed in markets which require ur specialist skills and have high barriers t entry. The balance we will achieve bth between catastrphe and nn-catastrphe expsures, and between insurance and reinsurance risks will add further stability t ur bk f business and a fundatin frm which t target further grwth. We are delighted t welcme ur new clleagues t Amlin and lk frward t bringing the best f ur tw rganisatins t bear in the Eurpean market. Cmmenting n the Acquisitin, Patrick Cene, Chief Executive f FCI, said: We are pleased that in Amlin we have fund a strng new sharehlder. Amlin has an excellent track recrd in its markets and A level ratings frm all f the large rating agencies. After a perid f uncertainty, we are nw again in a strng psitin t build ur future. Amlin ffers us financial strength, excellent underwriting expertise and strng risk management which enables us t serve ur clients and brkers even better. The visin and culture f Amlin matches urs almst perfectly. I wuld like t thank all ur brkers and clients fr their supprt ver the recent mnths and ur staff fr their relentless effrts t keep ur business strng. We have made great strides in reaching agreement with ex-frtis grup cmpanies abut the transitin prcess and we are ready t start a new future with ur new sharehlder. 5

6 Details relating t the Acquisitin On 2 June 2009, Amlin (Overseas Hldings) Limited (the Purchaser ) entered int an acquisitin agreement with the State f the Netherlands t purchase the entire share capital f FCI. The cnsideratin fr the shares is 350 millin and is payable in cash upn cmpletin in accrdance with the prvisins f the acquisitin agreement, which bligatin Amlin has guaranteed. The Acquisitin, because f its size, is a Class 1 transactin fr Amlin under the Listing Rules f the United Kingdm Listing Authrity and is therefre cnditinal, inter alia, n apprval by Amlin sharehlders. The Acquisitin is als cnditinal upn the Purchaser having btained a declaratin f n-bjectin frm the DNB in relatin t the Acquisitin, as required by the Dutch Financial Supervisin Act, with cnditins (if any) acceptable t the Purchaser. Given its very recent acquisitin f FCI in Octber 2008 as part f the natinalisatin f the Dutch entities f the frmer Frtis Grup, the Seller was prepared t give the Purchaser nly very limited warranty cver relating t its wnership f FCI and capacity t sell the shares, the mst recent audited accunts f FCI and the psitin f the Cmpany since the accunts dates. The indemnity cver prvided is primarily limited t any lsses that the Purchaser might suffer were the natinalisatin t be fund unlawful r therwise imprperly effected r fr any lsses arising ut f any related claim. The Seller s liability under the warranties and the indemnity is subject t custmary limits. Als relevant t the Acquisitin are the transitinal services agreement and certain separatin agreements int which FCI has recently entered. FCI has histrically and currently btains a number f its services frm varius cmpanies within the frmer Frtis Grup (the Frtis Service Prviders ). These services include IT, underwriting, reinsurance administratin, claims handling, asset management and financial peratins services. As part f the separatin f FCI frm the frmer Frtis Grup, the terms upn which such services are t be prvided t FCI ging frward have recently been frmalised in a transitinal services agreement and varius separatin agreements between FCI and the Frtis Service Prviders and, because they evlved ut f an intra-grup services prvisin arrangement, these agreements cntain varius limitatins n the liability f the Frtis Service Prviders thereunder. FCI may cntinue t rely n the Frtis Service Prviders t render these services fr a perid f time fllwing the Acquisitin, up until the end f 2010, with a right t extend until June 2011 (with a significant upward price ratchet). After this time, FCI will have t perate independently f the Frtis Service Prviders and its current IT systems and applicatins, alng with its histric claims data, will have t have been migrated t an Amlin based IT platfrm. In additin t the transitinal services referred t abve, FCI s Belgian wrkfrce f apprximately 142 peple is currently secnded frm Frtis Insurance Belgium and the arrangements relating t the separatin f FCI frm the Frtis Grup include FCI making ffers f emplyment and seeking t secure the transfer f its Belgian wrkfrce t FCI with minimum interruptin t all cncerned as quickly as pssible. A general meeting f Amlin will be held fr the purpse f cnsidering and if thught fit apprving the Acquisitin. A ntice cnvening the general meeting will be set ut in the circular t Amlin sharehlders, which will be published as sn as pssible. Assuming all cnditins are satisfied, Amlin currently expects the Acquisitin t cmplete by the end f Q There will be a presentatin fr analysts at 8.30 a.m. tday at Amlin's ffices, St. Helen's, 1 Undershaft, Lndn, EC3A 8ND. Analysts r investrs wishing t attend the meeting r t participate via webcast, please call Julianne Jessup, Head f Investr Relatins, n , r Hannah Bale, Head f Cmmunicatins, n

7 Enquiries: Charles Philipps, Chief Executive Officer Richard Hextall, Finance Directr Analysts and Investrs Julianne Jessup, Head f Investr Relatins Rb Bailhache, Financial Dynamics Media Hannah Bale, Head f Cmmunicatins David Haggie, Haggie Financial LLP Peter Rigby, Haggie Financial LLP Juliet Tilley, Haggie Financial LLP Lexicn Partners Limited Matthew Lindsey-Clark Nick Chapman RBS Hare Gvett Limited Bb Cwdell Jhn MacGwan Ntes: (1) The statements that the Acquisitin will be earnings and ROE enhancing d nt cnstitute a prfit frecast and shuld nt be interpreted t mean that the earnings per share in the first full financial year fllwing the Acquisitin, r in any subsequent perid, wuld necessarily match r be greater than thse fr the relevant preceding financial year (2) The financial infrmatin relating t FCI set ut in this annuncement is shwn n a basis cnsistent with Amlin s accunting plicies as at 31 December 2008 (3) Premiums received after the cst f reinsurance and adjustment fr unearned premium. Unearned premium cvers the future perid fr which an insurance plicy remains in frce (4) Rati, in percentage, calculated by dividing the cnslidated prfit after tax by the pening ttal equity (5) Rati, in percentage, f net insurance claims t net earned premiums (6) Rati, in percentage, f the sum f expenses fr the acquisitin f insurance cntracts and administrative expenses t net earned premiums (7) Rati, in percentage, f the sum f net insurance claims, expenses fr the acquisitin f insurance cntracts and administrative expenses t net earned premiums. This is als the sum f the expense rati and the claims rati Disclaimer: Lexicn Partners, which is authrised and regulated in the UK by the Financial Services Authrity, is acting exclusively fr Amlin in cnnectin with the Acquisitin and n-ne else and will nt be respnsible t anyne ther than Amlin fr prviding the prtectins affrded t clients f Lexicn Partners r fr prviding advice in relatin t the Acquisitin r any ther matters referred t in this annuncement. RBS Hare Gvett, which is authrised and regulated in the UK by the Financial Services Authrity, is acting exclusively fr Amlin and fr n-ne else in cnnectin with the Acquisitin referred t in this annuncement and will nt be respnsible t anyne ther than Amlin fr prviding the prtectins affrded t clients f RBS Hare Gvett r fr prviding advice in relatin t the Acquisitin, the Placing r any ther matter referred t in this annuncement. This annuncement includes certain "frward-lking statements". These statements are based n the current expectatins f the management f Amlin and FCI and are naturally subject t uncertainty and changes in circumstances. The frward-lking statements cntained herein may include statements abut the expected effects n Amlin r FCI, the expected timing and scpe f the Acquisitin, strategic ptins and all ther statements in this annuncement ther than histrical facts. Frward-lking statements include, withut limitatin, statements typically cntaining wrds such as "intends", "expects", "anticipates", "targets", "estimates" and wrds f similar imprt. By their nature, frward-lking statements invlve risk and uncertainty because they relate t events and depend n circumstances that will ccur in the future. There are a number f factrs that culd cause actual results and develpments t differ materially frm thse expressed r implied by such frward-lking statements. These factrs include, but are nt limited t, the satisfactin f the cnditins t the Acquisitin, as well as additinal factrs, such as changes in ecnmic cnditins, changes in the level f capital investment, success f business and perating initiatives and restructuring bjectives, custmers' strategies and stability, changes in the regulatry envirnment, fluctuatins in interest and exchange rates, the utcme f litigatin, gvernment actins and natural phenmena such as flds, earthquakes and hurricanes. Other unknwn r unpredictable factrs culd cause actual results t differ materially frm thse in the frwardlking statements. Neither Amlin nr FCI undertake any bligatin t update publicly r revise frward-lking statements, whether as a result f new infrmatin, future events r therwise, except t the extent legally required. 7

8 This annuncement is nt intended t, and des nt, cnstitute r frm any part f an ffer t sell r an invitatin t purchase r subscribe fr any securities r the slicitatin f an ffer t buy r subscribe fr any securities nr shall there be any sale, issuance r transfer f the securities referred t in the annuncement in the United States r any jurisdictin in cntraventin f applicable law. This annuncement des nt cnstitute an ffer f shares f Amlin in the United States. Shares in Amlin have nt been and will nt be registered under the U.S. Securities Act f 1933, as amended (the "Securities Act") r under the securities laws f any state f the United States and may nt be ffered r sld, directly r indirectly, in r int the United States absent registratin under the Securities Act r an exemptin frm registratin. The shares f Amlin referred t in this annuncement are being ffered nly utside the United States in accrdance with Regulatin S under the Securities Act. There will be n public ffering f securities f Amlin in the United States. 1. FCI three year balance sheet APPENDIX As at 31 December (1) ( millin) Cash and investments... 1,044 1,101 1,200 Reinsurance assets Other assets Ttal assets... 1,515 1,586 1,723 Unearned premium Outstanding claims ,131 Subrdinated liabilities Other liabilities Ttal liabilities... 1,173 1,306 1,477 Capital and ther reserves Retained earnings Ttal equity and reserves Ttal equity, reserves and liabilities. 1,515 1,586 1, FCI investment prtfli As at 31 December 2008 millin % Gvernment bnds % Crprate bnds % Real estate % Lans % Ttal investments.. 1, % Nte: 1. The financial infrmatin relating t FCI set ut in this appendix is shwn n a basis cnsistent with Amlin s accunting plicies as at 31 December