ACH Achp

 

TIDMTAW 
 
RNS Number : 3834R 
Tawa PLC 
20 August 2010 
 

 
 
 
                                    Tawa plc 
 
                       Acquisition of Island Capital Ltd 
 
Tawa plc ("Tawa" or the "Group") the quoted insurance service provider and 
run-off investor, today announces that it has entered into a share purchase 
agreement to acquire 94.3% of the issued shares of Island Capital Ltd ("Island 
Capital" or the "Company"), and its wholly-owned UK subsidiary, Island Capital 
(Europe) Ltd, for an initial consideration of $7.4m and deferred consideration 
dependent on future financial performance of the Company, which is expected to 
be largely driven by subrogation recoveries.  For technical reasons the 
aggregate of all consideration has been capped at $40m, although it is unlikely 
that deferred consideration would exceed $15m. 
 
The acquisition will give Tawa access to expertise in credit and political risk 
insurance. 
 
Island Capital is a Bermuda insurance company with a specialist underwriting 
portfolio of trade credit and political risk insurance business.  The Company 
went into run-off in November 2008 following the sale of its trade credit and 
political risk insurance underwriting platform.  As at 31 December 2009 the 
Company had gross reserves of $20.6m and net assets on its pro forma, US GAAP 
undiscounted balance sheet of $28.1m.  International and financial reporting 
standards require a company to make a provision for future expenses where it 
discounts its balance sheet, as Tawa does.  After making adjustments for ULAE 
and other adjustments relating to the acquisition, the impact of the transaction 
on Tawa's net assets is broadly neutral. 
 
Following completion, Paul Mooney, President and Chief Executive Officer of 
Island Capital, who owns 5.7% of the issued shares of Island Capital, will join 
the Tawa team and continue to manage the portfolio from the Group's offices with 
an initial employment term from the closing of the transaction through 31 
December 2012. 
 
This transaction is subject to regulatory approval from the Bermuda Monetary 
Authority and the FSA.  It is expected that such approval should be obtained 
within 3 months. 
 
It is intended that the acquisition cost will be financed from Tawa's existing 
cash resources.  There will be no change to the board or senior management of 
Tawa arising from the acquisition. 
 
Gilles Erulin, Chief Executive Officer of Tawa plc, commented: 
 
"One of our goals is to expand our involvement and develop our expertise in 
specialist and niche areas of the insurance arena.  Trade credit insurance is 
definitely an area where the conjunction of Tawa and Island Capital will provide 
for further portfolio expansion.  This acquisition fits with our strategy of 
enhancing our long term expansion by combining the existing skills of our people 
with those of acquired teams and represents an interesting development for 
Tawa." 
 
"We look forward to welcoming Paul Mooney to the Group." 
 
 
 
Enquiries: 
 
+---------------------------------------------+---------------+ 
| Gilles Erulin, Chief Executive, Tawa plc    | 020 7068 8044 | 
|                                             |               | 
+---------------------------------------------+---------------+ 
| Peter Rigby, Haggie Financial               | 020 7417 8989 | 
|                                             |               | 
+---------------------------------------------+---------------+ 
| Guy Wiehahn, KBC Peel Hunt (nominated       | 020 7418 8900 | 
| adviser and broker)                         |               | 
+---------------------------------------------+---------------+ 
 
 
Notes for Editors: 
 
Tawa was formed in 2001 with the purpose of acquiring or developing assets and 
business in the insurance industry. Tawa provides capital solutions for 
insurance and reinsurance run-off portfolios, companies and businesses, through 
acquisition, part VII transfer, reinsurance and debt purchase. Tawa also 
provides services to the run-off industry and develops its own products to serve 
the insurance market as a whole. 
 
By creating a diversified portfolio of businesses at different stages of the 
run-off process Tawa is a consolidator of this specific market in the UK, US, 
continental Europe, Bermuda, and elsewhere as opportunities arise. 
 
Since its formation, Tawa has acquired CX Reinsurance Company Limited, KX 
Reinsurance Company Limited, PXRE Reinsurance Company and the PRO group of 
companies. 
 
The combined Tawa/PRO team of 350 professionals deal with a broad range of 
companies including a number of the world's largest insurance businesses. PRO 
deliver a market-wide third-party insurance servicing capability to active 
underwriters as well as run-offs; operating in London's company and Lloyd's 
markets as well as continental Europe the USA and Bermuda. 
 
Tawa also operates as an incubator for new projects and is currently developing 
the STRIPE  system, a new claims and post-placement transactions processing 
platform. 
 
Given the nature of the transaction, Tawa has provided such disclosure as is 
required in accordance with Schedule Four of the AIM Rules for Companies as a 
"Substantial Transaction". 
 
Further information can be found on the Company's website: www.tawaplc.co.uk 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 ACQEASPEAFDEEEF 
 

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