Reinsurance arrangement (1967E)
April 04 2011 - 2:00AM
UK Regulatory
TIDMTAW
RNS Number : 1967E
Tawa PLC
03 April 2011
TAWA CREATES ITS FIRST SPECIALIST RUN-OFF REINSURER
*****
Tawa plc announces that it has provided a reinsurance contract
to Penn National Insurance to protect it from adverse development
in its lead paint exposures. The reinsurance contract provides
protection with respect to lead paint risks written by Penn
National Insurance primarily between 1991 to 1997 for real estate
properties in and around Baltimore.
*********
Tawa has set up a Bermudian regulated special purpose insurer,
QX Reinsurance Company Limited ("QX Re"), to provide reinsurance
for a book of lead paint exposure of Pennsylvania National Mutual
Casualty Insurance Company ("Penn National Insurance").
The maximum reinsurance liability arising from the reinsurance
contract of $100m has been collateralised by a trust fund in QX Re
which has been financed by the reinsurance premium received and an
equity injection from Tawa of in aggregate $90m. An increased bank
facility of $27.5m has been obtained to part finance the equity
injection. Tawa plc has also provided a group guarantee to the
trust fund which is triggered in certain circumstances.
With the provision of a reinsurance contract the reinsurance
premium received will be recognised in the consolidated income
statement with an associated estimate of claims to be paid. Using a
best estimate of claims to be paid net assets are expected to
increase by $20m as a result of this transaction.
Penn National Insurance has entered into an Administrative
Services Agreement under which PRO US will manage the adjustment of
claims, the collection of related reinsurance receivables, the
pursuit of subrogation or other recoveries and any other required
services relating to the reinsured portfolio.
*********
Marvin Mohn, head of US operations for Tawa plc, commented, "The
Tawa family, previously made up of mature run-offs, has now been
joined by a new member. This newly--created reinsurance vehicle is
an innovative way for us to assume this discontinued portfolio,
when a company transfer was not possible. Significant efforts have
been vested in the engineering of this transaction by both Tawa and
Penn National Insurance, enabling this innovative structure to be
developed and established. Also, this confirms Tawa's focus on
expanding its US Market presence via sophisticated
transactions."
Chris Reichow of PRO US said, "The servicing contract with Penn
National Insurance firmly establishes PRO's presence as a service
provider to the US and Bermudian insurance markets. This
transaction broadens our footprint here. It increases our capacity
to support locally future Tawa acquired portfolios, and also serve
other clients on highly specialised segments".
Kenneth Shutts, CEO of Penn National Insurance, said "The
transaction we have announced with Tawa provides us with
reinsurance coverage so that we have effectively put lead paint
liability exposures behind us. This reinsurance transfer will allow
us to move forward to concentrate on our core book of business,
which continues to perform well, without the drag that lead paint
has had on earnings. We are also very pleased that this deal will
give Penn National Insurance access to PRO's expertise in managing
this run-off business."
ENDS
Contact
Gilles Erulin 020 7068 8044
Chief Executive, Tawa plc
Peel Hunt LLP (nominated adviser
and broker)
James Britton 020 7418 8900
Guy Wiehahn 020 7418 8893
FWD PR
Victoria Sisson +44 (0)7941 294872
Alexandra Thompson +44 (0)7798 898 277
About Tawa:
Tawa plc was formed in 2001 with the purpose of acquiring or
developing assets and businesses in the insurance industry and
services markets in the UK, continental Europe, US and Bermuda.
Since its formation, Tawa has acquired CX Reinsurance Company
Limited, KX Reinsurance Company Limited, PXRE Reinsurance Company,
Island Capital Limited, the PRO group of companies and Oslo
Reinsurance Company (UK) Limited. The future acquisition of
additional insurance entities remains key to Tawa's business
model.
In July 2007 Tawa plc was floated on the AIM market. Further
information can be found on the Company's website:
www.tawaplc.co.uk
About PRO
Tawa's servicing arm, PRO, employs 250 professionals and is a
leading provider of outsourcing and consultancy services to the
international (re)-insurance industry. Since its formation in 1993,
PRO has provided underwriting, claims management, broking and
consulting services to a broad array of international clients
ranging from single entities, to complex pools with a mix of
insolvent and solvent members with complex assumed and reinsurance
portfolios.
www.pro-ltd.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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