TIDMHUW
RNS Number : 3803S
Hampden Underwriting Plc
18 May 2009
18 May 2009
Hampden Underwriting PLC
("Hampden Underwriting" or the "Company")
Preliminary results for the year ended 31 December 2008
Hampden Underwriting, which provides investors with a limited liability direct
investment into the Lloyd's insurance market, announces its preliminary results
for the year ended 31 December 2008.
Highlights
* Commenced underwriting with an allocated capacity of GBP5.1m
* Premium written during the period totalled GBP5.2m
* Group's first acquisition of a Lloyd's corporate member during the year
* Small loss of GBP48,000
* Net assets of GBP7.0m
Commenting upon these results Chairman, Sir Michael Oliver said:
"2008 was the first full year of trading and as with virtually all years of
account, is showing a small loss after 12 months. It is encouraging that at this
stage, albeit with the account still very much on risk, early forecasts suggest
a profitable outcome for both Hampden Corporate Member and Nameco (No. 365)
Limited, our two underwriting subsidiaries. In addition the Company's investment
income has continued to exceed cash operating expenses.
In our view, prospects for the London Insurance Market and specifically Lloyd's
look extremely promising and we look forward to generating attractive returns
for shareholders."
Enquiries
+-----------------------+------------------------+---------------------+
| Hampden Underwriting | Jeremy Evans | 020 7863 6567 |
| | | |
+-----------------------+------------------------+---------------------+
| Smith & Williamson | David Jones | 020 7131 4000 |
| Corporate Finance | Barrie Newton | |
| Limited | Joanne Royden-Turner | |
| | | |
+-----------------------+------------------------+---------------------+
Chairman's Statement
2008 was the first full year of trading and as with virtually all years of
account, is showing a small loss after 12 months. It is encouraging that at this
stage, albeit with the account still very much on risk, early forecasts suggest
a profitable outcome for both Hampden Corporate Member and Nameco (No. 365)
Limited, our two underwriting subsidiaries. In addition the Company's investment
income has continued to exceed cash operating expenses.
In February of 2009 we acquired Nameco (No. 605) Limited which currently
underwrites GBP2.7m which when added to the underwriting of Hampden Corporate
Member and Nameco (No. 365) Limited takes our overall premium income limit to
GBP7.6m. It has also given us valuable exposure to the highly profitable 2006
and 2007 years of account.
In April of this year our Members' Agent, Hampden Agencies Limited ("HAL"),
produced its Annual Market Report. In their Lloyd's Adviser's Report they
comment on market conditions in detail, but I would like to quote from it their
views on one aspect in particular. "Our view is that we have now entered the
hardening phase of the cycle with a potential hard market for 2010 and 2011. The
combination of a long-term loss of investment return and reduction in
policyholder surplus (a measure of the capital base of US insurers) now requires
an underwriting profit for investors to achieve an adequate return on equity.
Our view is that Lloyd's is favourably positioned to maintain its record of
strong profitability since 2002".
The rationale of establishing Hampden Underwriting was to provide an
opportunity to invest in a quoted company underwriting via a diverse spread of
syndicates through its own corporate member as well as by the acquisition of
others. We also undertook to look at other Lloyd's related opportunities. During
the course of the year we looked at several but felt that our capital was best
deployed directly supporting underwriting. We will continue to look at all
opportunities as well as considering the possibilities of raising further
capital from both existing shareholders and new investors. In our view,
prospects for the London Insurance Market and specifically Lloyd's look
extremely promising and we look forward to generating attractive returns for
shareholders.
Sir Michael Oliver
Non-executive Chairman
15 May 2009
Lloyd's Adviser's Report
Market outlook
During the 1980s and 1990s the US property casualty industry failed to make an
underwriting profit with the combined ratio (the standard measure of
profitability of the industry which excludes investment income) being
consistently above 100%. The reason was that underwriting losses could be
subsidised by investment returns generated by the bull market in both bonds and
equities, which lasted from 1982 to 2000. Already this decade, the US industry
has declared underwriting profits in three years and Lloyd's has made profits in
five successive years since the 2002 three-year account. We are now in a low
interest rate environment with a long term loss of investment return. No longer
can an underwriting loss be subsidised by investment return. It is for this
reason, perhaps more than any other, that non-life insurance and, in particular
Lloyd's, continues to be a favourable investment proposition.
The industry's underwriting capacity has been depleted by catastrophe losses
from Hurricane Ike and asset losses equivalent to a major catastrophe suffered
in 2008 which, taken together, are "market changing". According to Swiss Re's
Sigma research 2008 marked the second worst year on record for insured
catastrophe losses after 2005. In addition, investment losses are estimated by
the New York based Insurance Information Institute to have been the fourth
largest "capital event" over the past 20 years for the US insurance industry.
We see 2009 as a year of transition as the insurance and reinsurance markets
move to a rating environment where rate rises, not reductions, are becoming the
norm with a potential hard market in 2010 or 2011.
This change in trend is most marked in the retrocession and reinsurance markets,
particularly for catastrophe exposed US business. The 1 January renewal
season is the key bell-weather in assessing pricing trends and after two years
of rate reductions the reinsurance broker, Guy Carpenter, reported that the
overall increase for reinsurance programmes in the United States at 1 January
2009 was 11%. Our expectation is that increased reinsurance costs will feed
through into direct rates as the year progresses.
While insurance is not immune to recession related claims activity or reduced
demand for cover from lines of business which are turnover dependent or linked
to international trade, insurance is not a discretionary purchase. Increased
casualty claims activity is being seen in US E&O and D&O financial institutions
business as investors seek to recover financial losses but underwriters are now
charging significant rate increases. Overall, insurance is likely to be less
affected by the economic recession than banks and other financial services
businesses and, in fact, may benefit from the "credit crunch" as the
availability of risk bearing capital reduces.
Lloyd's outperforms its peer group competitors
As the world's leading subscription market for insurance and reinsurance risk,
Lloyd's market position is set to benefit from an increased flow of business as
insurers and risk managers look to lessen their counterparty risk and dependence
on any one carrier in an increasingly uncertain world.
Lloyd's strong operating performance continues to stand out. The traditional
method for performance comparisons of competing insurance businesses is an
analysis of the combined ratio, which is the ratio of net incurred claims plus
net operating expenses to net earned premiums. In 2008, Lloyd's combined ratio
was the best compared with its peer groups at 91%, with Lloyd's outperforming
its nearest competitor, Bermudian Reinsurers, by an aggregate of 7% over the
period 2004 to 2008. As well as strong operating performance for its investors,
Lloyd's security for policyholders is also recognised by the rating agencies
with Lloyd's being only one of three out of the top ten reinsurers whose current
rating of A+ from Standard & Poor's is the same as before the World Trade Centre
losses in 2001.
Lloyd's operating results have outperformed its main peer groups, while HAL's
managed portfolios continue to outperform Lloyd's. The portfolio of Lloyd's
syndicates managed by HAL for HCM is well positioned to take advantage of
opportunities for profitable growth into 2010, with many syndicates in the
portfolio expecting to increase their underwriting capacity for 2010 to take
advantage of improving market conditions and compensate for the decline in the
value of sterling against the US dollar.
HCM underwriting performance
HCM's first underwriting year is the 2008 Account, although its two Nameco
acquisitions have given exposure to the profitable 2006 and 2007 Accounts.
Estimates for all syndicates on the 2008 Account will not be available until the
end of May reflecting data at the end of Quarter 1 2009. Forecasts have been
received for 9 syndicates in HCM's portfolio for the 2008 Account representing
54% of capacity with an average mid-point forecast of 7.2% on capacity. It is
encouraging that at this early stage, despite the 2008 catastrophe losses, all
12 syndicates are forecasting profits. However, the 2008 Account is still on
risk with reinsurance exposed, in particular to earthquake, until 30 June 2009
while many insurance policies will be on risk until 31 December 2009. HAL
maintains its profit target of 0% to 5% of capacity, excluding prior year
releases.
Prospects for underwriting at Lloyd's in 2009 remain attractive. Our profit
target remains in a range of 5% to 10% of capacity, excluding prior year
releases, which reflects an improved potential reward for 2009 compared with
2008. Despite the improved potential reward for 2009, we view risk and potential
recession related claims as increasing due to increased costs for reinsurance
and, in particular, retrocession cover for reinsurers.
Top 10 Syndicate Holdings for 2009 Account
+-----------+-------------------------+-----------+-----------+-----------+--------------------+
| Syndicate | Managing Agent | 2009 | 2009 | 2009 | 2009 Major |
| | | Syndicate | Group | Group | Category |
| | | capacity | portfolio | portfolio | of business |
| | | GBP'000 | capacity | % of | |
| | | | GBP'000 | total | |
+-----------+-------------------------+-----------+-----------+-----------+--------------------+
| 510 | R.J. Kiln & Co. Ltd | 630,000.0 | 983.0 | 13.0 | US$ Property |
+-----------+-------------------------+-----------+-----------+-----------+--------------------+
| 2791 | Managing Agency | 400,902.4 | 925.1 | 12.2 | Reinsurance |
| | Partners Ltd | | | | |
+-----------+-------------------------+-----------+-----------+-----------+--------------------+
| 958 | Omega Underwriting | 249,432.4 | 820.0 | 10.8 | Reinsurance |
| | Agents Ltd | | | | |
+-----------+-------------------------+-----------+-----------+-----------+--------------------+
| 623 | Beazley Furlonge Ltd | 149,899.8 | 623.7 | 8.2 | US$ Non-Marine |
| | | | | | Liability |
+-----------+-------------------------+-----------+-----------+-----------+--------------------+
| 2121 | Argenta Syndicate | 130,000.0 | 567.1 | 7.5 | US$ Property |
| | Mangement Ltd | | | | |
+-----------+-------------------------+-----------+-----------+-----------+--------------------+
| 557 | R.J. Kiln & Co Ltd | 119,577.0 | 484.8 | 6.4 | Reinsurance |
+-----------+-------------------------+-----------+-----------+-----------+--------------------+
| 609 | Atrium Underwriters Ltd | 200,000.0 | 458.6 | 6.1 | Energy |
+-----------+-------------------------+-----------+-----------+-----------+--------------------+
| 33 | Hiscox Syndicates Ltd | 750,000.0 | 413.1 | 5.5 | US$ Property |
+-----------+-------------------------+-----------+-----------+-----------+--------------------+
| 218 | Equity Syndicate | 452,325.7 | 382.0 | 5.0 | Motor |
| | Mangement Ltd | | | | |
+-----------+-------------------------+-----------+-----------+-----------+--------------------+
| 260 | KGM Underwriting | 72,500.0 | 356.9 | 4.7 | Motor |
| | Agencies Ltd | | | | |
+-----------+-------------------------+-----------+-----------+-----------+--------------------+
| Subtotal | | | 6,014.3 | 79.4 | |
+-----------+-------------------------+-----------+-----------+-----------+--------------------+
| Portfolio Total | | 7,575.6 | 100.0 | |
+-----------+-------------------------+-----------+-----------+-----------+--------------------+
2009 Portfolio analysis
The Group's core underwriting participation for the 2009 underwriting year is
through HAL's managed portfolio, MAPA 7208, which was originally acquired for
the 2008 underwriting year. This capacity of GBP4.4m reflects adjustments
through syndicate de-emptions and pre-emptions and the non-renewal of an annual
participation on Syndicate 6101.
During 2008 and 2009 the Group supplemented the MAPA capacity managed by HAL
through the purchases of Nameco 365 and Nameco 605. It also added four smaller
individual participations on MAP Syndicate 6103, Hiscox Syndicate 6104, Amlin
Syndicate 6106 and ICAT Syndicate 4242, all of which should benefit from higher
rates on US catastrophe exposed business. The Group's total participation for
2009 is GBP7.6m of capacity.
The spread of syndicates in MAPA 7208 is similar to those of HAL's existing
MAPAs with a weighting towards those syndicates which have historically
outperformed the broader Lloyd's market. The largest lines remain on Kiln
Syndicate 510, MAP Syndicate 2791 and Omega Syndicate 958, all of which are
syndicates with excellent track records and specialists in underwriting
reinsurance business, where rates are now increasing.
HAL considers that the portfolio provides a good spread of business across
managing agents and classes of business with motor and liability providing a
balance to the catastrophe exposed reinsurance and property business, as well as
contributing to lower capital requirements due to Lloyd's credits for
diversification.
Portfolio risk management
HAL manages the portfolio risk by diversification across classes of business,
syndicates and managing agents as well as controlling the downside, in the event
of a major loss, by monitoring the aggregate losses estimated by managing agents
to Realistic Disaster Scenarios. HAL considers risk in the context of potential
return and seeks to actively manage catastrophe exposure, dependent on market
conditions.
Lloyd's first utilised Realistic Disaster Scenarios in 1995 to evaluate exposure
at both syndicate and market level. These scenarios continue to be refined and
updated to take account of loss experience and exposure values. For 2009 the
largest loss modelled is a Florida windstorm totalling $125bn, which compares
with only $60bn in 2005 indicating additional conservatism. Exposure management
is a critical component of being able to manage the insurance cycle.
The Realistic Disaster Scenario chart (contained in the full Financial
Statements) shows the aggregated impact at portfolio level for the Group for the
ten largest net exposures (after reinsurance) to events modelled for 2009. These
exposures provide a guide to potential downside risk, but do not measure
potential loss since they exclude the results of the balance of the account. The
Group's largest modelled exposure net of reinsurance is to a two event scenario
at 18.8% of capacity, which has increased for 2009 as a result of the
acquisition of Nameco 605.
Group income statement
Year ended 31 December 2008
+----------------------------------------------+--------+--------------+--------------+
| | | | 17 months |
+----------------------------------------------+--------+--------------+--------------+
| | | Year ended | ended |
+----------------------------------------------+--------+--------------+--------------+
| | | 31 December | 31 December |
+----------------------------------------------+--------+--------------+--------------+
| | | 2008 | 2007 |
+----------------------------------------------+--------+--------------+--------------+
| | Note | GBP'000 | GBP'000 |
+----------------------------------------------+--------+--------------+--------------+
| Gross premium written | | 5,245 | - |
+----------------------------------------------+--------+--------------+--------------+
| Reinsurance premium ceded | | (854) | - |
+----------------------------------------------+--------+--------------+--------------+
| Net premiums written | | 4,391 | - |
+----------------------------------------------+--------+--------------+--------------+
| Change in unearned gross premium provision | | (1,982) | - |
+----------------------------------------------+--------+--------------+--------------+
| Change in unearned reinsurance premium | | 218 | - |
| provision | | | |
+----------------------------------------------+--------+--------------+--------------+
| | | (1,764) | - |
+----------------------------------------------+--------+--------------+--------------+
| Net earned premium | | 2,627 | - |
+----------------------------------------------+--------+--------------+--------------+
| Net investment income | 3 | 358 | 174 |
+----------------------------------------------+--------+--------------+--------------+
| Other underwriting income | | (1) | - |
+----------------------------------------------+--------+--------------+--------------+
| Other income | | 25 | - |
+----------------------------------------------+--------+--------------+--------------+
| | | 382 | 174 |
+----------------------------------------------+--------+--------------+--------------+
| Revenue | | 3,009 | 174 |
+----------------------------------------------+--------+--------------+--------------+
| Gross claims paid | | (670) | - |
+----------------------------------------------+--------+--------------+--------------+
| Reinsurance share of gross claims paid | | 108 | - |
+----------------------------------------------+--------+--------------+--------------+
| Claims paid, net of reinsurance | | (562) | - |
+----------------------------------------------+--------+--------------+--------------+
| Change in provision for gross claims | | (1,740) | - |
+----------------------------------------------+--------+--------------+--------------+
| Reinsurance share of change in provision for | | 378 | - |
| gross claims | | | |
+----------------------------------------------+--------+--------------+--------------+
| Net change in provision for claims | | (1,362) | - |
+----------------------------------------------+--------+--------------+--------------+
| Net insurance claims and loss adjustment | | (1,924) | - |
| expenses | | | |
+----------------------------------------------+--------+--------------+--------------+
| Expenses incurred in insurance activities | | (720) | - |
+----------------------------------------------+--------+--------------+--------------+
| Other operating expenses | | (450) | (85) |
+----------------------------------------------+--------+--------------+--------------+
| Operating expenses | | (1,170) | (85) |
+----------------------------------------------+--------+--------------+--------------+
| Operating (loss)/profit before tax | 4 | (85) | 89 |
+----------------------------------------------+--------+--------------+--------------+
| Income tax credit/(expense) | | 37 | (27) |
+----------------------------------------------+--------+--------------+--------------+
| (Loss)/profit attributable to equity | | (48) | 62 |
| shareholders | | | |
+----------------------------------------------+--------+--------------+--------------+
| Earnings per share attributable to equity | | | |
| shareholders | | | |
+----------------------------------------------+--------+--------------+--------------+
| Basic and diluted | 5 | (0.65)p | 0.83p |
+----------------------------------------------+--------+--------------+--------------+
The (loss)/profit attributable to equity shareholders and earnings per share set
out above are in respect of continuing operations.
The accounting policies and notes are an integral part of these financial
statements.
Group balance sheet
At 31 December 2008
+----------------------------------------------+-------+----------------+---------------+
| | | 31 December | 31 December |
+----------------------------------------------+-------+----------------+---------------+
| | | 2008 | 2007 |
+----------------------------------------------+-------+----------------+---------------+
| | Note | GBP'000 | GBP'000 |
+----------------------------------------------+-------+----------------+---------------+
| Assets | | | |
+----------------------------------------------+-------+----------------+---------------+
| Intangible assets | 6 | 920 | 981 |
+----------------------------------------------+-------+----------------+---------------+
| Financial investments | 7 | 4,131 | 2,486 |
+----------------------------------------------+-------+----------------+---------------+
| Reinsurance share of insurance liabilities | | | |
+----------------------------------------------+-------+----------------+---------------+
| - Reinsurers' share of outstanding claims | | 678 | - |
+----------------------------------------------+-------+----------------+---------------+
| - Reinsurers' share of unearned premiums | | 266 | - |
+----------------------------------------------+-------+----------------+---------------+
| Other receivables, including insurance | | 2,557 | 79 |
| receivables | | | |
+----------------------------------------------+-------+----------------+---------------+
| Prepayments and accrued income | | 612 | 33 |
+----------------------------------------------+-------+----------------+---------------+
| Deferred income tax assets | | 16 | - |
+----------------------------------------------+-------+----------------+---------------+
| Cash and cash equivalents | | 3,931 | 3,552 |
+----------------------------------------------+-------+----------------+---------------+
| Total assets | | 13,111 | 7,131 |
+----------------------------------------------+-------+----------------+---------------+
| Liabilities | | | |
+----------------------------------------------+-------+----------------+---------------+
| Insurance liabilities | | | |
+----------------------------------------------+-------+----------------+---------------+
| - Claims outstanding | | 2,879 | - |
+----------------------------------------------+-------+----------------+---------------+
| - Unearned premiums | | 2,366 | - |
+----------------------------------------------+-------+----------------+---------------+
| Other payables, including insurance payables | | 803 | - |
+----------------------------------------------+-------+----------------+---------------+
| Accruals and deferred income | | 26 | 40 |
+----------------------------------------------+-------+----------------+---------------+
| Current income tax liabilities | | - | 27 |
+----------------------------------------------+-------+----------------+---------------+
| Deferred income tax liabilities | | 21 | - |
+----------------------------------------------+-------+----------------+---------------+
| Total liabilities | | 6,095 | 67 |
+----------------------------------------------+-------+----------------+---------------+
| Shareholders' equity | | | |
+----------------------------------------------+-------+----------------+---------------+
| Share capital | 8 | 741 | 741 |
+----------------------------------------------+-------+----------------+---------------+
| Share premium | 8 | 6,261 | 6,261 |
+----------------------------------------------+-------+----------------+---------------+
| Retained earnings | 8 | 14 | 62 |
+----------------------------------------------+-------+----------------+---------------+
| Total shareholders' equity | | 7,016 | 7,064 |
+----------------------------------------------+-------+----------------+---------------+
| Total liabilities and shareholders' equity | | 13,111 | 7,131 |
+----------------------------------------------+-------+----------------+---------------+
The accounting policies and notes are an integral part of these financial
statements.
Group cash flow statement
Year ended 31 December 2008
+--------------------------------------------------+--------------+----------------+
| | | 17 months |
+--------------------------------------------------+--------------+----------------+
| | Year ended | ended |
+--------------------------------------------------+--------------+----------------+
| | 31 December | 31 December |
+--------------------------------------------------+--------------+----------------+
| | 2008 | 2007 |
+--------------------------------------------------+--------------+----------------+
| Cash flow from operating activities | GBP'000 | GBP'000 |
+--------------------------------------------------+--------------+----------------+
| Results of operating activities | (85) | 89 |
+--------------------------------------------------+--------------+----------------+
| Interest received | (264) | (73) |
+--------------------------------------------------+--------------+----------------+
| Investment income | (49) | - |
+--------------------------------------------------+--------------+----------------+
| Dividend received | (18) | - |
+--------------------------------------------------+--------------+----------------+
| Income tax paid | 11 | - |
+--------------------------------------------------+--------------+----------------+
| Recognition of negative goodwill | (25) | - |
+--------------------------------------------------+--------------+----------------+
| Amortisation of intangible assets | 150 | - |
+--------------------------------------------------+--------------+----------------+
| Change in fair value of investments recognised | 17 | (101) |
| in the income statement | | |
+--------------------------------------------------+--------------+----------------+
| Changes in working capital: | | |
+--------------------------------------------------+--------------+----------------+
| Increase in other receivables | (3,057) | (112) |
+--------------------------------------------------+--------------+----------------+
| Increase in other payables | 810 | 40 |
+--------------------------------------------------+--------------+----------------+
| Net increase in technical provisions | 4,301 | - |
+--------------------------------------------------+--------------+----------------+
| Net cash inflow/(outflow) from operating | 1,791 | (157) |
| activities | | |
+--------------------------------------------------+--------------+----------------+
| Cash flows from investing activities | | |
+--------------------------------------------------+--------------+----------------+
| Interest received | 264 | 73 |
+--------------------------------------------------+--------------+----------------+
| Investment income | 49 | - |
+--------------------------------------------------+--------------+----------------+
| Dividend received | 18 | - |
+--------------------------------------------------+--------------+----------------+
| Purchase of intangible assets | (17) | (981) |
+--------------------------------------------------+--------------+----------------+
| Proceeds from disposal of intangible assets | 3 | - |
+--------------------------------------------------+--------------+----------------+
| Purchase of financial investments | (1,645) | (2,385) |
+--------------------------------------------------+--------------+----------------+
| Acquisition of subsidiary, net of cash acquired | (84) | - |
+--------------------------------------------------+--------------+----------------+
| Net cash outflow from investing activities | (1,412) | (3,293) |
+--------------------------------------------------+--------------+----------------+
| Cash flows from financing activities | | |
+--------------------------------------------------+--------------+----------------+
| Net proceeds from issue of ordinary share | - | 7,002 |
| capital | | |
+--------------------------------------------------+--------------+----------------+
| Net cash inflow from financing activities | - | 7,002 |
+--------------------------------------------------+--------------+----------------+
| Net increase in cash, cash equivalents and bank | 379 | 3,552 |
| overdrafts | | |
+--------------------------------------------------+--------------+----------------+
| Cash, cash equivalents and bank overdrafts at | 3,552 | - |
| beginning of year/period | | |
+--------------------------------------------------+--------------+----------------+
| Cash, cash equivalents and bank overdrafts at | 3,931 | 3,552 |
| end of year/period | | |
+--------------------------------------------------+--------------+----------------+
The accounting policies and notes are an integral part of these financial
statements.
Statement of changes in shareholders' equity
Year ended 31 December 2008
+-----------------------------------+----------+-------------+----------+----------+---------+
| | Ordinary | Preference | Share | Retained | |
| | | | | | |
+-----------------------------------+----------+-------------+----------+----------+---------+
| | share | share | premium | earnings | Total |
| | capital | capital | | | |
+-----------------------------------+----------+-------------+----------+----------+---------+
| Group | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-----------------------------------+----------+-------------+----------+----------+---------+
| Profit for the period | - | - | - | 62 | 62 |
+-----------------------------------+----------+-------------+----------+----------+---------+
| Share issue expense charged to | - | - | (411) | - | (411) |
| equity | | | | | |
+-----------------------------------+----------+-------------+----------+----------+---------+
| New preference shares issued | - | 50 | - | - | 50 |
+-----------------------------------+----------+-------------+----------+----------+---------+
| New ordinary shares issued | 741 | - | 6,672 | - | 7,413 |
+-----------------------------------+----------+-------------+----------+----------+---------+
| Preference shares redeemed | - | (50) | - | - | (50) |
+-----------------------------------+----------+-------------+----------+----------+---------+
| At 31 December 2007 | 741 | - | 6,261 | 62 | 7,064 |
+-----------------------------------+----------+-------------+----------+----------+---------+
| At 1 January 2008 | 741 | - | 6,261 | 62 | 7,064 |
+-----------------------------------+----------+-------------+----------+----------+---------+
| Loss for the year attributable to | - | - | - | (48) | (48) |
| equity shareholders | | | | | |
+-----------------------------------+----------+-------------+----------+----------+---------+
| At 31 December 2008 | 741 | - | 6,261 | 14 | 7,016 |
+-----------------------------------+----------+-------------+----------+----------+---------+
| | | | | | |
+-----------------------------------+----------+-------------+----------+----------+---------+
The accounting policies and notes are an integral part of these financial
statements.
Notes to the Financial Statements
1. Accounting policies
The principal accounting policies adopted in the preparation of the financial
information set out in the announcement are set out in the full financial
statements for the year ended 31 December 2008 (the "Financial Statements").
Basis of preparation
The Financial Statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS"), incorporating IFRIC interpretations
endorsed by the European Union (EU) and with those parts of the Companies Act
1985, applicable to companies reporting under IFRS. The Financial Statements
comply with Article 4 of the EU IAS regulation. The Financial Statements have
been prepared under the historical cost convention.
The preparation of Financial Statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the Financial
Statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results ultimately may differ
from these estimates. The Group participates in insurance business through its
Lloyd's corporate member. Accounting information in respect of syndicate
participations is provided by the syndicate managing agents and is reported upon
by the syndicate auditors.
International Financial Reporting Standards
At the date of authorisation of the Financial Statements the following standards
and interpretations had been published by the International Accounting Standards
Board ("IASB") but were not yet effective and have therefore not been adopted in
the Financial Statements:
* IAS 1 Presentation of Financial Statements (Revised);
* IAS 23 Borrowing Costs (Revised);
* IAS 1 and IAS 32 Puttable Financial Instruments and Obligations Arising on
Liquidation (Amended);
* IFRS 1 and IAS 27 Cost of an Investment in a Subsidiary, Jointly Controlled
Entity or Associate (Amended);
* IFRS 2 Share-based Payment (Amended);
* IFRS 8 Operating Segments;
* IFRIC 13 Customer Loyalty Programmes.
The Directors anticipate that the adoption of the above in future years will not
have a material impact on the Financial Statements except for additional
disclosures.
2. Segmental information
Primary segment information
The Group has three primary segments which represent the primary way in which
the Group is managed:
+-----+------------------------------------------------------------------------------------+
| - | Syndicate participation; |
+-----+------------------------------------------------------------------------------------+
| - | Investment management; |
+-----+------------------------------------------------------------------------------------+
| - | Other corporate activities. |
+-----+------------------------------------------------------------------------------------+
+-------------------------------------------+---------------+------------+------------+-----------+
| | | | Other | |
+-------------------------------------------+---------------+------------+------------+-----------+
| | Syndicate | Investment | corporate | |
+-------------------------------------------+---------------+------------+------------+-----------+
| | participation | management | activities | Total |
+-------------------------------------------+---------------+------------+------------+-----------+
| Year ended 31 December 2008 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------------+---------------+------------+------------+-----------+
| Net earned premium | 2,627 | - | - | 2,627 |
+-------------------------------------------+---------------+------------+------------+-----------+
| Net investment income | 134 | 224 | - | 358 |
+-------------------------------------------+---------------+------------+------------+-----------+
| Other underwriting income | (1) | - | - | (1) |
+-------------------------------------------+---------------+------------+------------+-----------+
| Other income | - | - | 25 | 25 |
+-------------------------------------------+---------------+------------+------------+-----------+
| Net insurance claims and loss adjustment | (1,924) | - | - | (1,924) |
| expenses | | | | |
+-------------------------------------------+---------------+------------+------------+-----------+
| Expenses incurred in insurance activities | (720) | - | - | (720) |
+-------------------------------------------+---------------+------------+------------+-----------+
| Amortisation of syndicate capacity | - | - | (150) | (150) |
+-------------------------------------------+---------------+------------+------------+-----------+
| Other operating expenses | - | - | (300) | (300) |
+-------------------------------------------+---------------+------------+------------+-----------+
| Results of operating activities | 116 | 224 | (425) | (85) |
+-------------------------------------------+---------------+------------+------------+-----------+
+-------------------------------------------+---------------+------------+------------+-----------+
| | | | Other | |
+-------------------------------------------+---------------+------------+------------+-----------+
| | Syndicate | Investment | corporate | |
+-------------------------------------------+---------------+------------+------------+-----------+
| | participation | management | activities | Total |
+-------------------------------------------+---------------+------------+------------+-----------+
| 17 months ended 31 December 2007 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------------+---------------+------------+------------+-----------+
| Net earned premium | - | - | - | - |
+-------------------------------------------+---------------+------------+------------+-----------+
| Net investment income | - | 174 | - | 174 |
+-------------------------------------------+---------------+------------+------------+-----------+
| Other income | - | - | - | - |
+-------------------------------------------+---------------+------------+------------+-----------+
| Net insurance claims and loss adjustment | - | - | - | - |
| expenses | | | | |
+-------------------------------------------+---------------+------------+------------+-----------+
| Expenses incurred in insurance activities | - | - | - | - |
+-------------------------------------------+---------------+------------+------------+-----------+
| Other operating expenses | - | - | (85) | (85) |
+-------------------------------------------+---------------+------------+------------+-----------+
| Results of operating activities | - | 174 | (85) | 89 |
+-------------------------------------------+---------------+------------+------------+-----------+
Secondary segment information
The Group does not have any secondary segments as it considers all of its
activities to arise from trading within the UK.
3.Net investment income
+--------------------------------------------------------+----------------+----------------+
| | | 17 months |
+--------------------------------------------------------+----------------+----------------+
| | Year ended | ended |
+--------------------------------------------------------+----------------+----------------+
| | 31 December | 31 December |
+--------------------------------------------------------+----------------+----------------+
| | 2008 | 2007 |
+--------------------------------------------------------+----------------+----------------+
| | GBP'000 | GBP'000 |
+--------------------------------------------------------+----------------+----------------+
| Investment income at fair value through income | 67 | - |
| statement | | |
+--------------------------------------------------------+----------------+----------------+
| Realised gains on financial investments at fair value | 92 | - |
| through income statement | | |
+--------------------------------------------------------+----------------+----------------+
| Unrealised (losses)/gains on financial investments at | (17) | 101 |
| fair value through income statement | | |
+--------------------------------------------------------+----------------+----------------+
| Investment management expenses | (48) | - |
+--------------------------------------------------------+----------------+----------------+
| Bank interest | 264 | 73 |
+--------------------------------------------------------+----------------+----------------+
| Net investment income | 358 | 174 |
+--------------------------------------------------------+----------------+----------------+
4. Operating (loss)/profit before tax
+------------------------------------------------------------+---------------+---------------+
| | | 17 months |
+------------------------------------------------------------+---------------+---------------+
| | Year ended | ended |
+------------------------------------------------------------+---------------+---------------+
| | 31 December | 31 December |
+------------------------------------------------------------+---------------+---------------+
| | 2008 | 2007 |
+------------------------------------------------------------+---------------+---------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------------------+---------------+---------------+
| Operating (loss)/profit before tax is stated after | | |
| charging: | | |
+------------------------------------------------------------+---------------+---------------+
| Directors' remuneration | 74 | 26 |
+------------------------------------------------------------+---------------+---------------+
| Amortisation of intangible assets | 150 | - |
+------------------------------------------------------------+---------------+---------------+
| Auditors' remuneration: | | |
+------------------------------------------------------------+---------------+---------------+
| - audit of the Parent Company and Group Financial | 12 | 12 |
| Statements | | |
+------------------------------------------------------------+---------------+---------------+
| - audit of subsidiary company Financial Statements | 2 | - |
+------------------------------------------------------------+---------------+---------------+
| - services relating to taxation | 2 | 2 |
+------------------------------------------------------------+---------------+---------------+
| - other services pursuant to legislation | 15 | - |
+------------------------------------------------------------+---------------+---------------+
5. Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period. The Group has no dilutive potential ordinary
shares.
Earnings per share have been calculated in accordance with IAS 33.
Reconciliation of the earnings and weighted average number of shares used in the
calculation is set out below.
+-----------------------------------------------------------+---------------+---------------+
| | | 17 months |
+-----------------------------------------------------------+---------------+---------------+
| | Year ended | ended |
+-----------------------------------------------------------+---------------+---------------+
| | 31 December | 31 December |
+-----------------------------------------------------------+---------------+---------------+
| | 2008 | 2007 |
+-----------------------------------------------------------+---------------+---------------+
| | GBP'000 | GBP'000 |
+-----------------------------------------------------------+---------------+---------------+
| (Loss)/profit for the period (GBP) | (48,000) | 62,000 |
+-----------------------------------------------------------+---------------+---------------+
| Weighted average number of shares in issue | 7,413,376 | 7,413,376 |
+-----------------------------------------------------------+---------------+---------------+
| Basic and diluted (loss)/earnings per share (p) | (0.65) | 0.83 |
+-----------------------------------------------------------+---------------+---------------+
6. Intangible assets
+----------------------------------------------------------+-------------------------------+
| | Syndicate |
+----------------------------------------------------------+-------------------------------+
| | capacity |
+----------------------------------------------------------+-------------------------------+
| | GBP'000 |
+----------------------------------------------------------+-------------------------------+
| Cost | |
+----------------------------------------------------------+-------------------------------+
| At 1 January 2008 | 981 |
+----------------------------------------------------------+-------------------------------+
| Additions | 17 |
+----------------------------------------------------------+-------------------------------+
| Disposals | (3) |
+----------------------------------------------------------+-------------------------------+
| Acquired with subsidiary undertaking | 86 |
+----------------------------------------------------------+-------------------------------+
| At 31 December 2008 | 1,081 |
+----------------------------------------------------------+-------------------------------+
| Amortisation | |
+----------------------------------------------------------+-------------------------------+
| At 1 January 2008 | - |
+----------------------------------------------------------+-------------------------------+
| Charge for the year | 150 |
+----------------------------------------------------------+-------------------------------+
| Acquired with subsidiary undertaking | 11 |
+----------------------------------------------------------+-------------------------------+
| At 31 December 2008 | 161 |
+----------------------------------------------------------+-------------------------------+
| Net book value | |
+----------------------------------------------------------+-------------------------------+
| As at 31 December 2008 | 920 |
+----------------------------------------------------------+-------------------------------+
| As at 31 December 2007 | 981 |
+----------------------------------------------------------+-------------------------------+
7. Financial investments
+----------------------------------------------------------+-----------------+-------------+
| | 31 December | 31 December |
+----------------------------------------------------------+-----------------+-------------+
| | 2008 | 2007 |
+----------------------------------------------------------+-----------------+-------------+
| Group | GBP'000 | GBP'000 |
+----------------------------------------------------------+-----------------+-------------+
| Shares and other variable yield securities | 124 | 435 |
+----------------------------------------------------------+-----------------+-------------+
| Debt securities and other fixed income securities | 1,683 | - |
+----------------------------------------------------------+-----------------+-------------+
| Holdings in collective investment schemes | 23 | - |
+----------------------------------------------------------+-----------------+-------------+
| Deposits with credit institutions | 32 | - |
+----------------------------------------------------------+-----------------+-------------+
| Funds held at Lloyd's | 2,258 | 2,051 |
+----------------------------------------------------------+-----------------+-------------+
| Other | 11 | - |
+----------------------------------------------------------+-----------------+-------------+
| Market value | 4,131 | 2,486 |
+----------------------------------------------------------+-----------------+-------------+
| Cost | 4,155 | 2,385 |
+----------------------------------------------------------+-----------------+-------------+
| Listed investments included in the above | 1,830 | 435 |
+----------------------------------------------------------+-----------------+-------------+
8. Share capital and share premium
+---------------------------------------------------------+----------+------------+---------+
| | Ordinary | Preference | |
| | | | |
+---------------------------------------------------------+----------+------------+---------+
| | share | share | |
+---------------------------------------------------------+----------+------------+---------+
| | capital | capital | Total |
+---------------------------------------------------------+----------+------------+---------+
| Authorised | GBP'000 | GBP'000 | GBP'000 |
+---------------------------------------------------------+----------+------------+---------+
| 29,500,000 ordinary shares of 10p each and 100,000 | 2,950 | 50 | 3,000 |
| preference shares of 50p each at 1 January 2008 | | | |
+---------------------------------------------------------+----------+------------+---------+
| 29,500,000 ordinary shares of 10p each and 100,000 | 2,950 | 50 | 3,000 |
| preference shares of 50p each at 31 December 2008 | | | |
+---------------------------------------------------------+----------+------------+---------+
| | | | |
+---------------------------------------------------------+----------+------------+---------+
| | Ordinary | | |
| | | | |
+---------------------------------------------------------+----------+------------+---------+
| | share | Share | |
+---------------------------------------------------------+----------+------------+---------+
| | capital | premium | Total |
+---------------------------------------------------------+----------+------------+---------+
| Allotted, called up and fully paid | GBP'000 | GBP'000 | GBP'000 |
+---------------------------------------------------------+----------+------------+---------+
| 7,413,376 ordinary shares of 10p each and share premium | 741 | 6,261 | 7,002 |
| at 1 January 2008 | | | |
+---------------------------------------------------------+----------+------------+---------+
| 7,413,376 ordinary shares of 10p each and share premium | 741 | 6,261 | 7,002 |
| at 31 December 2008 | | | |
+---------------------------------------------------------+----------+------------+---------+
9. Events after the balance sheet date
On 16 February 2009 Hampden Underwriting plc acquired 100% of the issued share
capital of GBP1 ordinary shares of Nameco (No. 605) Limited for GBP497,000.
Nameco (No. 605) Limited is a corporate member of Lloyd's. It is not practicable
to disclose further details of the financial effect of this acquisition as the
financial statements of Nameco (No. 605) Limited are not yet available.
In order to support the underwriting of Nameco (No. 605) Limited, the Group
deposited Funds at Lloyd's of GBP892,455 on 16 February 2009. In addition in
order to support the existing underwriting capacity of the Group's subsidiaries,
a further GBP544,576 will be required to be deposited with Lloyd's by 30 June
2009.
10.Financial statements
The financial information set out in this announcement does not constitute
statutory accounts but has been extracted from the Group's Financial Statements
which have not yet been delivered to the Registrar. The Group's annual report
and Financial Statements will be posted to shareholders shortly. Further copies
will be available from the Company's registered office: Hampden House, Great
Hampden, Great Missenden, Buckinghamshire, HP16 9RD.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFEFWISUSEFI
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