TIDMHUW
RNS Number : 8912D
Hampden Underwriting Plc
23 May 2012
23 May 2012
Hampden Underwriting plc
("Hampden Underwriting" or the "Company")
Preliminary results for the year ended 31 December 2011
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
2011.
Highlights
-- Premium written during the period totalled GBP7.7m
-- Net loss of GBP387,000
-- Loss per share of 5.22p
-- Net assets decrease to GBP7.5m
-- Net assets per share of GBP1.01
Commenting upon these results Chairman, Sir Michael Oliver
said:
"Whilst it gives me no pleasure to be reporting a loss in 2011,
when compared to the Lloyd's quoted sector as a whole, all
companies bar one saw a greater fall in their net tangible assets
as a result of the events of 2011 than we did. The Company was well
placed to deal with the loss and remains well capitalised to take
full advantage of the improved conditions that inevitably follow
losses of such severity."
Enquiries:
Hampden Underwriting Jeremy Evans 020 7863 6567
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Smith & Williamson Corporate
Finance David Jones 020 7131 4000
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Chairman's statement
There have been many examples since corporate capital was first
introduced into Lloyd's of companies whose ambition in the early
years was too high and whose underwriting limit in comparison to
its underlying assets was also too high. A substantial loss came
along and the company was not even in a position to meet its
solvency requirements to maintain its existing underwriting levels
let alone take advantage of an improving underwriting climate by
increasing its capacity. I am delighted to be able to say that we
do not fall into that category.
The principal task in the formative years of an underwriting
company has to be the safe custodianship of the company's assets,
all the more so in a difficult underwriting climate. This has also
been achieved.
Whilst it gives me no pleasure to be reporting a loss in 2011,
that has to be looked at in the context of the year being the
second worst on record for catastrophe losses. That said your
Company was well placed to deal with the loss and remains well
capitalised to take full advantage of the improved conditions that
inevitably follow losses of such severity and indeed diversity. Our
net asset value ("NAV") has fallen as a consequence but is still
over GBP1 per share and if one looks at the value of our capacity
using the most recent auction figures as opposed to the amortised
value in the balance sheet, it is actually worth a further GBP1.1m,
equivalent to approximately 15p a share. When compared to the
Lloyd's quoted sector as a whole, all companies bar one saw a
greater fall in their net tangible assets as a result of the events
of 2011 than we did.
We have got off to a good start and have done what we said we
would do. However, we are far too small and that is one of the
reasons why the good start is not reflected in our share price
which remains subject to violent swings when shares are either
bought or sold. As I said last year we need more shares in the
hands of more shareholders. It was always our intention to
endeavour to raise fresh capital to enable us to do more of what we
are currently doing but only when the time was right. That time is
now. We are involved in continuing discussions with our advisers
about raising capital which will of course involve giving you, our
existing shareholders, the opportunity to participate. We hope to
be able to tell you more about these plans in the near future.
We remain committed to implementing the policy of paying steady
and sustained dividends. The uncertainty I spoke of last year
concerning the full implications of the 2011 losses that prevented
us from initiating that policy are still being felt. In these
circumstances, we still feel that it would be imprudent to declare
a dividend at this stage but it is our intention to pay an interim
dividend later in the year.
Sir Michael Oliver
Non-executive Chairman
22 May 2012
Lloyd's Adviser's report
2011 review and outlook for 2012
Total insured losses for the global insurance industry from
natural catastrophes in 2011 totalled $110bn, making 2011 the
second most expensive year for the industry after 2005, when
insured losses, according to Swiss Re Sigma, were $123bn including
over $100bn from Hurricanes Katrina, Rita and Wilma. Most of the
losses in 2011 came from the earthquake in Japan in March costing
an estimated $35bn and the New Zealand earthquake in February
which, while technically an aftershock of the September 2010 event,
cost $12bn, becoming the country's most expensive disaster ever.
Later in the year (between July and November 2011) an area in
Thailand roughly equivalent to the size of Switzerland flooded,
causing the highest insured loss from global fresh water floods,
estimated at $12bn.
Hurricane losses were moderate with Hurricane Irene being the
first hurricane to make landfall in the US since Hurricane Ike in
2008, causing an estimated $5.3bn of insured losses. Taken
together, US insured losses in 2011 were the fifth highest on
record, exceeding $35bn with a series of spring tornado losses
estimated at $21.3bn, significantly above the 20 year inflation
adjusted average of $5.2bn between 1991 and 2010.
Catastrophe losses contributed to the US property/casualty
insurance industry making an underwriting loss of $36bn,
representing the second largest annual underwriting loss ever,
behind the $52.3bn underwriting loss in 2001. Despite these
underwriting losses, investment gains (income and realised capital
gains) enabled an overall net profit after tax of $19.2bn.
Industry capital remains strong for both insurers and reinsurers
despite the catastrophe losses suffered in 2011. The policyholders'
surplus of the US property casualty industry, a proxy for
underwriting capacity, boosted by unrealised capital gains declined
by only 1.6% to $550.3bn at year end 2011 compared with the record
policyholders' surplus of $556.9bn at year end 2010. Aon Benfield
Analytics estimated that reinsurers' capital fell by only 3% during
2011 or $15bn to $455bn compared with the record global reinsurance
capital available at year end 2010.
The insurance pricing cycle is a classic supply led cycle with
demand usually playing a more limited role. Typically demand
measured by premium has grown over the long term, being linked to
growth in GDP and levels of insurance penetration. However, since
2007 insurance underwriting has been particularly affected by
deficient demand during the great recession of 2007-2009 when US
net written premiums fell by an aggregate 6.8%, the first three
year decline since 1930-1933. The 3.3% rise in net written premium
growth in 2011 was driven in the main by rate rises rather than
exposure growth with US GDP only increasing by 1.7% in 2011. US net
written premium was 2.8% lower at year end 2011 than at the end of
2006. The demand component is expected to continue to recover with
A M Best projecting an increase of 3.8% in net written premium for
2012, which will have a modest impact on the underwriting capacity
required to write business.
The insurance and reinsurance marketplace is now beginning to
show signs of a recovery in premium and rates but this is not yet
broad, as we saw in 2001/2002. Our outlook is slowly becoming more
positive, although we remain cautious overall due to the
competition that remains evident in much of the non-catastrophe
exposed classes.
Overall, the supply/demand characteristics still mean that we
favour reinsurance underwriting where there is currently greater
margin in an average loss year than in insurance underwriting. We
continue to be more positive about US catastrophe exposed
reinsurance with that market being boosted this year due to a
change in a leading model for catastrophe losses. Since the start
of Q3 2011 a new model from the catastrophe loss modelling company,
Risk Management Solutions (RMS 11.0), has begun to be implemented
by both insurers and reinsurers with exposures to US windstorm and
storm surge for exposed coastal areas. Revised loss protections
have in some cases increased by 40% to 60%, requiring some insurers
to buy increased cover and forcing reinsurance underwriters to
increase rates or reduce the amount of capacity they provide.
Rate rises for US catastrophe reinsurance at 1 January 2012
increased by 8% according to reinsurance broker Guy Carpenter,
although, taking account of reductions in 2010 and 2011, rates are
still lower by 7.5% than they were in 2009. In territories with
significant underwriting losses such as Japan, rate increases have
been much more significant with Guy Carpenter reporting earthquake
excess of loss cover rates now back at 1993/1994 levels with rate
increases of between 35% and 125%.
In 2011 Lloyd's received 41% of its income from the US and
Canada with Lloyd's having overtaken American International Group
as the largest underwriter of US excess and surplus lines
("E&S") insurance business in 2010. As the market leader in
E&S business by premium volume Lloyd's is expected to benefit
from a hardening market leading to business migrating back to the
E&S market from the US admitted market.
We are currently seeing the start of a hardening market in the
US for the commercial property and casualty business, with the
Council of Insurance Agents and Brokers quarterly commercial P/C
market index survey showing an increase for the first quarter of
2012 of 4.4% following a 2.7% increase in the last quarter of 2011.
These increases mark the beginning of a reversal in the trend
following 30 quarters of rate declines. The opportunity for Lloyd's
to take advantage of a hard market when it arrives can be gauged
from the fact that in the last hard market between 2000 and 2003,
E&S income in the US increased from $12bn to over $30bn in a
four year period.
The investment component of an insurer's operating result in
principle should be a powerful force for underwriting discipline.
The New York based Insurance Information Institute estimates that a
100% combined ratio, i.e. breakeven underwriting result before
investments, would have generated a 5.5% return on equity in
2009/2010 compared with 10% in 2005 and 16% in 1979 when interest
rates were so much higher. The recovery in asset markets since 2009
accompanied by further declines in interest rates and credit
spreads have benefited insurers' profit and loss accounts with
realised gains as well as balance sheets with unrealised gains.
However, these may be one-off gains as maturing bonds and new
premium are being invested at much lower yields and importantly
locking in these low yields for the duration of the bond.
This long-term loss of investment yield will have a particular
impact on casualty underwriting where premiums can be held for a
"tail" of five to eight years before a claim is paid. Most lines of
casualty, both in the US and non-US, other than loss affected
business, remain competitive with rates stable overall. The reason
for this is that in particular the 2004 through to 2007 accident
years have continued to run off well, showing reserve releases,
although recent research from Moody's indicates that the more
recent accident years from 2009 and 2010 may have small
deficiencies in reserves. So far, the predominant influence has
been reserve releases, although going forward this is expected to
abate over the next two years and contribute to the transition we
are seeing from a soft market to a hardening market.
Overall, the market is "turning the corner" with signs of a
broadening out of rate increases from business with loss experience
and US catastrophe reinsurance to direct classes, particularly for
US business. Disappointingly, casualty remains soft and we do not
envisage this changing over the next 12 months.
The economy is likely to continue to have an influence during
2012. If the US economy continues its recovery exposure growth will
improve and we would expect rates to continue to harden. Lloyd's is
well placed to take advantage given its market position as one of
the largest US catastrophe reinsurers and the No.1 US excess and
surplus lines insurer measured by premium volume.
However, a further US recession could lead again to curtailed
demand and the potential for recession sensitive claims as well as
slowing the rate of recovery in the sectors where rates are rising.
The continuing impact of the sovereign debt crisis in peripheral
Europe is something which has the potential to impact both the
asset (investments) and liability (claims) sides of the balance
sheet. Lloyd's is well prepared having carried out stress tests on
the potential impact of any euro sovereign debt write downs and
restructurings.
Hampden Underwriting's 2011 results
The traditional method for comparing the performance of
competing insurance business is an analysis of the combined ratio,
which is the sum of net claims and expenses divided by net earned
premiums. The combined ratio of Hampden Underwriting's portfolio
for 2011 was 107.9% due in the main to catastrophe losses from
property reinsurance as well as a continued disappointing
performance by UK motor. This puts Hampden's Underwriting's
performance in line with the average of its peers in Lloyd's as
well as industry peer groups.
Syndicate profit distributions
Profit distributions from Hampden Underwriting's portfolio of
syndicates continue to be made by reference to the traditional
three year accounts. Using this measure of performance Hampden
Underwriting's portfolio has outperformed Lloyd's on the 2009
account at 31 December 2011 and is estimated to outperform Lloyd's
on the 2010 account.
The 2009 account result at 31 December 2011, before members'
fees, was a profit of 18.27%, which is just over one percentage
point above the Lloyd's market average result of 17.25%. The 2009
account benefited from good rates for property catastrophe
reinsurance business coinciding with a year of low catastrophe
losses and the absence of a large hurricane making landfall.
Hampden Underwriting's portfolio benefited in particular from its
participation on reinsurance business through special purpose
reinsurance syndicates managed by managing agency partners, Hiscox
and Amlin, which compensated for losses on two UK motor
syndicates.
The 2010 account estimated result after eight quarters at Q4
2011 is a small loss at the mid-point of (2.04%) with Hampden
Underwriting again outperforming the estimated loss of the Lloyd's
market as a whole (3.95%). The majority of the insured losses on
the 2010 account were due to catastrophe losses occurring in
2011.
Again, like 2009, no hurricanes made direct landfall in the US
but insured catastrophe losses were 65% higher at $43bn compared
with 2009. At this stage of development most syndicates do not
report any prior year releases, which provides potential for the
estimated result to improve, before closure at the end of 2012.
At this early stage of development of the 2011 account a
complete set of published estimates is not available until the end
of May 2012. This account is expected to produce a modest loss in
line with the 2010 account, with the largest loss expected to be
due to the Thai floods.
Hampden Underwriting's capital position
Net tangible assets reduced by only 2.5% during 2011 to GBP6.43m
despite the catastrophe losses suffered, which puts the Company in
a strong financial position to develop the portfolio as and when
opportunities arise. Net tangible assets provide a significant
capital surplus over the Lloyd's minimum capital requirement as at
November 2011 which was just under GBP4m.
Hampden Underwriting's portfolio for 2012
Hampden's underwriting portfolio for 2012 continues to provide 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. 29.9% of the capacity
is in the three syndicates rated "A" by Hampden Agencies, being
Syndicates 386, 609 and 2791, with Syndicate 2791 being the largest
holding at 16.4% of capacity.
Risk management
The two major risks faced by insurers and reinsurers are
deficient loss reserves and inadequate pricing, which, taken
together, account for 40% of insurer impairments according to A M
Best. The pricing cycle is easier to identify in real time. The
reserving cycle is more difficult to identify in real time as
typically reserving standards slip after a period of reserve
releases and there is a lag before this is recognised. Hampden
Agencies approaches the management of portfolio risk by
diversifying across classes of business, syndicates and managing
agents and importantly understanding the cycle management and
reserving strategy of each syndicate as well as the rate
environment.
We also assess the downside in the event of a major loss through
monitoring the aggregate losses estimated by managing agents to
realistic disaster scenarios. Risk is assessed in the context of
potential return with catastrophe exposure being actively managed
dependent on market conditions. With improved rating in reinsurance
business for 2012 this class of business is likely to increase its
share of gross premium. Hampden Underwriting's largest modelled
exposures net of reinsurance on the basis of Lloyd's realistic
disaster scenarios are similar for 2012 compared with 2011, with
the largest remaining a two-event scenario incorporating two
consecutive Atlantic seaboard windstorms in the north-east of
America at 19.2% of capacity net of reinsurance.
The next highest is a Gulf of Mexico windstorm at 18.7% of
capacity net. Realistic disaster scenario exposure as a percentage
of capacity remains for all scenarios within the 20% net of
reinsurance Hampden Agencies guideline.
Top 10 syndicate holdings
2012 2012 2012
Syndicate HCM portfolio HCM portfolio
capacity capacity % of
--------- --------------------------- ----------- ------------- ------------- ------------------
Syndicate Managing agent GBP'000 GBP'000 total Largest class
--------- --------------------------- ----------- ------------- ------------- ------------------
Managing Agency Partners
2791 Ltd 508,003.7 1,527.4 16.4 Reinsurance
510 R. J. Kiln & Co. Ltd 1,064,000.0 1,479.9 15.9 US$ property
US$ Non-marine
623 Beazley Furlonge Ltd 214,697.1 1,158.8 12.5 liability
609 Atrium Underwriters Ltd 420,000.0 941.7 10.1 Energy
33 Hiscox Syndicates Ltd 949,995.6 734.2 7.9 Reinsurance
Equity Syndicate Management
218 Ltd 437,624.0 566.9 6.1 Motor
Omega Underwriting Agents
958 Ltd 279,999.7 434.9 4.7 Reinsurance
6111 Catlin 60,000.0 398.4 4.3 Reinsurance
Non-US$ Non-marine
386 QBE Underwriting Ltd 413,000.9 312.0 3.4 liability
557 R. J. Kiln & Co. Ltd 60,000.0 271.2 2.9 Reinsurance
--------- --------------------------- ----------- ------------- ------------- ------------------
Subtotal 7,825.3 84.1
--------- ------------------------------------------------------- ------------- ------------------
Total 9,307.0 100.0
--------- ------------------------------------------------------- ------------- ------------------
The top ten syndicates comprise 84.1% of the portfolio. Two new
syndicates were joined for 2012, managed by the Catlin and Pembroke
agencies.
Consolidated statement of comprehensive income
Year ended 31 December 2011
Year ended Year ended
31 December 31 December
2011 2010
Note GBP'000 GBP'000
------------------------------------------------------ -------------- -------------
Gross premium written 7,715 7,887
Reinsurance premium ceded (1,445) (1,436)
------------------------------------------------------ -------------- -------------
Net premiums written 6,270 6,451
Change in unearned gross premium provision 238 462
Change in unearned reinsurance premium provision (17) (122)
------------------------------------------------------ -------------- -------------
221 340
------------------------------------------------------ -------------- -------------
Net earned premium 6,491 6,791
Net investment income 3 247 368
Other underwriting income - 4
Other income 22 116
------------------------------------------------- ------------------- -------------
269 488
---------------------------------------------------------------------- -------------
Revenue 6,760 7,279
------------------------------------------------- ------------------- -------------
Gross claims paid (4,726) (4,582)
Reinsurance share of gross claims paid 842 729
------------------------------------------------- ------------------- -------------
Claims paid, net of reinsurance (3,884) (3,853)
------------------------------------------------- ------------------- -------------
Change in provision for gross claims (1,115) (398)
Reinsurance share of change in provision for
gross claims 486 58
------------------------------------------------- ------------------- -------------
Net change in provision for claims (629) (340)
------------------------------------------------- ------ ------------- -----------
Net insurance claims and loss adjustment expenses (4,513) (4,193)
Expenses incurred in insurance activities (2,277) (2,425)
Other operating expenses (574) (533)
------------------------------------------------- ------------------- -------------
Operating expenses (2,851) (2,958)
------------------------------------------------- ------------------- -------------
Operating (loss)/profit before tax 4 (604) 128
Income tax credit 217 4
------------------------------------------------- ------ ------------- -----------
(Loss)/profit and total comprehensive income attributable
to equity shareholders (387) 132
------------------------------------------------- ------ ----------- -------------
(Loss)/earnings per share attributable to equity shareholders
Basic and diluted 5 (5.22)p 1.78p
------------------------------------------------- ------ ----------- -------------
The (loss)/profit attributable to equity shareholders and
(loss)/earnings per share set out above are in respect of
continuing operations.
Consolidated statement of financial position
At 31 December 2011
31 December 31 December
2011 2010
Note GBP'000 GBP'000
Assets
Intangible assets 6 1,052 1,274
Deferred income tax assets - 12
Reinsurance share of insurance liabilities:
- reinsurers' share of outstanding
claims 3,044 2,592
- reinsurers' share of unearned premiums 409 425
Other receivables, including insurance
receivables 6,628 6,039
Prepayments and accrued income 842 901
Financial assets at fair value 7 13,675 13,841
Cash and cash equivalents 3,020 3,320
----------------------------------------- -------- -----------
Total assets 28,670 28,404
----------------------------------------- -------- -----------
Liabilities
Insurance liabilities:
- claims outstanding 14,234 13,104
- unearned premiums 3,137 3,377
Deferred income tax liabilities 415 655
Other payables, including insurance
payables 2,911 2,819
Accruals and deferred income 488 577
----------------------------------------- -------- -----------
Total liabilities 21,185 20,532
----------------------------------------- -------- -----------
Shareholders' equity
Share capital 8 741 741
Share premium 8 6,261 6,261
Retained earnings 483 870
----------------------------------------- ------- -----------
Total shareholders' equity 7,485 7,872
----------------------------------------- -------- -----------
Total liabilities and shareholders'
equity 28,670 28,404
----------------------------------------- -------- -----------
Consolidated statement of cash flows
Year ended 31 December 2011
Year ended Year ended
31 December 31 December
2011 2010
GBP'000 GBP'000
Cash flows from operating activities
Results of operating activities (604) 128
Interest received (4) (31)
Investment income (275) (315)
Recognition of negative goodwill - (116)
Profit on sale of intangible assets 11 -
Amortisation of intangible assets 270 246
Change in fair value of investments (5) (21)
Changes in working capital:
- increase in other receivables (530) (1,157)
- increase in other payables 3 955
- net increase in technical provisions 454 4,691
----------------------------------------------------- ----- -----------
Net cash (outflow)/inflow from operating activities (680) 4,380
----------------------------------------------------- ----- -----------
Cash flows from investing activities
Interest received 4 31
Income tax (paid)/receipt (16) 68
Investment income 275 315
Purchase of intangible assets (49) (26)
Purchase of financial assets at fair value 166 (3,400)
Acquisition of subsidiary, net of cash acquired - (159)
----------------------------------------------------- ----- -----------
Net cash inflow/(outflow) from investing activities 380 (3,171)
----------------------------------------------------- ----- -----------
Net (decrease)/increase in cash and cash equivalents (300) 1,209
Cash and cash equivalents at beginning of year 3,320 2,111
----------------------------------------------------- ----- -----------
Cash and cash equivalents at end of year 3,020 3,320
----------------------------------------------------- ----- -----------
The accounting policies and notes are an integral part of these
Financial Statements.
Statements of changes in shareholders' equity
Year ended 31 December 2011
Attributable to owners of the parent
-------------------------------------------------------------------------------------------
Preference Retained
Ordinary share capital share capital Share premium earnings Total
Consolidated GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------- -------------- ------------- --------- -------
At 1 January 2010 741 - 6,261 738 7,740
Profit and total comprehensive
income for the year - - - 132 132
------------------------------- ------- -------------- ------------- --------- -------
At 31 December 2010 741 - 6,261 870 7,872
------------------------------- ------- -------------- ------------- --------- -------
At 1 January 2011 741 - 6,261 870 7,872
Loss and total comprehensive
income for the year - - - (387) (387)
------------------------------- ------- -------------- ------------- --------- -------
At 31 December 2011 741 - 6,261 483 7,485
------------------------------- ------- -------------- ------------- --------- -------
Notes to the financial statements
Year ended 31 December 2011
1. Accounting policies
The principal accounting policies adopted in the preparation of
the financial information set out in this announcement are set out
in the full financial statements for the year ended 31 December
2011 (the "Financial Statements").
Basis of preparation
The Financial Statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") endorsed by
the European Union ("EU"), IFRIC interpretations and those parts of
the Companies Act 2006 applicable to companies reporting under
IFRS.
The Financial Statements have been prepared under the historical
cost convention as modified by the revaluation of financial assets
at fair value through profit or loss. A summary of the more
important Group accounting policies is set out below.
The preparation of Financial Statements in conformity with IFRS
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 year. 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 subsidiaries. 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
The following standards and amendments to standards are
mandatory for the first time for the financial year beginning 1
January 2011. The adoption of these standards does not have a
material impact on the Group's Financial Statements.
-- IFRS 7 (amended) "Financial Instruments: Disclosures". The amendments
require an explicit statement that the interaction between qualitative
and quantitative disclosures better enables users to evaluate an entity's
exposure to risks arising from financial instruments.
-- IAS 1 (amended) "Presentation of Financial Statements". IAS 1 is amended
to clarify that reconciliation from opening to closing balances is
required to be presented in the statement of changes in equity for
each component of equity. IAS 1 is also amended to allow the analysis
of the individual other comprehensive income line items by component
of equity to be presented in the notes.
-- IAS 32 (amended) "Financial Instruments: Presentation". The amendment
requires that rights, options or warrants to acquire a fixed number
of the entity's own equity instruments for a fixed amount of any currency
are equity instruments if the entity offers the rights, options or
warrants pro rata to all of its existing owners of the same class of
its own non-derivative equity instruments.
-- IFRIC 19 "Extinguishing Financial Liabilities with Equity Instruments".
IFRIC 19 deals with measurement of equity instruments issued in a debt
for equity swap. It addresses the accounting for such a transaction
by the debtor only.
-- IFRIC 14 (amended) "Prepayment of a Minimum Funding Requirement". The
amendment to IFRIC 14 removes unintended consequences arising from
the treatment of prepayments when there is a minimum funding requirement
("MFR"). The amendment results in prepayments of contributions in certain
circumstances being recognised as an asset rather than an expense.
-- ISA 24 (amended) "Related Party Disclosures" simplifies the disclosure
requirements for government related entities and clarifies the definition
of a related party.
In addition, the following is a list of standards that are in
issue but are not effective in 2011, or have not yet been adopted
in the EU, together with the effective date of application to the
Group:
-- IAS 12 (amendment) "Deferred Tax: Recovery of Underlying Assets" (effective
1 January 2012)
-- IAS 1 (amendment) "Presentation of Items of Other Comprehensive Income"
(effective 1 July 2012)
-- IFRS 9 "Financial Instruments" (effective 1 January 2015)
-- IRFS 10 "Consolidated Financial Statements" (effective 1 January 2015)
-- IFRS 11 "Joint Arrangements" (effective 1 January 2013)
-- IFRS 12 "Disclosure of Interests in Other Entities" (effective 1 January
2013)
-- IFRS 13 "Fair Value Measurement" (effective 1 January 2013)
-- IAS 19 (amendment) "Defined Benefit Plans" (effective 1 January 2013)
-- IAS 32 (amendment) "Offsetting Financial Assets and Financial Liabilities"
(effective 1 January 2014)
-- IFRS 7 (amendment) "Offsetting Financial Assets and Liabilities" (effective
1 January 2013)
-- IAS 27 "Separate Financial Statements" (effective 1 January 2013)
-- IAS 28 "Investments in Associates and Joint Ventures" (effective 1
January 2013)
-- IFRS 1 (amendment) "Severe Hyperinflation and Removal of Fixed Dates
for First-time Adopters" (effective 1 July 2011)
-- IFRS 1 (amendment) "Government Loans" (effective 1 January 2013)
-- IFRS 7 (amendment) "Disclosures - Transfers of Financial Assets" (effective
1 July 2011)
-- IFRIC 20 "Stripping Costs in the Production Phase of a Surface Mine"
(effective 1 January 2013)
The Directors do not anticipate that the adoption of these
standards will have a material impact on the Financial
Statements.
2. Segmental information
The Group has three segments that represent the primary way in
which the Group is managed:
syndicate participation;
investment management; and
other corporate activities.
Syndicate Investment Other corporate
participation management activities Total
Year ended 31 December 2011 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ ------- ----------- --------------- -------
Net earned premium 6,491 - - 6,491
Net investment income 245 2 - 247
Other underwriting income - - - -
Other income 22 - - 22
Net insurance claims and loss adjustment
expenses (4,513) - - (4,513)
Expenses incurred in insurance activities (2,277) - - (2,277)
Amortisation of syndicate capacity - - (158) (158)
Other operating expenses (192) - (224) (416)
------------------------------------------ ------- ----------- --------------- -------
Results of operating activities (224) 2 (382) (604)
------------------------------------------ ------- ----------- --------------- -------
Syndicate Investment Other corporate
participation management activities Total
Year ended 31 December 2010 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ ------- ----------- --------------- -------
Net earned premium 6,791 - - 6,791
Net investment income 365 3 - 368
Other underwriting income 4 - - 4
Other income - - 116 116
Net insurance claims and loss adjustment
expenses (4,193) - - (4,193)
Expenses incurred in insurance activities (2,425) - - (2,425)
Amortisation of syndicate capacity - - (158) (158)
Other operating expenses (156) - (219) (375)
------------------------------------------ ------- ----------- --------------- -------
Results of operating activities 386 3 (261) 128
------------------------------------------ ------- ----------- --------------- -------
The Group does not have any geographical segments as it
considers all of its activities to arise from trading within the
UK.
No major customers exceed 10% of revenue.
3. Net investment income
Year ended Year ended
31 December 31 December
2011 2010
GBP'000 GBP'000
Investment income 275 315
Realised gains on financial assets at fair value through
profit or loss 74 137
Unrealised gains on financial assets at fair value through
profit or loss 5 21
Investment management expenses (111) (136)
Bank interest 4 31
----------------------------------------------------------- ----- -----------
Net investment income 247 368
----------------------------------------------------------- ----- -----------
4. Operating (loss)/profit before tax
Year ended Year ended
31 December 31 December
2011 2010
GBP'000 GBP'000
Operating (loss)/profit before tax is stated after charging:
Directors' remuneration 65 65
Amortisation of intangible assets 270 246
Auditors' remuneration:
- audit of the Parent Company and Group Financial
Statements 25 24
- audit of subsidiary company Financial Statements 8 3
- services relating to taxation - 5
- other services pursuant to legislation - 15
- other services - 9
--------------------------------------------------- --- -----------
The Group has no employees.
5. (Loss)/earnings per share
Basic (loss)/earnings per share is calculated by dividing the
(loss)/earnings attributable to ordinary shareholders by the
weighted average number of ordinaryshares outstanding during the
period.
The Group has no dilutive potential ordinary shares.
Earnings per share has been calculated in accordance with IAS
33.
Reconciliation of the (loss)/earnings and weighted average
number of shares used in the calculation is set out below:
Year ended Year ended
31 December 31 December
2011 2010
(Loss)/profit for the period GBP(387,000) GBP132,000
-------------------------------------------- ------------ -----------
Weighted average number of shares in issue 7,413,376 7,413,376
-------------------------------------------- ------------ -----------
Basic and diluted (loss)/earnings per share (5.22)p 1.78p
-------------------------------------------- ------------ -----------
6. Intangible assets
Syndicate
capacity
GBP'000
Cost
At 1 January 2010 1,649
Additions 26
Acquired with subsidiary undertaking 304
------------------------------------- -----
At 31 December 2010 1,979
------------------------------------- -----
At 1 January 2011 1,979
Additions 49
Disposals (1)
------------------------------------- -----
At 31 December 2011 2,027
------------------------------------- -----
Amortisation
At 1 January 2010 433
Charge for the year 246
Acquired with subsidiary undertaking 26
------------------------------------- -----
At 31 December 2010 705
------------------------------------- -----
At 1 January 2011 705
Charge for the year 270
------------------------------------- -----
At 31 December 2011 975
------------------------------------- -----
Net book value
As at 31 December 2010 1,274
------------------------------------- -----
As at 31 December 2011 1,052
------------------------------------- -----
7. Financial assets at fair value through profit or loss
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities.
Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3: techniques which use inputs that have a significant
effect on the recorded fair value that are not based on observable
market data.
The Group has no level 3 investments.
As at 31 December 2011, the Group held the following financial
assets carried at fair value on the statement of financial
position:
Assets measured at fair value
2011 Level 1 Level
2
Group GBP000 GBP000 GBP000
-------------------------------------------------- ------ ------- ------
Shares and other variable yield securities 1,071 1,071 -
Debt securities and other fixed income securities 7,821 7,821 -
Participation in investment pools 484 484 -
Loans guaranteed by mortgage 81 - 81
Holdings in collective investment schemes 80 - 80
Deposits with credit institutions 43 - 43
Funds held at Lloyd's 4,090 4,090 -
Other 5 - 5
-------------------------------------------------- ------ ------- ------
Total - market value 13,675 13,466 209
-------------------------------------------------- ------ ------- ------
2010 Level 1 Level 2
Group GBP000 GBP000 GBP000
-------------------------------------------------- ------ ------- -------
Shares and other variable yield securities 1,149 1,149 -
Debt securities and other fixed income securities 8,502 8,502 -
Participation in investment pools 504 504 -
Loans guaranteed by mortgage 77 - 77
Holdings in collective investment schemes 76 - 76
Deposits with credit institutions 55 - 55
Funds held at Lloyd's 3,473 3,473 -
Other 5 - 5
-------------------------------------------------- ------ ------- -------
Total - market value 13,841 13,628 213
-------------------------------------------------- ------ ------- -------
Funds at Lloyd's represents assets deposited with the
Corporation of Lloyd's (Lloyd's) to support the Group's
underwriting activities as described in the Accounting Policies.
The Group has entered into a Lloyd's Deposit Trust Deed which gives
the Corporation the right to apply these monies in settlement of
any claims arising from the participation on the syndicates. These
monies can only be released from the provision of this Deed with
Lloyd's express permission and only in circumstances where the
amounts are either replaced by an equivalent asset, or after the
expiration of the Group's liabilities in respect of its
underwriting.
The Directors consider any credit risk or liquidity risk not to
be material.
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 preference shares
of 50p each
at 1 January 2011 2,950 50 3,000
------------------------------------------------ ------------- ---------- -------
29,500,000 ordinary shares of 10p each and 100,000 preference shares
of 50p each
at 31 December 2011 2,950 50 3,000
------------------------------------------------ ------------- ---------- -------
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 at 1 January 2011 741 6,261 7,002
------------------------------------------------ ------- ------- -------
7,413,376 ordinary shares of 10p each and share
premium at 31 December 2011 741 6,261 7,002
------------------------------------------------ ------- ------- -------
9. 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 and on the
Company's website www.hampdenplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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