Hampden releases reinsurance capital for reinvestment
Hampden Underwriting, which provides investment into the Lloyd's insurance market, has released a significant amount of capital – by way of an annually renewable reinsurance arrangement – back into the market.
The transaction includes a collateralised quota share reinsurance agreement commencing with 2013 year of account, 50 percent of the Company's 2013 insurance exposure ceded to the reinsurer and a release of £4.1m (approximately 50% of the company's £8.2m of Funds at Lloyd's) for reinvestment in new opportunities.
A ratcheted, performancebased profit commission payable to the Company of between 10 percent and 20 percent of the profits arising on business ceded in each period and a minimum term of one year renewable annually thereafter are also included.
"This transaction presents Hampden Underwriting with a welcome source of capital with which to fund nearterm opportunities the Company wishes to pursue and does so on attractive commercial terms,” said Sir Michael Oliver, the Company's chairman. “The Board regularly considers the relative merits of alternative sources of capital and is confident that this is an appropriate funding option at this time."
Nigel Hanbury, the company's chief executive, added: "Current market conditions continue to present the Company with attractive investment opportunities which require funding. We are delighted to have been able to successfully conclude this transaction which provides the Company with a modest war chest with which we can continue to progress acquisition opportunities. The reinsurance terms provide a profit commission in good underwriting years and a reduced risk exposure in disappointing underwriting years in a spectrum that is both equitable and commercially attractive. Its annually renewable feature provides Hampden Underwriting with certainty for 2013 as well as the appropriate opportunity to review the arrangement from time to time."
