Trenwicks Lloyds Unit To Conduct MBO

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London

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As Trenwick Group Ltd. files for Chapter 11 bankruptcyprotection and continues to run off insurance and reinsuranceoperations, its Lloyds business is conducting a managementbuyout.

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The management team of Trenwick Managing Agents Limited, led bychief executive officer Michael Watson, has reached agreement withTrenwick Group to acquire the companys Lloyds business for anundisclosed sum.

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While the management team will have a significant stake in thenew business, it will be majority owned by Englefield Capital, a700 million euro ($792.8 million) private equity fund.

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Trenwick Managing Agents, which shortly will be renamed, managesSyndicate 839 and Syndicate 44, a life syndicate. The acquiredbusiness begins with the 2004 year of account. Capacity is expectedto be 250 million ($402.2 million) and 3.5 million ($5.6 million)for the two syndicates, respectively.

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Syndicate 839 will focus on five main areas: treaty reinsurance;personal lines and property insurance; professional indemnityinsurance; financial institutions insurance; and specialty linesinsurance.

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Mr. Watson and Jim Giordano, the chief underwriting officer,joined TMA in May 2001 when they began a restructuring of theportfolio and returned the business to profitability, the TMAmanagement team said. As part of that effort, TMA recently ceasedwriting some 90-100 million of aviation business ($144.8-$160.9million), according to market sources. (It will continue to writegeneral aviation insurance for small planes within the syndicatespecialty insurance division.)

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Much of the reduction in capacity– from the current 328 million($527.7 million) to 250 millionis attributable to the reducedaviation writings. A leader in aviation has to be able to write aminimum of 100 million ($160.9 million) in premiums, according to amarket source. That volume, however, would leave the Syndicateoverexposed to one line of business.

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The acquisition remains subject to the completion of duediligence, execution of legal documentation and regulatoryconsents, TMA said.

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Meanwhile, Trenwick Group Ltd., the current parent of TMA,announced on Aug. 7 its filing of Chapter 11 bankruptcy proceedingsin the United States and the filing of similar proceedings inBermuda, Barbados or the United Kingdom. Previously it had placedthe remainder of its businesses into runoff. In 2002, Trenwick soldthe inforce business of LaSalle Re Limited, its Bermudasubsidiary.


Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, August 18, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.


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