Bermuda-based insurer Ironshore Inc. said today that it is entering the Lloyd's market with the purchase of Pembroke Managing Agency and Syndicate 4000 for ?17 million in cash--or some $33.9 million at today's exchange rate.

Syndicate 4000 underwrites a portfolio of specialist lines products including financial institutions, professional liability, marine and other select specialist lines, Ironshore said.

The company announced it will take over the 2009 underwriting year of account onward and Chaucer Holdings PLC, the major Pembroke stockholder, will retain the 2008 and prior underwriting years of account.

The transaction is subject to approval from Lloyd's and the UK's Financial Services Authority.

Mark Wheeler is active underwriter for Syndicate 4000, and Pembroke Managing Agency is led by Mark Butterworth, managing director, with Mr. Wheeler as underwriting director.

Bob Deutsch, chief executive officer of Ironshore, said in a statement, "The addition of Pembroke completes Ironshore's strategic goal to have three central underwriting platforms: Bermuda, U.S. and Lloyd's."

He added, "Ironshore is pleased to have found such a talented group with Mark Wheeler and his experienced team. Pembroke offers Ironshore a diverse spread of international financial institutions and professional liability risks, as well as an ideal Lloyd's platform poised for future growth focused on underwriting profits."

Mr. Wheeler called Pembroke "an excellent fit within Ironshore. Our business is complementary and our underwriting approach like minded." The merger, he said, "will enable us to enhance our offering to clients, and we believe provides the right platform to grow the business successfully."

Mr. Wheeler established Syndicate 4000 in 2004. Mr. Butterworth joined Pembroke from Liberty Syndicates where he was chief operating officer. Ironshore said Justin Wash, who has been consulting with Ironshore since early 2007 and has 17 years of financial expertise in the Lloyd's market, will join Pembroke as finance director.

The company said Mr. Deutsch is non-executive director of Chaucer and, therefore, did not participate in the Chaucer board's deliberations relating to this transaction. He will resign from the board on Dec. 31.

According to an Ironshore spokesperson, Chaucer Holdings PLC will receive ?14.9 million ($29.7 million) for its 76 percent ownership of Pembroke JV, which owns Pembroke Managing Agency. The amount is subject to pound for pound adjustment to the extent that net assets at completion differ from ?500,000.

Two wholly owned subsidiaries of Chaucer provide capital for Syndicate 4000, which has an underwriting capacity of ?73 million ($145.5 million) for 2008.

Chaucer's right to participate on the Syndicate for the 2009 and subsequent years of account will pass to an Ironshore corporate member.

Chaucer said it will retain its participations on the Syndicate for the 2008 and prior open years of account, continuing to provide funds at Lloyd's to support their underwriting. The open years continue to perform satisfactorily.

The proceeds from the sale, Chaucer said, will provide additional working capital for its core businesses.

Sale of Pembroke follows a competitive auction process organized by Lexicon Partners Limited.

Ewen Gilmour, Chaucer CEO, said: "We are delighted to announce this transaction, which demonstrates the value of our syndicate investment and management activities, realizing a significant return for Chaucer shareholders and securing the future of Pembroke's business. We have enjoyed a successful partnership with the Pembroke management team over the last four years and wish them and Ironshore every success in the future."

Special Reports /

Bermuda's Ironshore Buys A Lloyd's Syndicate

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