Ockham and BRiT announce Lloyd's capacity auction disclosure for syndicates 429 and 389

Ockham Holdings PLC's subsidiary SMSM Limited ("SMSM") and BRiT Insurance Holdings PLC's subsidiary Wren Syndicates Management Limited have today made the following Lloyd's Capacity Auction announcement:
August 31, 2001

• SMSM currently manages life Syndicate 429 which trades as "Alder Life". Syndicate 429 has approximately £8 million of capacity for 2001. SMSM and Wren are pleased to announce that negotiations are proceeding for Wren to acquire from SMSM for a nominal consideration the right to manage Syndicate 429. Heads of Agreement outlining the terms of the proposed acquisition have been signed. It is expected the acquisition will complete during September 2001, subject to regulatory approval and the signature by the parties of a sale and purchase agreement.
• Depending on the progress of the acquisition, either SMSM or Wren will make the necessary applications to Lloyd's to give the requisite notice under the agency agreements.
• Wren also expects to apply to Lloyd's for the merger of Syndicate 429 into Syndicate 389 which it already manages. It is expected the appropriate application for Lloyd’s consent for the syndicate merger in accordance with the Major Syndicate Transactions Byelaw will be made during the week beginning 3 September 2001. It is expected the syndicate merger will take effect from 1 January 2002.
• Reinsurance Group of America, Inc. (RGA), which currently provides 78% of the capacity for Syndicate 429 has indicated, following discussions with SMSM, that it does not intend to provide capital support to Syndicate 429 for the 2002 underwriting year of account. This is in accordance with the auction disclosure made in 2000 where RGA stated it did not intend to support underwriting beyond the end of the 2001 underwriting year of account. It is anticipated that RGA will confirm in advance of Auction 2 that it will support the merger of Syndicate 429 into Syndicate 389 as outlined above.
• BRIT UW Limited which currently provides 100% of the capacity for Syndicate 389 intends to confirm in advance of Auction 2 that it will support the merger of Syndicate 429 into Syndicate 389.
• Alternative bilateral arrangements for the provision of underwriting capacity for the merged syndicate are being considered although it is possible that all or some of RGA’s capacity may be made available from Auction 2 once the plans are further developed.
• BRIT UW Limited reserves the right to subscribe for capacity on Syndicate 429 in Auction 2 and/or Auction 3.
• The precise figures have not been finalised in terms of the basis on which, and amounts in which, rights to participate in the successor Syndicate 389 for 2002 are to be allocated among the members of the ceasing Syndicate 429 and the members of the successor syndicate for the current year of account. Potential subscribers in the auction should note that, if successful, they could be part of a minority interest on the merged syndicate. Further details will be disclosed in advance of Auction 2.
• It is not intended at this stage that the proposed merger will be concluded on terms that could give rise to a requirement in the future for BRIT UW Limited to make a mandatory offer to the minority on the merged syndicate. If however, such an obligation does arise BRIT UW Limited intends to seek the consent of the minority under the Mandatory Offer Byelaw to a waiver of that requirement.
• Wren is currently discussing with Lloyd's the most appropriate way of effecting a late change in the 2002 fee structure of Syndicate 389. At this stage, details of the fee structure for the merged syndicate for the 2002 year of account have not been finalised.
• It is proposed that Nicholas Allen and Kim Rowley will be joint active underwriters of the merged syndicate but for regulatory purposes Nicholas Allen will be the nominated active underwriter.
• Syndicate 389 has prepared a business forecast for 2002 but this will change if the acquisition of Syndicate 429 is completed and regulatory consent for the merger of Syndicate 429 into Syndicate 389 for 1 January 2002 is received from Lloyd's. In this case, a revised business forecast for the merged syndicate for 2002 will be prepared and circulated to relevant capital providers in advance of Auction 3.
• If the proposed merger of the syndicates is successful it is the intention that the 2001 year of account of Syndicate 429 will be reinsured to close into the 2002 year of account of Syndicate 389. In the meantime it is intended that the 1999 and 2000 years of account of Syndicate 429 will be reinsured in the usual way, into the next following year of account of Syndicate 429.
• The parties will be seeking dispensation from Lloyd's from certain of the requirements contained in the Major Syndicate Transactions Byelaw namely the requirement that a full merger document should be prepared and circulated to all relevant members of Syndicates 389 and 429 and the requirements to hold syndicate meetings and a ballot of members in order to effect the merger of the two syndicates.
• It should be noted that if regulatory consent to merge the two syndicates for 2002 is not received by the anticipated date of completion neither Wren nor SMSM will proceed with the transaction.