FOR IMMEDIATE RELEASE
1 December 2005

Subordinated debt
2005-12-01 01:00:00

Brit Insurance Holdings PLC ('Brit' or 'the Company'), the UK-based international general insurer and reinsurer, announces that it has conditionally agreed to raise £150 million of Lower Tier Two long term subordinated debt, through the issue of Subordinated Notes due 2030 ('the Issue'). Brit will use the proceeds to fund the Group's working capital, to take advantage of growth opportunities in the insurance market, for general corporate purposes, including re-financing the Company's 8.5% Unsecured Subordinated Loan Stock 2008 (whether on maturity in 2008 or earlier) and to fund all or some of the Group's current pension fund deficit which is approximately £20 million as calculated under FRS17.
The Issue is callable on 9 December 2020 and bears an initial interest at the rate of 6.71% per annum, payable annually in arrear, representing a spread of 240 basis points over the benchmark gilt. Following the call date the interest rate resets at 340 basis points above the 10-year gilt rate prevailing at the time. The Issue is expected to be assigned a rating of BBB by Fitch Ratings, and to be listed on the London Stock Exchange's Gilt Edged and Fixed Interest Market. Joint Lead Managers to the issue are Barclays Capital and HSBC. Completion of the Issue, which is subject to certain conditions, is expected to occur on or before 9 December 2005.
Matthew Scales, Group Finance Director, said: 'The Group has taken advantage of favourable conditions in the bond markets to raise £150 million of additional Lower Tier Two debt. The Issue was substantially oversubscribed and as such we are very pleased with the overwhelming response, which has resulted in a very successful debut for the Group in the Sterling hybrid market.
'We now intend to press ahead with our share premium reduction to create further distributable reserves to give maximum flexibility for dividend payments. We expect this process to be completed by the end of March 2006. Subject to price, we may now consider buying in some or all of our existing 8.5% Unsecured Subordinated Loan Stock 2008 before its final maturity. We are extremely comfortable with this new, high quality long term subordinated debt representing approximately 25 per cent of net tangible assets.'
Dane Douetil, Group Chief Executive, said: 'We commented at the interims that we were looking at the Group's capital structure and that we would make an announcement before the year-end. We have now finished the review and concluded that an increase in gearing using subordinated debt that qualifies as regulatory capital is the most efficient and flexible structure.
'The £150 million that we have raised will allow us to grow our London Market and UK operations into the rapidly improving market conditions, whilst increasing earnings per share and our return on equity.'

Enquiries
Dane Douetil/Matthew Scales
Brit Insurance Holdings PLC
020 7984 8500
David Haggie/Peter Rigby
Haggie Financial
020 7417 8989

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FOR IMMEDIATE RELEASE1 December 2005

Subordinated debt 2005-12-01 01:00:00

FOR IMMEDIATE RELEASE
1 December 2005

Subordinated debt
2005-12-01 01:00:00