May 2011 Financial News

GHL Enters Agreement to Sell Its Lloyd’s of London Business

May 23, 2011

Guardian Holdings Limited (GHL) and its minority shareholding partners have agreed to sell their Lloyd’s of London business, Jubilee Group Holdings Limited (JGHL), to Ryan Specialty Group for a total consideration of £35 million (which at the current rate of exchange is approximately TT$359 million). The transaction values the business at 2.33 times book value, placing a premium on the business which exceeds comparable recent Lloyd’s of London acquisitions.

As the largest single shareholder in JGHL, with just under 40% ownership, GHL supplied the majority of underwriting capital to the three syndicates managed by JGHL’s managing agency, Jubilee Managing Agency Limited. The underwriting capital currently committed to these syndicates amounts to approximately £30 million (approximately TT$308 million), which will flow back to GHL over the next four years as the underwriting years are closed. These funds will be in addition to the proceeds received from the sale of GHL’s shares in JGHL.

According to GHL Group CEO Jeff Mack, “the decision to exit our Lloyd’s of London business is part of an overall and ongoing strategic review of GHL’s businesses by our Board of Directors since the start of 2009.”

GHL can trace its participation at Lloyd’s back to 2002 when it acquired NEMWIL, which in turn owned a Lloyd’s Corporate Member through which a moderate underwriting commitment had been made. The Group’s participation in the Lloyd’s market was expanded when it acquired, with its minority partners, a 40% interest in Appleclaim Limited and Jubilee Managing Agency Limited. The following year, Appleclaim expanded with its own acquisition from the St. Paul Insurance Group of the former Cassidy Davis businesses. Appleclaim Limited was re-branded Jubilee Group Holdings Limited in 2009. The acquisition of a Lloyd’s Managing Agency was part of GHL’s expansion plans into developed markets.

In contrast to GHL’s acquisition of Zenith Insurance Company, which was sold in 2009 taking a TT$856 million write-down, JGHL has provided the Group with an excellent return on capital. Chairman Arthur Lok Jack noted that “the companies remaining in our portfolio are companies we believe will offer our shareholders the greatest return on capital. With the sale of Jubilee, we have essentially returned to our Caribbean roots.” He added that “the proceeds from this sale will be used to support the organic growth of our existing companies and will also be available for future acquisitions.” Mack made the same point to shareholders at GHL’s Annual General Meeting on May 10th, adding that GHL’s priority for acquisitions will be in is home market, the English-speaking Caribbean.

The sale of Jubilee is expected to add an estimated TT$0.30 to GHL’s earnings per share this year. The sale is subject to receiving the necessary regulatory approvals in the United Kingdom.


Arthur Lok Jack
Chairman
May 19, 2011

Jeff Mack
Group CEO
May 19, 2011


Source:
The Trinidad and Tobago Stock Exchange Limited
Monday May 23, 2011