Highlights
• Profit for the half year was $11.0 million (2010: $1.4 million);
• Group net assets are $234.6 million (2010: $223.9 million);
• Net assets per share in US dollars are $2.08 (£1.27) per share (31 December 2010: $2.00 / £1.26);
• A capital extraction of $22.8 million from its Connecticut domiciled subsidiary PXRE Reinsurance Company Limited was achieved during the period. This represents free cash available to Tawa plc and has been used to repay debt;
• On 10 March 2011, the Group completed the transaction to acquire Oslo Reinsurance Company (UK) Limited;
• On 31 March 2011, Tawa plc set up QX Reinsurance Company Limited, a Bermudian regulated special purpose insurer which provides reinsurance coverage for a book of lead paint exposure that was underwritten by Pennsylvania National Mutual Casualty Insurance Company;
• On 7 April 2011, Tawa plc entered into a definitive agreement to acquire for $1 a 51% stake in LGIC Holdings, LLC the sole shareholder of Lincoln General Insurance Company, a Pennsylvania run-off, which is awaiting regulatory approval;
• An interim dividend for the year ended 31 December 2010 of 2 cents (1.23 pence) per share was paid on 1 June 2011, with a final dividend for the same amount to be paid on 2 December 2011.
Tawa plc holds capital extraction and free cash flow generation as its main performance indicator. In this context a capital extraction of $22.8 million from its Connecticut domiciled subsidiary PXRE Reinsurance Company Limited was achieved during the period, which has been used to repay debt. This continues to reflect the progress made on reduction of the volatility achieved by downscaling the liability portfolios owned by the Group.
Gilles Erulin, Chief Executive, commented:
“This first half of the year has been busy and profitable for our company. We have invested considerable effort into our servicing arm to create a solid performer across all segments of the insurance market. Since the acquisition of Pro, nearly two years ago, Tawa has positioned Pro as ‘best in class’ outsourcing provider and moved its consulting services towards higher value added. The soon to be completed acquisition of Chiltington, and now Whittington, will give our servicing business outstanding coverage of the UK insurance market, and a US and Continental reach.
“On the insurance portfolio front we are keeping a good momentum in our cash investment-cash extraction model. Overall the first half of the year results were more volatile than we would have expected in relation to the insurance portfolios we are carrying, but capable of being absorbed by solid acquisitions generated profits of the QX transaction earlier this year. QX is an innovative way to assume discontinued portfolios, when a company transfer is not possible. The engineering of this transaction by both Tawa and Penn National Insurance illustrates where Tawa makes a difference, enabling this innovative structure to be developed and established.
“Overall, Tawa has reaped the benefits of cross synergies between its servicing business and its portfolio acquisition capacity. Service provision enhances our ability to access portfolio opportunities and the portfolios acquired by Tawa feed our servicing business and increase the skilled professional staff which forms the bulk of our consulting capacity.
While this first part of the year has been a great ride, we keep in mind that those transactions are only valuable to our shareholders if we ensure new investments contribute to solid sustainable earnings in the future.”
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