Millea to Reorganize Kiln; Close Vetra Investment Vehicle

Japan’s Millea Holdings, Inc., (Tokio Marine and Nichido Fire) announced plans to reorganize the Bermuda-based Kiln Group, which it agreed to acquire last December (See IJ web site – https://www.insurancejournal.com/news/international/2007/12/14/85660.htm). The group will also wind up its Vetra investment vehicle.

Millea’s President Shuzo Sumi said the reorganization is aimed at streamlining the structure of the Kiln group. It will involve winding up Kiln Ltd., the holding company, and Kiln Reinsurance Ltd., the reinsurance company.

Millea finalized the Kiln acquisition in March. Kiln’s primary operations are in the UK, where it operates several Lloyd’s Syndicates.

“The winding up of these two companies is part of a structural reorganization plan to streamline Kiln Group and is not intended to cause any change with respect to the routine business operations of Kiln Group, such as with underwriting activities at Lloyd’s,” said the announcement.

Millea explained that the business operations of Kiln Ltd., the Bermuda-based holding company, which is wholly-owned subsidiary of Tokio Marine & Nichido “will be transferred to Kiln (UK) Holdings Limited, a wholly owned subsidiary of Kiln Ltd. and the intermediary holding company of Kiln Group.”

The existing contracts of Kiln Reinsurance Ltd., a wholly-owned subsidiary of Kiln Ltd., which is also based in Bermuda, “will be transferred to other group companies of Millea Group and subsequently Kiln Reinsurance Ltd. will be wound up together with Kiln Ltd.”

Concerning Vetra, Millea issued the following statement:
“Since November 2006, in an effort to increase its investment in highly rated bonds and to enhance its investment efficiencies, Tokio Marine & Nichido Fire Insurance Co., Ltd. (“Tokio Marine & Nichido”), a wholly- owned subsidiary of Millea Holdings, Inc. (the “Company”), has been invested in the subordinated income notes (the “Notes”) issued by a special purpose company, Vetra Finance Corporation (“Vetra”).

“However, due to disruptions and uncertainties in the credit markets that are resulting in liquidity difficulties, it has become difficult for Vetra to obtain new funding and to make new investments.

“The Company announces that Vetra plans to complete the payment in full of amounts owing to its remaining secured creditors in a few months and then to purchase all of the outstanding Notes held by Tokio Marine & Nichido with the remaining assets of Vetra. Tokio Marine & Nichido’s investment in Vetra will cease accordingly.

“The Company has treated Vetra as a consolidated subsidiary of the Company and the financial results of Vetra have been consolidated into the financial results of the Company. Vetra will no longer be a consolidated subsidiary of the Company once Tokio Marine & Nichido’s investment in Vetra ceases. The impact of this to the business forecasts of the Company for the fiscal year ending March 31, 2009 that were announced on May 21, 2008 is considered insignificant.”

Source: Millea Group – ir.millea.co.jp/en