Lloyd’s Kiln to Raise $129 Million

November 3, 2005

R.J. Kiln plc, a leading Lloyd’s underwriter, announced that it plans to raise £72.8 Million ($129.3 million in additional capital through a rights issue. Kiln plans to offer 3 Issue Shares for every 7 Existing Ordinary Shares.

The bulletin said the issue had been “fully underwritten by Numis other than in respect of approximately 17.6 million Issue Shares for which Berkley Insurance Company has irrevocably undertaken to subscribe in order to take up the rights to which it is beneficially entitled under the Rights Issue in full.”

The issue price was set at 87 pence ($1.55) per share under the Rights Issue, which represents a discount of 16 percent to the closing price of 103.5 pence ($1.84) as of November 1.

The company explained its reasoning for the rights issue as a move to increase capacity following the impact of the U.S. Hurricanes. Kiln said it is “expecting underwriting conditions in its core specialist areas in 2006 to be attractive, with overall rate increases of 12.5 per cent. Individual property risks, US catastrophe reinsurance risks and offshore energy risks are forecast to increase by 23 percent, 23 percent and 46 percent, respectively.”

The announcement notes that “at least £40 million [$71 million] of the net proceeds will be used to acquire capacity on Syndicate 510 and to provide additional funds at Lloyd’s to support the increased underwriting participation of the Kiln Corporate Members for the 2006 year of account. The balance of the net proceeds provides flexibility to acquire and support additional capacity and will strengthen Kiln’s capital and liquidity position.”

Chief Executive Edward Creasy commented: “We believe that the underwriting conditions for 2006 and future years have changed markedly for the better as a result of the losses caused to the insurance and reinsurance industry by the US Hurricanes. The Rights Issue will allow our shareholders to benefit from a greater share of the returns generated by our specialist underwriting expertise within this environment and enhance Kiln’s financial flexibility.”

The bulletin also noted that the rights issue is “conditional upon, inter alia, Shareholder approval of the Resolutions to be proposed at the Extraordinary General Meeting of the Company (“EGM”) which is expected to be held on 25 November 2005.”

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