Duncanson & Holt Syndicate Management Ltd

Current Syndicates - 55, 957, 1101, 1308, 1999
Other Syndicates of Interest

21 January 2000Syndicate 55 announces cash calls on 1998 and 1999 years of account
Duncanson & Holt Syndicate Management Ltd ("DHSM") has announced that, following the cessation of Syndicate 55 at the end of 1999 due to UNUMProvident Corporation's withdrawal of support to DHSM, it will be necessary to make cash calls on both the 1998 and 1999 years of account.

Over recent months the Syndicate has relied on a US$10m loan facility provided by the bankers to meet its day to day cash demands. However, in light of the circumstances relating to the Syndicate ceasing trading, the Bank has cancelled this facility and called in the outstanding loan amount with immediate effect.

Following unsuccessful attempts by DHSM to replace the loan with alternative funds, the Board of DHSM considers it necessary to make cash calls on Syndicate 55's 1998 and 1999 years of account. The calls will be for 7.5% on both years of account and will be due for payment on 28th February 2000.

07 January 2000Theakston 1101 ceases
In a surprise announcement, Duncanson & Holt Syndicate Management Ltd informed capital providers that, despite all efforts, the Syndicate will not trade forward into the year 2000. The reason for this last minute failure was that discussions with the new Agency's prospective partner, Richmond Underwriting Ltd, have been discontinued due to further uncertainty regarding the Syndicate's forecast results for the 1997 and 1998 years of account. Apparently, forecasts were at the upper end of the ranges previously provided due to late notice of claims, and the situation with regard to the 1998 year is particularly uncertain.

Work is currently in progress on year-end figures with the Syndicate's actuary and auditor, and Duncanson & Holt will communicate further developments in the near future.

23 December 1999Duncanson & Holt Syndicates to cease trading for 2000
Following UNUMProvident's announcement last month to withdraw support from Syndicates 55, 1308 and 1999, Duncason & Holt Syndicate Management Ltd has now confirmed that, due to the lack of time available to them to replace the capacity, these Syndicates will not trade forward for the 2000 year of account.
23 December 1999Duncanson & Holt Syndicates to cease trading for 2000
Following UNUMProvident's announcement last month to withdraw support from Syndicates 55, 1308 and 1999, Duncason & Holt Syndicate Management Ltd has now confirmed that, due to the lack of time available to them to replace the capacity, these Syndicates will not trade forward for the 2000 year of account.
07 December 1999Theakston update
Brian Theakston has informed capital providers that the Syndicate's management is making every effort to ensure that it will be continuing for the 2000 Account, subject to contract.

Following UNUMProvident's decision to withdraw from the Lloyd's market, it is unlikely that additional support will be in place as at 1st January, 2000 to replace the capacity lost. The Syndicate is planning to trade with a reduced Stamp, subject to the continuing support of Members' Agents and the satisfactory conclusion of a quota share arrangement. Excluding UNUMProvident's capacity, the Syndicate has a Stamp of £21.6m. Subject to Lloyd's approval, it is proposed that the quota share arrangement will increase the underwriting capacity to £40m.
02 December 1999D&H Update
We understand from the LUAA that there is currently a 50/50 chance that Simon Spinney and George Lloyd-Roberts will continue to underwrite into the 2000 Account. A major U.K. company is carrying out due diligence work this week and if they proceed with the employment of Messrs. Spinney and Lloyd-Roberts it is not clear whether one, two or three of the existing Syndicates will go forward or whether the new employer will establish a completely fresh vehicle.

Brian Theakston's Syndicate 1101 will continue for the 2000 Account. The Syndicate managers are talking to a major corporate backer in the hope of replacing the capacity lost through the withdrawal of UNUMProvident. Even if the talks come to nothing, the Syndicate will continue to trade with its Stamp reduced from £56m to £21m.
29 November 1999SHOCK DEPARTURE BY UNUMProvident
Duncanson & Holt Syndicate Management Ltd. (DHSM) has, in the last few weeks, struggled to obtain new capital for its four Syndicates following UNUMProvident's decision not to back the Syndicates for 2000. This move took the market by surprise as it had been clearly understood that UNUMProvident would stand behind the Syndicates for the 2000 Account. This agreement, made as recently as 20th October, 1999, involved UNUMProvident guaranteeing capacity for Non-Marine Syndicate 55 (£34m out of a total capacity of £46m in 1999); Non-Marine Syndicate 1101 (£22m out of a total capacity of £54m in 1999); Marine Syndicate 1308 (£64m out of a total capacity of £90m in 1999); and Space Syndicate 1999 (£8.5m out of a total capacity of £15m in 1999). The U-turn was prompted by the deteriorating estimates for the Duncanson & Holt Syndicate Management's Syndicates.

A statement from UNUMProvident said "recent deterioration in projected results of the Syndicates has led the company to this action, which will allow it to minimise and manage further costs and losses consistent with the related charge taken in its third quarter of this year". It is understood that the Duncanson & Holt Underwriters Board took this decision on 17th November after UNUMProvident had changed the articles for voting.

Andy Ripley, Managing Director of DHSM, explained that "the one UNUMProvident member on the five-strong Board was given more votes, in effect the number of Directors plus two. This meant that the vote to pull the capital backing was won by six votes to four. The DHU board was emasculated". A statement issued to brokers and capital providers by the Managing Agency stressed the fact that the Board of DHSM had not agreed the late notice of termination of Managing Agents Agreements with D&H Underwriters.

Andy Ripley commented that with the funds lacking, the only course of action would be to face reality and place the Syndicates in run-off. He further said that the Syndicates were in the process of being sold and Heads of Agreement had already been signed for Syndicate 1101.

To date, UNUMProvident has provided approximately 75% of the capital of DHSM managed Syndicates and it was known that it was making an exit from the market next year. Earlier this year UNUM and Provident merged and made the decision to concentrate on disability insurance, its core business, simultaneously making an exit from its reinsurance operations in North America and Lloyd's. Apparently the insurer made a provision of approximately £128m in the third quarter to cover the run-off.

Nearer to home, in September, DHSM ceased underwriting on Syndicate 957, placing its pooled reinsurance company, Duncanson & Holt Europe into run-off at the beginning of November.

Lloyd's rules require Managing Agents to have the necessary risk-based capital in place by 26th November, however we understand that Andy Ripley is seeking some leeway from Lloyd's in view of these developments.
26 November 1999Syndicate 55 run-off implications
The 1997 year of account of Syndicate 55 is forecast to produce a loss of 3% to 6% and the 1998 Account a loss of 7.5% to 12.5%.

Due to UNUMProvident's exit, the information and estimated results contained in the September SQR did not reflect the potential implications of the Syndicate being placed in run-off. An increased run-off cost provision and a risk premium may be required if the Syndicate does not have a successor to accept the reinsurance to close. The Syndicate will have to purchase additional reinsurance to protect the run-off of the account.
25 November 1999Syndicate 957 cash call
Duncanson & Holt have written to its backers to advise that due to cash flow problems which are exacerbated by the added burden of U.S. trading requirements, Syndicate 957's high reinsurance gearing has made the problem that much more acute. A U.S.$64m loan facility provided by the Syndicate's bankers has so far enabled the Syndicate to meet its cash demands but with the decision made in September for the Syndicate to cease underwriting, the Bank was forced to call in the loan facility. Discussions held with other Banks to replace the loan with an alternative facility proved unsuccessful.

The Board of Duncanson & Holt Syndicate Management Ltd. has therefore considered it necessary to make cash calls on Syndicate 957's 1997, 1998 and 1999 Accounts. The due date for the 1997 year of account call will be Friday 7th January, 2000 and for the 1998 and 1999 years of account Monday 28th February, 2000.

In summary, the following cash calls are being made, shown as a percentage of capacity:-

Cash call Payment date Forecast result
1997 Account 40% 7th Jan. 2000 (3%)-(8%)
1998 Account 40% 28th Feb. 2000 (15%)-(20%)
1999 Account 25% 28th Feb. 2000 No forecast to date
07 October 1999Duncanson & Holt and Richmond to form new Managing Agency
The Board of Duncanson & Holt Syndicate Management Ltd has announced that it has reached agreement in principle for the transfer of the management of Syndicate 1101 to a new managing agent that will be owned by the senior management of Syndicate 1101 and Richmond Underwriting Limited. This transaction has now received approval from Lloyd's.

Under the proposed agreement, the management and Richmond will form a new managing agent, to be called Trafalgar Syndicate Management Ltd, which will acquire the rights to manage Syndicate 1101 for the 2000 year of account. In addition, the current open years of Syndicate 1101 will be managed by Trafalgar Syndicate Management Ltd. Trafalgar Underwriting Agencies Ltd will remain a subsidiary of the Duncanson & Holt group.

If required, Duncanson & Holt Underwriters Ltd, a Lloyd's corporate member, will provide Syndicate 1101 with a maximum of £15 million capacity, to be capped at 40% of total Syndicate capacity, for the 2000 year of account.

The active underwriter will continue to be Brian Theakston. Syndicate 1101's underwriting team and agency management will remain as they were prior to the transfer of the syndicate to Duncanson Holt Syndicate Management Ltd.
01 October 1999Syndicate 957 - Notice of cessation of underwriting
UNUMProvident Corporation, the owners of DHSM are disposing of their Lloyd's interests. However, this does not include Syndicate 957. The Board of D&H has therefore decided that the Syndicate will cease underwriting subject to Lloyd's approval. Although UNUMProvident have indicated their support for the Syndicate for 2000, there is little prospect of it attracting capacity for 2001. D&H have made it clear that the decision to cease underwriting is no way reflective of the performance of the Underwriter, Gareth Absalom or his team. Mr. Absalom's contract cannot be terminated until 31st March, 2000 and the notice period on his contract is six months. Subject to Lloyd's approval, he will oversee the Syndicate's orderly run-off.

Given the circumstances, DHSM does not propose to offer compensation to the members of the Syndicate for its cessation.
10 September 1999Information for capital providers to Syndicate 1101
Subject to the approval of Lloyd's, the management of Syndicate 1101 is in the process of establishing a new Managing Agent for the purpose of managing Syndicate 1101 from 1st January, 2000.

They are currently in discussions with Duncanson & Holt Syndicate Management Ltd. with regard to the transfer of the right to manage the Syndicate.
07 July 1999Ralph Sharp to remain on DHSM Board
Ralph Sharp has agreed to remain on the Board of DHSM in a non-executive capacity.
04 May 1999UNUM exit from Lloyd's
UNUM Corporation has announced its decision to exit from reinsurance business which includes Duncanson & Holt Europe Ltd and its Lloyd's interests.

UNUM has appointed Morgan Stanley to work with D&H to find a buyer in order to ensure that new and acceptable capital will be supporting their Underwriting business for 2000. Various proposals will be considered by UNUM possibly including one from their existing management.

UNUM will be making a significant charge attributable to their exit from reinsurance business. This adjustment is due to a correction of estimated levels of profit which were previously assumed for US accounting that will not be achieved when applying a UK basis of accounting. There may also be some write-off of 'goodwill' associated with the acquisition of D&H/RMS.

With regards to D&H involvement with the Unicover three year contract, they have confirmed that throughout, their exposure to the Unicover three year deal is minimal and arises from writing the non-specific reinsurance of some of the re-insurers of the Unicover business and those protections have limited reinstatements.
05 March 1999Ralph Sharp leaves Duncanson & Holt
Ralph Sharp, Managing Director of Duncanson & Holt Syndicate Management Ltd., is to leave the company at the end of June to "take up another opportunity".
07 January 1999New F.I. Consortium for Duncanson & Holt
DUNCANSON & HOLT SYNDICATE MANAGEMENT LIMITED
3 underwriters, previously employed by Chubb Europe, have been employed by D&H to write a predominantly Financial Institutions book as a Lloyd's consortium. D&H syndicates 55 and 1101 will participate with a 50% share each. The account will mainly consist of UK accounts and is expected to write between £3.25 m. to £4.8 m. in the first year, being 46% bankers blanket bond, 42% PI and 12% D&O. LRG Services Limited, a wholly owned subsidiary of D&H, will administer the consortium.
04 December 1998Synd 1999 Space Synd to Lose 50% in First year
Simon Spinney's specialist space syndicate looks likely to lose in the region of 50% for the 1998 year of account, its first year of trading. D&H are unable to formally estimate a final result with any accuracy at this stage. Overall losses for the space insurance market in 1998 are likely to top US $1.25 billion, in a year when rates are already under pressure. This compares with the previous annual high of US $773 million in 1994. D&H's lower risk syndicate 1308 will be affected to a lesser degree.
04 December 1998Syndicate 1308 Syndicate Hit by Space Losses
Simon Spinney's syndicate that writes space business with syndicate 1999 (D&H's specialist space syndicate) on a 50:50 split, as part of its overall account, will be affected by the projected 50% loss estimated for syndicate 1999's 1998 account. D&H have advised supporters of syndicate 1308 that its overall result is likely to be affected by about 4%.

 
 

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