Nuclear Names wooed - Business - News - The Independent

Nuclear Names wooed

Cox offers 40p in pound to buy out power station syndicate members

An attempt by the quoted company which runs some of Lloyd's most profitable underwriting syndicates to buy out its Names is running into fierce opposition.

Cox Insurance Services is trying to buy in pounds 100m worth of underwriting capacity on three syndicates as the insurance market becomes increasingly dominated by corporate members with limited liability. The move highlights yet again the type of conflicts of interest that have riddled Lloyd's over the years.

The company's best offer is 40p in the pound of underwriting capacity - the premium income a Name can accept each year - to those on syndicate 1176. Cox, valued at pounds 212m with its shares at an all-time high of 199.5p, is offering the Names cash or shares for what is in effect the rights to participate in existing syndicates. Syndicate 1176 is one of Lloyds most profitable operations, specialising in insuring nuclear power stations across the world. When Cox set up the syndicate it wheeled out the late Lord Marshall of Goring, a formidable advocate of the safety of nuclear power, to attract Names to put up their capital.

On the face of it the offer looks generous. It is the highest price ever offered for underwriting capacity at Lloyd's and gives Names the chance to make a profitable exit. But opponents point out that the syndicate has been hugely successful, turning in annual profits of 40 per cent of premium capacity. So Cox's 40p-in-the-pound bid amounts to just one year's earnings.

"That's true but it's still a fair price," said Richard Brewster, finance director of Cox, citing increased risk and the fact that Names will have to put up more money as Lloyd's introduces new risk-based rules on capital needed to back up underwriting.

That fails to impress John Parkinson, a director of Willis Faber & Dumas Agencies which is the Members Agent for some of the Names. "It's too cheap at one year's profits, whatever they say about the risk," he said.

Sir David Berriman, chairman of the Association of Lloyd's Names, points out that for individual Names who want to stay in the insurance market there are only a limited number of successful syndicates to join. "If you think you can stay in a syndicate and earn a reasonable return why settle for one year's earnings?" said Sir David.

Cox is in the peculiar position of having to please its own shareholders while trying not to antagonise the Names whose commitments have helped it make money. Members agents also face a conflict. If they advise their Names to accept the offer and sell out, they lose fees.

Mr Brewster claims this is a non-problem. "We want to share gains between shareholders and the Names. This is truly a merger of interests where two and two does equal five."

Yet while Cox is offering once times earnings, its own shares, as SBC Warburg analyst Ben Cohen points out, sell for 17 times earnings. "It would be a good deal for shareholders since it would certainly enhance earnings per share. Other things being equal the Names will probably want to hold on and not accept the offer."

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
Arts and Entertainment
Emma Thompson and Bryn Terfel are bringing Sweeney Todd: The Demon Barber of Fleet Street to the London Coliseum
theatre

Returning to the stage after 20 years makes actress feel 'nauseous'

News
peopleThe Times of India said actress should treat it as a 'compliment'
PROMOTED VIDEO
Property
Home body: Badger stays safe indoors
property
News
The programme sees four specialists creating what they believe are three perfect couples, based on scientific matchmaking. The couples will not meet until they walk down the aisle together
tvUK wedding show jilted
Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
Arts and Entertainment
You've been framed: Henri Matisse's colourful cut-outs at Tate Modern
artWhat makes a smash-hit art show
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
Student
The Guildhall School of Music and Drama is to offer a BA degree in Performance and Creative Enterprise
student

Top conservatoire offers ‘groundbreaking’ arts degree

Sport
Mikel Arteta pictured during Borussia Dortmund vs Arsenal
champions league
Voices
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Payroll & Accounts Assistant

£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week