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Brit Insurance Sets Up New Bermudian Company

by Amanda Banks,, London

22 December 2006

Brit Insurance Holdings Plc, the UK-domiciled international general insurer and reinsurer, has become the latest Lloyd's of London-listed insurer to establish a new company in Bermuda.

In an announcement last week, Brit Insurance said that it has signed contracts for the launch of a specialist reinsurance company, Norton Re Insurance Limited to write catastrophe retrocession business from Bermuda.

Norton Re has received its licence from the Bermuda Monetary Authority and, subject to conditions, completion was expected on Friday 15 December 2006.

As a lead investor Brit Insurance subscribed $21.1 million giving it an overall interest of 19.6% of the initial $107.7 million capital subscribed. The remainder is owned by international institutional investors. HSBC Bank plc acted as adviser, structurer and placement agent.

Commenting on the move, Dane Douetil, Chief Executive Officer of Brit Insurance, stated:

"We announced earlier in the year that we were investigating this new strategy and we are delighted by the high level of demand that we have seen from investors. As 2006 has progressed, terms and conditions and pricing in the retrocession market have strengthened further and we and our fellow investors regard this as the optimal time to launch the new carrier.

"Norton Re will offer investors pure exposure to this specialist underwriting area with the benefit of our knowledge and experience. Our own investment will be restricted to a minority share to limit correlation of risk with our other classes of insurance and reinsurance."

He added:

"This will be our first investment in an offshore underwriting business and a further significant step in Brit Insurance's evolution into a widely diversified insurance group. We believe that this innovative structure is attractive to capital markets and is a potential blueprint that we can consider for other classes of business with similar characteristics."

Last week, London-based insurer, Hiscox, announced the completion of its corporate reorganisation to introduce a new Bermudian domiciled holding company for the group.

Bermuda's more favourable tax regime and its proximity to its increasingly important US market have been cited by the company as the major reasons for the formation of the new entity.

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