Proposed Return of Capital to Shareholders

RNS Number : 6213Y

Hiscox Ltd

26 February 2013

 



Proposed Return of Capital to Shareholders and a 89 for 100 Share Capital Consolidation

Hamilton, Bermuda (26 February 2013) - Further to the announcement made on the 25 February 2013, Hiscox Ltd ("Hiscox" or the "Company") is today posting a circular to shareholders (the "Circular") regarding the proposed return of capital by way of a B Share scheme (the "Return of Capital") and associated share capital consolidation as well as the notice of extraordinary general meeting (the "EGM") to approve them.

Highlights

The Return of Capital will comprise:

·      a special distribution to shareholders of approximately £150 million, representing 38.0 pence per existing ordinary share; and

·      a further amount of 12.0 pence per existing ordinary share, instead of the payment of a final dividend for the financial year ended 31 December 2012.

The Board has reviewed the capital requirements of the Group for the coming year considering, inter alia, the cost of Superstorm Sandy, the current rating environment and future growth opportunities, and have concluded that a special distribution of 38.0 pence per share, in addition to the ordinary final dividend equivalent of 12.0 pence per share, should be made. This will reduce capital levels to approximately that of the 2012 opening balance sheet with a resulting favourable impact on both the Group's premium to capital gearing ratio and return on capital, whilst still providing sufficient headroom above existing internal and external capital constraints.

As announced on 25 February 2013 in the Group's preliminary statement of the full year results for the year ended 31 December 2012 a sum equal to 12.0 pence per existing ordinary share will be payable to shareholders as part of the Return of Capital in place of a final dividend.  Such amount, together with the interim dividend of 6.0 pence per share paid in September 2012, represents a total dividend for 2012 equal to 18.0 pence per share, an increase of 5.9per cent over the 2011 dividend, in line with the Company's policy of progressive dividend growth.  As a result shareholders will be entitled to payment of the equivalent of the final dividend included within the Return of Capital earlier than the normal payment date for the final dividend.  Furthermore, as this amount is being paid as part of the B Share scheme, a scrip dividend alternative will not be offered to shareholders.

Details of Return of Capital

The Board has decided to effect the Return of Capital through a structure involving the issue of B Shares, which may enable shareholders, subject to applicable overseas restrictions and tax laws, to elect to receive their cash proceeds as income or capital or any combination of the two.  The Directors believe the Return of Capital represents an efficient and effective way to return cash to shareholders, it treats all shareholders equally relative to the size of their existing shareholdings in the Company and enhances the Company's ability to maintain a progressive dividend policy.

It is proposed that each shareholder will receive one B Share for every existing ordinary share held at 4.30 p.m. on 28 March 2013. Shareholders will be able to elect between any combination of the following B Share alternatives as to how they receive their cash:

(i)   to have their B Shares redeemed on the first redemption date of 4 April 2013 (cash expected to be sent or credited by 26 April 2013);

(ii)   to have their B Shares redeemed on the final redemption date of 12 April 2013 (cash expected to be sent or credited by 3 May 2013); and/or

(iii)  to receive a B Share dividend in respect of the B Shares (cash expected to be sent or credited by 3 May 2013).

The amounts received under the capital alternatives per (i) and (ii) above should generally be taxed as capital for UK tax purposes.  The amounts received under the dividend alternative per (iii) above should generally be taxed as income for UK tax purposes.  Shareholders who do not make a valid election will be deemed to have elected to receive the B Share dividend in respect of all of their share entitlement.  US Shareholders will automatically receive the B Share dividend and need take no action in respect of making an election.

Details of Share Capital Consolidation

The Return of Capital will be combined with a consolidation and subdivision of existing ordinary shares (the "Share Capital Consolidation").  The Directors believe that the existing ordinary shares, like those of other non-life insurers, are generally valued in the market by reference to the net tangible assets ("NTA") value of the Company.  Accordingly, the Share Capital Consolidation is being calculated by reference to the Company's last published NTA value, being 31 December 2012, with the intention that the NTA value per new ordinary share after the Share Capital Consolidation is approximately equal to the NTA value per existing ordinary share beforehand, disregarding any effect that the amount comprising the equivalent of the final dividend per share within the amount of the Return of Capital may have on the NTA value of the Company.  The NTA value per share as at 31 December 2012 was 332.0 pence per share.

The effect of the Share Capital Consolidation will be to reduce the number of issued ordinary shares to reflect the reduction in the Company's overall NTA value (save in respect of the amount comprising the equivalent of the final dividend per share within the amount of the Return of Capital), but shareholders will own the same proportion of shares in the Company as they did previously, subject to fractional entitlements.

For every 100 existing ordinary shares held at 4.30 p.m. on 28 March 2013 (including any existing ordinary shares held as treasury shares), shareholders will receive 89 new ordinary shares.

The new ordinary shares are expected to be admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities on 2 April 2013 in the same way as the existing ordinary shares and will be equivalent in all material respects to the existing ordinary shares except that their par value will be different, including as to their dividend, voting and other rights.  The B Shares will not be admitted to trading.

The Return of Capital and the Share Capital Consolidation requires the approval of shareholders, which will be sought at the EGM to be held at Hadsley House, Lefebvre Street, St. Peter Port, Guernsey GY1 2JP at 2 p.m. on 28 March 2013.  For the convenience of the Company's Shareholders, they may attend the EGM via a video link at the Company's registered office, 4^th Floor, Wessex House, 45 Reid Street, Hamilton HM12, Bermuda (10.00 a.m. Bermuda time) and at the Group's London office, 1 Great St Helen's, London EC3A 6HX. 

Full details of the Return of Capital and Share Capital Consolidation together with the notice of EGM will be set out in the Circular despatched to shareholders today.  Terms used in this announcement but which are otherwise undefined shall have the same meanings as set out in the Circular.

The Board of Hiscox is being advised on the Return of Capital by UBS Limited.

Expected timetable of principal events:

Event	Time and/or Date
Latest time and date for receipt of Form of Direction or CREST Proxy Instruction for EGM	2.00 p.m. on 25 March 2013
Election Deadline: latest time and date for receipt of TTE Instructions in relation to the B Share Alternatives	1.00 p.m. on 26 March 2013
Latest time and date for receipt of Form of Proxy for EGM	2.00 p.m. on 26 March 2013
Election Deadline: latest time and date for receipt of Election Forms in relation to the B Share Alternatives	1.00 p.m. on 27 March 2013
EGM	2.00 p.m. on 28 March 2013
Latest time and date for dealings in Existing Ordinary Shares. Existing Ordinary Shares register closed and Depositary Interests in respect of Existing Ordinary Shares disabled in CREST	4.30 p.m. on 28 March 2013
Record Time for the Share Capital Consolidation and entitlement to B Shares	4.30 p.m.  on 28 March 2013
Cancellation of trading of Existing Ordinary Shares. New Ordinary Shares admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities. Dealings commence in New Ordinary Shares	8.00 a.m. on 2 April 2013
B Shares issued	8.00 a.m. on 2 April 2013
First B Share Redemption Date	4 April 2013
Final B Share Redemption Date	12 April 2013
B Share Dividend becomes payable on B Shares issued pursuant to the Dividend Alternative	12 April 2013
Despatch of cheques or CREST accounts credited in respect of proceeds under the Capital Alternative in respect of the First B Share Redemption	By 26 April 2013
Despatch of cheques or CREST accounts credited in respect of proceeds under the Capital Alternative in respect of the Final B Share Redemption	By 3 May 2013
Despatch of cheques or CREST accounts credited in respect of proceeds under the Dividend Alternative	By 3 May 2013

For further information:

Hiscox Ltd

Jeremy Pinchin, Group Company Secretary                                             [phone]

Kylie O'Connor, Head of Group Communications, London                          [phone]

Brunswick

Tom Burns                                                                                            [phone]

Clemmie Raynsford

Copies of the Circular will be available for inspection during normal business hours on any weekday (public holidays excepted) at the Company's registered office, 4^th Floor, Wessex House, 45 Reid Street, Hamilton HM12, Bermuda and at the offices of Hiscox plc, 1 Great St. Helen's, London EC3A 6HX later today up to and including the date of the EGM and will also be available for inspection for at least 15 minutes before as well as during the EGM.  A copy of the Circular will also be available on the Company's website, www.hiscox.com, and will be submitted to the National Storage Mechanism, where it will be available for inspection.

None of the B Shares, New Ordinary Shares or Deferred Shares have been or will be registered under the US Securities Act or the state securities laws of the United States and none of them may be offered or sold in the United States unless pursuant to a transaction that has been registered under the US Securities Act and the relevant state securities laws or that is not subject to the registration requirements of the US Securities Act or such laws, either due to an exemption therefrom or otherwise.

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributes should inform themselves about and observe such restrictions.

This announcement does not constitute, or form part of, an offer to sell or the solicitation of an offer to subscribe for any securities, nor the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issue or transfer of the securities referred to in this announcement in any jurisdiction in contravention of applicable law.

 

END

 

 

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