Euclidian went through a turbulent time with its capital raising, but with new capital in place and a new chief executive the company is reborn.
On the eve of Easter, where one third of the world is focusing on the resurrection, it seems quite apt to be talking to Jamie Stuart, managing director of Lloyd's managing agency Euclidian Underwriting. In the past nine months, Stuart and the Euclidian executive board have faced some daunting days, where it looked as if the insurer would collapse. Lloyd's franchise performance board was keen last year to extend the capital raising deadline for Euclidian to the 19 November, two weeks after the original 1 November deadline set for the market, because it knew the underwriter did have good business on its books. Plus it had suffered from exceptional bad luck. Euclidian had seen major board changes, and the loss of its capital provider and its reinsurer in the space of three months.
New horizonsEuclidian's infrastructure was always complicated, with the ultimate holding company of Euclidian Group being EUC Re Ltd, which was 30% owned by Euclidian's management and 70% by Centre Solutions, a wholly-owned subsidiary of Zurich Financial Services. Centre Solutions had financial difficulties and rumours are that AIG, Euclidian's reinsurer, pulled out after disputes with the Lloyd's franchise board. Today, however, Stuart, with his new chief executive Andrew Holland, is happy to discuss the rebirth of the company."It has been difficult. Really difficult at times, but we have pulled through. Lloyd's could have closed us down but they were very supportive."Euclidian now has the capital it needs. I admit I want to get to a position where it is permanent capital, not temporary, but our business plan is more secure," says Stuart.Holland, who in February left Brit Insurance, where he was chief operating officer, agrees and is looking to expand the underwriting teams through acquisitions. "I have a reputation of building teams and there are a number of opportunities on the horizon."Berkshire Hathaway is now the capital provider of Euclidian's Syndicate 1243. It is understood Berkshire Hathaway has put £20m behind the company to pursue the option of an initial public offering (IPO). Lexicon Partners has been appointed to put the portfolio together. The syndicate's capacity for 2004 is £251m, though overall the insurer raised £271m, with the remaining capital going offshore to Gibraltar and Guernsey.Stuart says that "people shouldn't get too hung up" with Gibraltar. "We have put some of the smaller personal lines books into the operation, like motor, caravan and fleet businesses, mostly affinity schemes." Stuart said he hoped the operation would still generate a premium income of £50m.
Holding steady"Lloyd's is our core market and where we want to stay. We are no longer looking at long-tail business, only short-tail, and this should make life easier for the future."Stuart says that rates are softening in energy and aviation across the market but "we are not prepared to sway". "We will keep the rates stable. There is a lot more to be had from the hard market." Holland says it is the "creativity and vision" at Euclidian that finally led him to leave Brit. "I was getting more frustrated at Brit, which they knew, because everything was in place and I needed a new challenge. Jamie approached me and I could see this was an exciting opportunity."