Insurer embarks on capital raising to buy out major shareholder
Lloyd's insurer Euclidian is setting up an operation in Gibraltar and has started a capital raising programme to buy out its major shareholder, Centre Solutions.
And in a separate move, the company has instigated a major management restructure after chairman James Truscott's departure some months ago. Euclidian managing director James Corrigan-Stuart said: "We have put in our application for a Gibraltar operation. It will be for our motor, caravan and fleet businesses, which are mostly affinity schemes, and we expect to generate a premium income of £50m. We have also decided to approach capital providers, including banks, venture capitalists and hedge funds, to raise capital."
The ultimate holding company of the Euclidian Group is EUC Re Ltd, which is 30% owned by Euclidian's management and 70% by Centre Solutions, a wholly-owned subsidiary of Zurich Financial Services.
Corrigan-Stuart spent the past few weeks making presentations to potential investors to raise £72m. He has seen 13 so far and will see 30 in all by September, which is the date Euclidian hopes to secure the full funding.
"Some have been negative, but others very encouraging," he added.
Euclidian hopes to raise the cash so the company can make an "exit" during the 2003-2005 years of account.
"This means replacing all the capital so we can become independent. It's not about leaving the market ," said Corrigan-Stuart.
Last week, the Euclidian board elected non-executive director Don Carey to become chairman of Euclidian Underwriting Ltd, but not the Euclidian Group. The new management structure will have a supervisory committee of four to five executives representing capital providers.
"A new chairman will be chosen to head this supervisory committee," said Corrigan-Stuart.
On why his friend and co-founder Truscott had left, he said: "We wanted a more hands-on approach over the control of the company. Everything had been far too centralised into one hub."
According to market sources, Truscott has been in negotiations with the Euclidian management over his final settlement since he left. It is understood that these are expected to be completed in the next week. Truscott had a 5% share in the company. Truscott was unavailable for comment as Insurance Times went to press.