£60 million to be returned upon sale of WR Berkley
Kiln has announced its intention to return up to £60 million of surplus capital and the proposed sale of its 20% interest in WRB Europe to WR Berkley.
Following a detailed review of the Group’s expected capital requirements for the 2008 year of account and beyond the Board has concluded that, after providing for the retention of sufficient capital to support the Group, including its international expansion plans and dividend commitments and assuming that the sale of its 20% interest in W. R. Berkley Insurance (Europe), Limited (“WRB Europe”) proceeds as anticipated (as referred to below), the Group is currently expected to have surplus capital of approximately £60 million by the year end, equivalent to some 21% of the Group’s market capitalisation as at 5 November 2007 of £280 million.
The Board intends, in the absence of unforeseen circumstances, to return this surplus capital to its shareholders in order to enhance shareholder returns. It is currently envisaged that, subject to shareholder approval, this would be achieved through a share buyback by way of tender offer of £45 million and ongoing market purchases under Kiln’s existing share buyback authority. The terms of the proposed tender offer will be announced upon publication of the circular convening the special general meeting to approve the tender offer.
In light of changing priorities and objectives of each of the parties, Kiln and WR Berkley have agreed in principle that WR Berkley will acquire Kiln’s 20% interest in WRB Europe for £24.5 million, which represents a premium of 31% (£5.8 million) in excess of the value of the investment recorded in Kiln’s accounts as at 30 June 2007. The proceeds of the sale of Kiln’s interest in WRB Europe will be applied to support the tender offer referred to above and it is anticipated that independent shareholder approval for the sale will be sought at the same special general meeting convened to approve the tender offer.
Kiln Ltd chief executive officer Edward Creasy said: “Kiln is firmly committed to a strategy of active capital management in order to enhance shareholder returns. We are delighted to be in a position to return a substantial sum to shareholders, including the proceeds of our successful investment in WRB Europe, while retaining sufficient capital to pursue our strategic plans.”
