HYPERION INSURANCE GROUP LIMITEDweb-resources.hyperiongrp.com/cmsmedia/1316/2009_hyperion_ra.pdf ·...
Transcript of HYPERION INSURANCE GROUP LIMITEDweb-resources.hyperiongrp.com/cmsmedia/1316/2009_hyperion_ra.pdf ·...
ARGENTINA
AUSTRALIA
BRAZIL
COLOMBIA
DUBAI
FINLAND
GERMANY
HONG KONG
ICELAND
INDIA
IRELAND
ISRAEL
ITALY
MEXICO
PUERTO RICO
SINGAPORE
SPAIN
SWEDEN
TAIWAN
UNITED KINGDOM
UNITED STATES
HYPERION INSURANCE GROUP LIMITED
REPORT & ACCOUNTS
YEAR ENDED 30 SEPTEMBER 2009
2008-2009 At A Glance 02
Chairman’s Statement 04
Chief Executive’s Review 06
Board Structure 08
Group Structure 10
Group Broking 11
Group Underwriting 21
Financial Statements 31
01HYPERION INSURANCE GROUP
CONTENTS
2008-2009 AT A GLANCE
£57,160,00GROUP REVENUE
£8,794,000EBITDA
£34,087,000BROKING REVENUE
£22,514,000UNDERWRITING REVENUE
448PEOPLE EMPLOYED
02 HYPERION INSURANCE GROUP
AT A GLANCE
2003 2004 2005 2006 2007 2008 2009
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
14.438
619
914
50 69102
175232
272
355408
383
448
1,759
5,170
2,245
6,787
Underwriting
Broking
3,659
10,478
6,606
13,689
8,894
17,990
14,228
19,17318,008
20,31822,808
23,848
22,514
34,087
3,691
1,3401,806
3,590 3,407
5,204
6,997
8,145
20.73027.399
34.10339.250
60
50
40
30
20
10
0
9,0008,0007,0006,0005,0004,0003,0002,0001,000
0
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
500
400
300
200
100
0
£ M
ILLI
ON
S£
‘000
£ ‘0
00N
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48.030
57.160
8,0768,794
03HYPERION INSURANCE GROUP
AT A GLANCE
KEY FACTS• Founded in 1994 and headquartered in the City of
London, Hyperion is a fast expanding internationalinsurance company. Since its inception it has grown tobecome a leading global provider of specialist insurancesoperating on four key platforms: wholesale, retail,reinsurance broking and underwriting.
• Four main brands: CFC Underwriting, DUAL, Hendricks& CO GmbH and Howden.
• 42 offices in 21 countries employing over 440 people.
• Reported operating income of £57.2 million for thefinancial year ended 30 September 2009 and EBITDA(excluding exceptional items) of £8.8 million, up 19% and9% respectively on 2008.
2008-2009HIGHLIGHTSOCTOBER 2008• Group entered an exclusive partnership with a broker in
Korea.
DECEMBER 2008• Established a North American Property & Casualty
Division, with a team joining from Benfield CorporateRisks.
• Trebled size of International Property business withsignificant expansion in the Far East. Office opened inHong Kong.
FEBRUARY 2009• Offices opened in Taiwan as part of our expansion in the
Far East of our International Property business.
MAY 2009 • DUAL International announced a strategic partnership
between its Hong Kong office, DUAL Asia, and MSIGInsurance (Hong Kong) Ltd to provide financial linesproducts for mid market companies in Asia.
JUNE 2009 • Howden signs a deal to acquire Hendricks & CO
GmbH, the leading specialist Directors and Officers andCommercial Legal Expenses broker in Germany.
JULY 2009• Bob Van Gieson, former President and CEO of Arch
Insurance Company Europe appointed Chairman andCEO of DUAL International.
• CFC entered the Life Sciences market and launchedBioSurance™ R&D a blended policy designed specificallyfor research and development companies.
• Eric Fady appointed Finance Director of the Group. Ericwas previously Finance Director for Marsh EuropeMiddle East and Africa.
The Queen’s Award forEnterprise inInternational Tradereflects the Group’s fastgrowing global presence.
TERRITORIES AND PRODUCT LINES
The Hyperion Group currently operates in 22 countriesand 60% of our income comes from territories outside theUK. The Queen’s Award for Enterprise in InternationalTrade reflects the Group’s fast growing global presence.Hyperion is focused on providing specialist insuranceproducts to its clients. Some of our products:
Civil Sanctions and Regulatory Proceedings LiabilityCommercial CrimeCyber & Privacy LiabilityDirectors and Officers LiabilityEmployment Practice LiabilityEnvironmentalFinancial SpecialtiesGeneral CasualtyHealthcareInvestor ProtectionLawyersLife SciencesManagement LiabilityPension Trust LiabilityProfessional IndemnityProfessional LiabilityPropertyReal EstateSpecial RisksTechnologyTrustees Liability
04 HYPERION INSURANCE GROUP
CHAIRMAN’S STATEMENT
“This is an excellent set of results with strong organicgrowth supplemented by the acquisition of Hendricks, the largest independent D&O broker in Germany. ”
JOHN VAN KUFFELERCHAIRMAN
JOHN VAN KUFFELERCHAIRMAN
05HYPERION INSURANCE GROUP
CHAIRMAN’S STATEMENT
CHAIRMAN’S STATEMENTPERFORMANCEIn the year ended 30 September 2009 we saw continuedstrong growth, combined with a number of importantstrategic developments.
Group revenue increased by an impressive 19% and EBITDAby 7%. This is an excellent set of results as most of ourgrowth was organic rather than through acquisitions. Thenew teams we have attracted have allowed us to exploitnew areas of business which have played a strong part intaking our Group forward.
In particular, this has given the Group an ability to extractearnings from all points of the value chain aligned withproviding a hedge across the insurance cycle and a balanceacross our businesses.
Our strategy to enter new markets and grow our brandsglobally was enhanced with our acquisition of Hendricks &CO GmbH, the leading specialist in Directors and Officersand Commercial Legal Expenses broker in Germany inOctober 2009. This has propelled Howden Broking Groupinto a market leading position in Germany.
THE BOARDSince the year-end Tim Howden and Brian Marsh haveretired as non-executive Directors. Tim Howden had beena director since the company’s foundation in 1994 andprovided us with encouragement and wise counsel throughthe years. I would like to thank him for his considerablecontribution and wish him well in his retirement. BrianMarsh served as a director for 3 years but through BPMarsh & Partners PLC and was the original institutionalinvestor from the foundation of the company in 1994. Wewill miss his considerable insurance and business expertise,but I am pleased to announce that Jon Newman has joinedour Board as the nominee of BP Marsh & Partners PLC. Jonhas served on the Boards of a number of insurance relatedcompanies and is Finance Director of BP Marsh & PartnersPLC. His experience and expertise will be valuable to usgoing forward particularly as we get closer to our proposedIPO in 2012.
EMPLOYEESOur employees remain central to the success of Hyperion.Their dedication and hard work has been the principalreason for our success in 2009 and I would like to thankthem all for their considerable efforts.
OUTLOOKDespite soft markets, the new year has started with strongrevenue growth in both our broking and underwritingagency businesses and the outlook for us remains good as aresult of the strategic steps we achieved in 2009.
The ongoing support of our external shareholders is atestament to the strength of our business model. Following3i’s investment in April 2008, the Group still has £22m ofcommitted funds for acquisition. This, combined with theongoing success of our broking and underwriting divisions,places the Group in a strong position to make furtheracquisitions and achieve the growth which will place us in anexcellent position for our proposed IPO in 2012.
JOHN VAN KUFFELERCHAIRMAN
06 HYPERION INSURANCE GROUP
CHIEF EXECUTIVE’S REVIEW
“Hyperion has a distinctive business model, combiningwholesale, retail and reinsurance broking and underwritingagency businesses. Our ambition is to continue to build aworld beating specialist insurance business; to enhance theexisting entrepreneurial flair and continue to support ourability to attract and retain the very best people.”
DAVID HOWDENCHIEF EXECUTIVE
07HYPERION INSURANCE GROUP
CHIEF EXECUTIVE’S REVIEW
CHIEF EXECUTIVE’S REVIEWTHIS HAS BEEN AN EXCITING YEAR for theGroup against an extremely challenging financial market.Hyperion’s success over the years is due to its uniquestructure and distinctive culture which acts as a magnet fortalent. This enables us to create value for the Group andour employees which is key to our continued success.
Hyperion has a distinctive business model, combiningwholesale, retail and reinsurance broking and underwritingagency businesses. This simultaneously delivers us ascalable international platform offering global distributionand strong relationships with business producers andunderwriters.
OUR BUSINESSESBehind the overall success of the Group last year, all ourmain businesses traded extremely well.
BROKINGThe Group’s insurance broking operations reportedrevenues of £34.1 million – an increase of 43% on last year.Major developments which have contributed to the successof the Group included the following:• Establishment of a North American Property & Casualty
division, with a first-class team joining from BenfieldCorporate Risks.
• Trebling the size of our International Property businesswith significant expansion in the Far East. Offices wereopened in Hong Kong (December 2008) and Taiwan(February 2009), and in October 2008 the Groupentered into an exclusive partnership with an insurancebroker in South Korea (to be renamed Howden Korea).Howden will also open an office in Singapore shortly.Since the year-end we have been awarded a reinsurancebroking licence in Singapore.
• Impressive growth has also been achieved in Israel andSpain, achieving respectively a 23% and 21% increase inoperating income.
• On 1 October 2009 we acquired Hendricks & COGmbH, the leading specialist Directors and Officers andCommercial Legal Expenses broker in Germany. Thedeal propels us to be the D&O market leader inGermany.
UNDERWRITINGUnderwriting agencies DUAL International and CFCUnderwriting, both headquartered in London and VKUnderwriters based in Miami, all had a successful year.Total gross written premiums were £137 million, anincrease of 33% on the previous year. Major developmentsthat have contributed to these results – and willcontribute to the future growth of the underwritingagencies include:• DUAL International announced a strategic partnership
between its Hong Kong office, DUAL Asia, and MSIGInsurance (Hong Kong) Ltd, to provide financial linesproducts for mid market companies in Asia.
• In July 2009 Bob Van Gieson, former President and CEOof Arch Insurance Company Europe, was appointedChairman and CEO of DUAL International.
• In October 2009 Dual opened its first Irish branch inDublin.
• DUAL expanded its operations in Australia with theopening of an office in Brisbane to add to its existingoffices in Sydney, Perth and Melbourne.
• From 1 December 2009, DUAL Australia startedunderwriting solely on behalf of Lloyd’s (Arch Syndicate 2012).
• CFC had a particularly successful year with grosspremium income rising to £30 million and operatingprofit to £2.3 million representing increases of 22% and41.6% respectively.
• CFC entered the Life Sciences market in July 2009 bylaunching BiosuranceTM R&D, a blended policy specificallydesigned for research and development companies inthe Life Sciences industry.
These strategic developments are key to our future growthplans.
Our ambition is to continue to build a world beatingspecialist insurance business; to enhance the existingentrepreneurial flair and continue to support our abilityto attract and retain the very best people. Our successcan be attributed to our employees; our ability tocontinue to meet the insurance needs of our clients andour product and distribution expertise.
DAVID HOWDENCHIEF EXECUTIVE
08 HYPERION INSURANCE GROUP
BOARD STRUCTURE
BOARD STRUCTUREJOHN DE BLOCQ VAN KUFFELERNON-EXECUTIVE CHAIRMANJohn van Kuffeler joined Hyperion as non-executive Chairman in February 2009. He brings nearly 40 years of international financialservices experience to the role, and is also Chairman of Provident Financial PLC. He joined Provident Financial in 1991 as ChiefExecutive, and was appointed Executive Chairman in 1997, becoming non-executive Chairman in 2002. Prior to his career atProvident Financial he was Chief Executive of Brown Shipley, the investment banking group. Both Provident Financial and BrownShipley had significant insurance operations and van Kuffeler was also a non-executive director of the Medical Defence Union. Hewas also the Founder and former Chairman of Huveaux, the AIM listed political publishing & media group, and former Chairman ofEidos as well as two City based investment trusts. He is also an Advisory Board member of the Princes Trust and a former Councilmember of the CBI.
DAVID HOWDENCHIEF EXECUTIVEDavid has over 25 years’ experience in the Insurance industry. He is a leading expert in the field of Directors and Officers andProfessional Indemnity insurance both in London and the overseas markets.
David started his career as a broker at Alexander Howden in 1980. He founded the group in 1994 originally as a wholesale brokeremploying just 5 people. He has been the fundamental driving force behind its expansion into an international insurance groupoffering wholesale, retail, reinsurance and underwriting.
As Chief Executive, David’s focus is on leading the group’s M&A activities as well as directing and implementing the group’sstrategic growth and direction.
ERIC FADYGROUP FINANCE DIRECTOREric joined Hyperion in June 2008. His last role was as Finance Director for Marsh Europe Middle East and Africa from 2003 to2007, where he managed major projects to help the company adjust to the post Spitzer business world. Previously he was CFOand Vice President for Strategy Implementation for Dun & Bradstreet Europe & Middle East from 1999 to 2002 where hecontributed to the design of the company’s new business model and significantly improved their performance. Eric graduated fromRheims Business School, and began his career as an auditor with KPMG in France.
R.T. VAN GIESONEXECUTIVE DIRECTOR HYPERION AND CHAIRMAN & CEO DUAL INTERNATIONALBob was appointed Chairman and CEO of DUAL International in July 2009. Bob has over 40 years’ insurance experience and waspreviously President and CEO of Arch Insurance Company Europe. Bob successfully built Arch from a start-up operation into a$500m business. He was also Chairman of Arch Europe and sat on the board of its Lloyd’s Syndicate. Prior to his time with Arch,Bob worked for CNA Financial where he was responsible for five business units with a revenue base of $1 billion. Prior to CNA,Bob had a 29 year career at the Chubb Corporation. During this time he spent many years in Canada helping to build a strong andprofitable Canadian operation. He moved to London in 1990 and was responsible for European and Far Eastern operations. Hewas a driving force behind Chubb’s expansion and under his leadership it was established as a significant international player.
09HYPERION INSURANCE GROUP
BOARD STRUCTURE
LUIS MUÑOZ-ROJAS ENTRECANALESEXECUTIVE DIRECTORLuis is a founding Director of DUAL International. He opened the first DUAL operation in Madrid in August 1998, havingpreviously served as Director of GyC América, a reinsurance broking subsidiary of Gil y Caravajal (now part of Aon). During thattime Luis had considerable involvement in the Latin American territories. Luis began his insurance career in 1989 working withGyC & Partners, the British subsidiary of the GyC Group. Prior to this, he worked for Société Générale de France in variouscapacities and areas including foreign exchange.
EMILE WOOLFNON-EXECUTIVE DIRECTOREmile is a forensic and litigation support consultant with Kingston Smith Chartered Accountants. A qualified Accountant, formerChairman of ICAEW's Professional Indemnity Insurance Panel of Participating Insurers, Emile’s expertise covers technicalaccounting and audit issues, including independence, professional ethics and governance.
JONATHAN NEWMANNON-EXECUTIVE DIRECTORJonathan was appointed to the Hyperion Board in 2009. He is Group Director of Finance at BP Marsh & Partners PLC, and is achartered Management Accountant with more than 13 years’ experience in the financial services industry. He joined BP Marsh inNovember 1999 and was appointed Group Finance Director in December 2003.
DAVID WHILEMANNON-EXECUTIVE DIRECTORDavid is a Partner in the 3i Growth Capital business, investing up to €250m for stakes in market-leading businesses in the UK andacross Europe. He specialises in originating and leading investments into private companies seeking to accelerate their growth,both organically and through acquisition. Past investments include Foster & Partners, the global architects, Hayley ConferenceCentres and Morgan McKinley, the financial services business. David is a chartered accountant and prior to 3i worked in theinsolvency division within PricewaterhouseCoopers.
INSURANCE UNDERWRITING
AVANTSpain
CFC UNDERWRITINGUnited Kingdom
DUALAustralia
Germany
Hong Kong
Ireland
Italy
Spain
United Kingdom
VK UNDERWRITERSArgentina
Colombia
Mexico
Puerto Rico
United States
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GROUP STRUCTURE
HYPERION INSURANCE GROUP
WHOLESALE, RETAIL & REINSURANCE BROKING
HOWDENBrazil
Dubai
Finland
Germany
Hong Kong
Iceland
India
Israel
Puerto Rico
Singapore
Spain
Sweden
Taiwan
United Kingdom
United States
40% GROUP INCOME13 TERRITORIES
18 OFFICES
60% GROUP INCOME15 TERRITORIES
24 OFFICES
11HYPERION INSURANCE GROUP
GROUP BROKINGINTRODUCTIONInsurance broking was the foundation of the HyperionInsurance Group with the formation of Howden InsuranceBrokers in 1994. From one operation in London, thenetwork of offices has grown to now number 24 worldwide.Over the past 16 years, the Group broking operations havegrown exponentially across the world as outstandinginsurance professionals have been identified in localterritories.
HOWDEN BROKING GROUPThe Howden Broking Group comprises wholesale, retailand reinsurance broking models, with its principalsubsidiary located at Lloyd’s of London. Retail brokersdistribute directly to the ultimate insured whereaswholesale brokers place business generated by otherinsurance brokers in the London and other internationalinsurance markets. Reinsurance broking is the process ofplacing insurance for insurance companies in order tospread the risk for the direct insurer. These methods ofbroking provide their own distinct advantages to the Groupand allow complete flexibility when entering a newterritory or product line.
Initially, the Group’s main focus was the two mutuallycompatible product lines of Professional Indemnityinsurance and Directors & Officers Liability insurance.However, client demand for the same professionalapproach to other insurance lines has grown. Howden hasbeen quick to meet these needs and is now a globalprovider of a range of specialist insurances.
HOWDEN OFFICES• Howden Insurance Brokers Limited – London, Leeds
and Taiwan• Howden Asia (Hong Kong) Limited – Hong Kong• Howden Asia Pte Ltd – Singapore• Howden Insurance Brokers LLC – Dubai• Howden Insurance Brokers India Private Limited –
Bangalore, Chennai, Hyderabad, Mumbai and New Delhi• Howden Insurance Brokers (2002) Limited - Tel Aviv• Howden Iberia SA – Barcelona, Madrid, Seville and
Valencia• Howden Insurance Brokers AB – Stockholm• Howden Insurance Brokers Oy – Helsinki• VK Howden LLC – Miami, Rio de Janeiro and San Juan• Howden Insurance Brokers Inc – Baltimore• Howden Corretora de Resseguros Ltda – Rio de Janeiro• Howden Iceland – Reykjavik• Hendricks & CO GmbH – Dusseldorf, Hamburg and
Munich
“We will aim to attractand recruit allindividuals, teams andbusinesses that weencounter who shareour passion for growthand desire to achieve. ”
TIM COLESCHIEF EXECUTIVE OFFICERHOWDEN BROKING GROUPAND HOWDEN INSURANCEBROKERS
HOWDEN BROKING GROUPDESPITE MARKET CONDITIONS, the Howden Broking Group recorded outstanding results with revenue increasing by 42.9% from £23.8 million to £31.4 million. This was achieved through organic growth alone. The EBITDA developed strongly too,increasing by 232%.
Strong growth was delivered by the Lloyd’s broker, which continued diversification of its product portfolio and territorial reach by attracting 2 teams. The first is an International Property team that has strong links with the Far East. The team led theestablishment of Howden Asia during the year, opening offices in Hong Kong, Taiwan and imminently, Korea and Singapore.
The second team to join is a North American Property and Casualty team which has firmly established Howden in the NorthAmerican marketplace, creating an exceptional platform for much greater growth.
Our retail operation in Dubai opened in April 2008 and enjoyed an excellent year.
Literally, a day after the financial year-end, Howden acquired Hendricks and CO GmbH, the market leading Directors and Officersliability broker in Germany.
In the coming year, we anticipate strong growth from all of our established operations. Our strategic drive will focus on developmentof our retail presence in Europe, particularly in the UK. In addition, we will continue to expand our operations in emerging markets,particularly in the Far East and Latin America. This will be complemented by further diversification of the product base of our GlobalWholesale and Reinsurance Practice. Most importantly, we will aim to attract and recruit all individuals, teams and businesses that weencounter who share our passion for growth and desire to achieve where others cannot.
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GROUP BROKING - HOWDEN BROKING GROUP
13HYPERION INSURANCE GROUP
GLOBAL WHOLESALE &REINSURANCE PRACTICEOVERVIEWThe Global Wholesale and Reinsurance Practice comprises allHowden operations providing services to clients that requireaccess to product expertise and insurance markets beyondtheir domestic or direct markets. The practice serves clientsacross the world from bases in London, the USA and the FarEast. Its capabilities currently include Financial Lines, Property,Casualty and Binding Authorities. An important feature of thebusiness is its ability to instantly access markets globally,creating arbitrage opportunities and greatly broadening therange of placement solutions available to clients.
THE MARKETThe negative effects of a global recession and continued declineof insurance premiums in nearly all sectors were offset by a‘flight to quality’ by clients who often sought the expertise ofspecialist brokers and strong insurers based in established,competitive insurance markets. This was most notable forthose operations providing access to the London insurancemarket, all of whom enjoyed reinvigorated interest frominternational clients, particularly those seeking Financial Lines.Foreign exchange rates were also more favourable this year.
2008-2009 HIGHLIGHTSOur strategies of product and territorial diversification gainedfurther traction during the year. We acquired a team thatsubstantially increased our International Property capability. Italso led establishment of Howden operations in Hong Kong,Taiwan and imminently Korea and Singapore, creating in ashort time-frame, an excellent platform from which to further
develop in the Far East. We also acquired an outstandingNorth American Property and Casualty team which has firmlyestablished Howden in the North American market andprovided a base which is already developing further. Given theturmoil in financial markets, it was pleasing that our expertisein Financial Institutions was in much demand with the relevantindividuals and teams performing outstandingly, particularly inLatin America which had an exceptional year.
OUR PEOPLEWe were very pleased that so many outstanding peoplejoined our business throughout the year. It was particularlygratifying to experience our expansion in the Far East, NorthAmerica and Latin America. We will continue to target andattract exceptional people and teams, which are the key toour success.
THE FUTUREGrowth is the over-riding focus for the Global Wholesale andReinsurance Practice. The strategy for the coming year is tocapitalise on momentum gained in the regions in which wehave recently established. We will also continue to expand theproduct portfolio in order to provide more products andservices to our valued client-base. Most importantly, we willcontinue to develop a cohesive and aligned structure in whichclient focus and a team approach is promoted above all else.
PHILIP BONDMANAGING DIRECTORPROPERTY DIVISION
CHARLES LANGDALEMANAGING DIRECTORINTERNATIONAL
JOHN PLUMMERMANAGING DIRECTORNORTH AMERICANPROPERTY & CASUALTY
PATRICK GILHAMCHAIRMANINTERNATIONAL
GROUP BROKING - HOWDEN BROKING GROUP
DUBAITHE MARKETWith a population of 5.5 million people, the UAE has a totalgross written premium of US$5 billion, of which the LifeInsurance market comprises about 20%. Despite the slowdown in the economy the insurance industry continued togrow in the first half of 2008 but by the third quartervolumes started to decline sharply accompanied by a fall inprices as rates softened.
2008-2009 HIGHLIGHTSDespite a tough business environment and a challengingeconomic climate faced by our customers, we met ourbudgeted revenue of AED 4.5 million and produced a PBT ofover AED 1 million which far exceeded the budget.
OUR PEOPLEWe are very proud of our excellent team of just under 20people. Our professionals are highly motivated and businesssavvy with the operational staff having a high level oftechnical expertise. Our excellent record of client retentionand consistent growth in new business is proof of our team’scommitment to excellent efficiency and gaining new business.
THE FUTUREWhilst we will strive to increase our market share in theLiability and Financial Lines, we will continue to focus onbuilding volume from Medical Insurance, Employee Benefits,Property and Motor Insurance. New initiatives includeestablishing a legal entity in the Dubai International FinancialCentre and a branch in Abu Dhabi.
“Our excellent recordof client retention andconsistent growth innew business is proof ofour team’s commitmentto excellent efficiencyand gaining newbusiness. ”
ARVIND KASHYAPAMANAGING DIRECTORHOWDEN DUBAI
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GROUP BROKING - HOWDEN BROKING GROUP
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GROUP BROKING - HOWDEN BROKING GROUP
INDIATHE MARKETThe size of the Non-Life insurance market in India is overINR 300 billion in gross written premiums and accounts for0.65% of the country’s GDP. Following the dismantling oftariffs by the IRDA (the regulatory authority in India) twoyears ago, fierce price competition amongst direct insurerscontinues. With adverse combined ratios, several insurersare beginning to feel the heat. While the sharpest fall inpricing has been witnessed in the property insurancesegment Liability and Health insurance too have seendownward trends.
It is expected that predatory pricing tendencies will continuefor a couple of years before the market stabilizes. Brokerswho are currently fighting for a small portion of the marketshare are eventually likely to emerge as an importantdistribution channel as the market matures.
2008-2009 HIGHLIGHTSIn our core Commercial Insurance business we crossed INR100 million income target and achieved a growth in income of18% compared to the previous year. We are privileged tocount some of the blue chip companies in India amongst ourcustomers, and have succeeded in adding several newcustomers. New business accounted for over 35% of incomein 2008-2009.
Regrettably, we have exited the Personal Lines insurancedistribution business that yielded losses due to a combinationof poor timing and lower than expected productivity.
OUR PEOPLEHowden is proud of the quality of its people and the way inwhich we work together to generate business value. As of 30September 2009, we have 55 people in our team.
Our professionals come from a multi-disciplinary background.The company has a campus recruitment programme andrecruits ‘management trainees’ from reputed businessschools. To retain and nurture talent, we place a strongemphasis on capability development and we have put in placevarious training programmes including induction modules.
THE FUTUREWe shall continue to seek growth in our core businessdespite a very soft local market. We expect to continue ourstrong income growth next year, driven largely by our threecore verticals – Financial Lines, large Property insurance andEmployee Benefits. New initiatives have been taken toenhance market share in large accounts and employeebenefits space. In line with our business plan our focus is onachieving our financial targets through investing in buildingthe right team.
“We are privileged tocount some of the bluechip companies in Indiaamongst our customers,and have succeeded inadding several newcustomers. ”
PRAVEEN VASHISHTAMANAGING DIRECTORHOWDEN INDIA
ISRAELTHE MARKETThe local insurance market in Israel is well developed,sophisticated and highly competitive and traditionallypremium rates have been very low in comparison to otherterritories. Despite the global economic crisis, growth hasslowed down but the economy has continued to grow bymore than 5%. Premium rates have levelled but some sectorsnotably financial institutions, have increased substantially.
Substantial claims, the continuous weakness of stock marketsand no Initial Public Offerings have given us a challengeparticularly as the largest D&O insurer in Israel.
2008-2009 HIGHLIGHTSDespite the volatility of the market, our year has beenexceptional, generating US$7 million in new premiumincome. We have achieved a 23% increase in income and a26% rise in profit year on year, an impressive performance.
We have broken the dominant position of one local player inMedical Malpractice now gaining a substantial market shareand we have become the market leader in insuring LifeScience companies.
OUR PEOPLEOur employees are passionate about the business and theirenergy, tenacity, drive and determination will bring continuedsuccess to our company.
As an insurance retailer, our success in building andmaintaining our relationship with our clients is fundamentalto our growth. All our account executives are trainedextensively and in the past 6 years we have obtained anaverage of over 50 new clients per quarter.
THE FUTUREWe will maintain our position as the leading business criticalinsurance broker in the region and enhance our market sharethrough our ability to build long-term relationships with newclients.
Our success in developing new product lines, includingMedical Malpractice and Product Liability together with LifeSciences gives us three strong products which will generategrowth going forward.
16 HYPERION INSURANCE GROUP
GROUP BROKING - HOWDEN BROKING GROUP
“ Despite the volatility of the market, our yearhas been exceptional,generating US$7million in new premium income. ”
DANNY SEVERCHAIRMANHOWDEN ISRAEL
SPAIN & PORTUGALTHE MARKETAs previously forecast the Spanish economy continues tosuffer from the effects of an economic crisis hampered also byits economic model based on real estate and constructionover the past decade. The impact of high unemployment, highpublic debt and stagnated growth for GDP (1.5%) in 2009,and (0.5%) in 2010 cannot be underestimated.
Although the impact has been felt in the insurance market itdoes not mirror the macro effect described above. Overallgrowth for 2009 is 1.7%, mainly driven by a 6.5% growth inLife Insurance, with a flat rate for Non-Life, and a (6.4%)decrease in Motor Insurance.
The future remains uncertain and will depend on the abilityof the Spanish economy to shift from its traditional incomesources.
2008-2009 HIGHLIGHTSThis year completes our original 3 year plan devised in 2006.Throughout this period we have created a platform forfuture growth with 4 locations in Spain and plans to expandin the North Region and in Lisbon. Our turnover of €25million with €3.25 million income is testament to theprofessional and dedicated team we have working for us.Overall a 560% growth across this period has beenimpressive.
In 2009 we have consolidated our position as market leaderin Private Medical Malpractice and Professional Indemnity and gained significant growth in two new areas, Surety andCivil Works Construction. Taking into account the difficultieswe face with Spain’s economy and our market we havecommissioned a team of specialists to expand into the creditinsurance arena.
OUR PEOPLEOur staff is renowned within the sector for its professionalismand creativity. The combination of autonomy, methodology,commitment, best practice, and providing a good workingenvironment makes us a highly desirable place to work.
THE FUTUREOur next 3 year plan aims to take the company to aprojected income above €6 million with a 20% profit rate.We will leverage the value of our team created during thepast 3 years and will also aim to continue to attract topindividuals.
“Our turnover of €25million with €3.25million income istestament to theprofessional anddedicated team wehave working for us. ”
JOSE-MANUEL GONZALEZ PEREZMANAGING DIRECTORHOWDEN IBERIA
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SWEDEN & FINLAND - NORDIC REGIONTHE MARKETThe Swedish insurance market is mature with most majorinternational brokers competing for business.
2008-2009 HIGHLIGHTSThe fierce competition driving down premiums has had anegative impact on our business. Our rating of AAA (Swedishbenchmark defined by Solidtet) has however, been maintainedand UC, Sweden’s leading Business and Credit Informationagency has assessed our risk as Class 5 the lowest risk.
We have won some exciting new business providing Boliden,Sweden’s largest mining company with Liability and MarineInsurance and Risk Management and we have developed a nichespeciality within trade credit and political risk insurance as wellas assisting companies who require export finance assistance.
OUR PEOPLEHowden AB is a well renowned insurance broker, whichhandles a broad range of large Swedish and internationalclients. We specialise in all lines of Corporate Non-Lifeinsurance including Trade Finance supporting cover. It istherefore paramount that we employ the best staff, with thenecessary expertise and experience, and operate within themost effective structure. We have strived to establish anextremely creative and innovative group of people, and toachieve the best balance between age and experience.
THE FUTUREOur ability to recruit the right people into a businessoperating in a highly competitive market is pivotal to meetour aim to grow our business by 30%.
18 HYPERION INSURANCE GROUP
GROUP BROKING - HOWDEN BROKING GROUP
THE MARKETMarket conditions in Finland remain challenging in view of theoverall situation in the liability insurance markets and therelatively new Act on Insurance Intermediaries, as well as theimpact of the global credit crisis; and in the case of Finland itsdependence on the export industry.
2008-2009 HIGHLIGHTSThe impact of the crisis has however, increased awareness inliability issues and insuring these risks. As the only pureliability specialist broker in Finland we have increased ourcustomer base by 30%. This is as a result of the increasedsales effort implemented in the early part of the year.Furthermore, the profitability of the company increasedsignificantly.
OUR PEOPLEHowden Oy team have achieved these results in a very toughenvironment and we intend to strengthen our team further.
THE FUTUREWe cannot see local insurance markets strengthening. Ourdirect contacts to international markets and our expertisegive us a clear advantage in our service to our clients.
In the forthcoming year Howden Oy will focus on increasingits co-operation with our Swedish sister company tofacilitate joint opportunities in the Nordic region. At thesame time we are searching for partners in other Nordiccountries so that in the near future we can have a trulyNordic Howden platform in place to exploit the weakness ofour competitors.
PASI HEIKKINEN MANAGING DIRECTORHOWDEN INSURANCEBROKERS OY - FINLAND
JESPER BRETZMANAGING DIRECTORHOWDEN INSURANCEBROKERS AB - SWEDEN
UNITED STATES / LATIN AMERICATHE MARKETMarket conditions in 2009 were marked by decliningpremiums and increasing competition. New capacitycontinues to enter the markets we serve which increases thechoice available to clients. New capacity providers typicallyhave ambitious premium targets and it is usually throughlower premiums that they hope to gain market share.
Whilst this market environment results in increasedcompetition and margin pressures, it also provides forinteresting opportunities. Insurers are more flexible and areseeking competitive advantage in the development of newproducts which we can often capitalize on.
2009-2010 HIGHLIGHTSThe biggest news during the fiscal year was the decision toalign our London and Latam based teams into a single globalwholesale unit offering clients worldwide market access. Bycombining the profit centers into a single unit we are able tobetter leverage markets on behalf of our clients and achievesuperior terms, conditions, and pricing.
Other highlights include: • We officially opened our office in Brazil and received our
SUSEP license to act as a local reinsurance intermediary inearly 2009
• We have reached a licensing/representation arrangementwith a local consultant in Mexico which will significantlyaid our “in country” marketing efforts
OUR PEOPLEOur firm is its people. Our insurance professionals are highlytechnical, with virtually all having amassed substantial brokingand underwriting experience in their careers. The technicalexpertise of our people, business producers, brokers andsupport staff is unmatched by any of our competitors whichprovides our firm with a strong competitive advantage in themarkets we serve.
Our Latam broking team and support service includeapproximately 12 people in 5 offices including personnelbased in Miami and London.
THE FUTUREWe expect to continue our regional and product expansionin Latin America as well as to launch additional productsincluding middle market property. Although marketconditions continue to be challenging we are optimistic aboutthe market opportunity given our focus on niches andrelentless focus on customer service and delivery.
“The technical expertise of our people,business producers,brokers and supportstaff is unmatched byany of our competitors.”
BOBBY VERNONMANAGING DIRECTORVK H OWDEN
19HYPERION INSURANCE GROUP
GROUP BROKING - HOWDEN BROKING GROUP
20 HYPERION INSURANCE GROUP
UNITED KINGDOMOur UK Retail operation’s strategic approach is that we aresector specialists who know insurance. Our focus onunderstanding a client’s sector and business results in aholistic approach to providing clients with the right productsat the right price, and underpins the structure andopportunity for long-term partnerships. We source acombination of insurances which fit specific requirements andwhich recognise the lifetime value of a client, from start-upbusinesses to recognised industry leaders. The structure ofthe team reflects our client-centric strategy and is currentlysplit into three key areas:
Howden Risk Partners occupies an increasingly dominantposition in the provision of bespoke management liabilityinsurance to the investment industry.
Professional Risks specialise in the provision of liabilityinsurances for a number of professions including engineers,insurance intermediaries and surveyors. We have beendeveloped in conjunction with professional memberassociations, leading insurers and specialist law firms tobespoke insurance packages which recognise the nuances ofrisk in individual professions.
Howden Affinity was significantly restructured, which haslaid the foundation for our future growth plans within thisarea. The business has expanded from being a specialist onlyin Complimentary Therapy and now includes a broadergroup of membership associations and franchise companies.
2008-2009 HIGHLIGHTSOur client focus has led us to listen and respond to ourclients’ buying needs for insurances other than those whichare core. As a result we have extended our capabilities toinclude a flexible, commercial, combined proposition to caterfor the varied needs of clients across our teams.
OUR PEOPLEThe division’s key capability is the quality of our people. Thisenables us to retain our existing clients and win new ones.As such, the division has made a number of key hires in thepast year; extending, strengthening and deepening ourexisting capabilities in line with emerging client needs.
THE FUTUREAlignment with client needs will define the development ofthe division’s capabilities and distribution platforms. Thiswill involve:• The acquisition of individuals and teams who exhibit the
Howden culture• A focus on marketing• Client research via the establishment of client boards• Benchmarking the Business in each sector against
competitors to understand changing market and sectordynamics
Whilst the UK retail business continues to operate within adiverse and competitive market, we are confident that ourcontinued focus on efficiency, sector specialism, and thequality of our people will deliver our ambitious growth plans.
GROUP BROKING - HOWDEN BROKING GROUP
“We have extended ourcapabilities to include aflexible, commercial,combined propositionto cater for the variedneeds of clients acrossour teams.”
MIKE LOBBMANAGING DIRECTORRETAIL
21HYPERION INSURANCE GROUP
GROUP UNDERWRITINGINTRODUCTIONThe underwriting arm of Hyperion was formed in 1998when the Group’s first underwriting agency, DUAL Ibérica,was established in Madrid. An underwriting agency has abinding (or delegated) authority given by an insurer to grantcover on the insurer’s behalf within certain pre-agreedparameters. Underwriting agency businesses act as a virtualinsurer, performing all of the functions typically performedby an insurer other than retaining the ultimate balancesheet risk. Hyperion operates underwriting agencybusinesses through Avant, CFC Underwriting, DUAL andVK Underwriters.
CFC UNDERWRITINGCFC Underwriting was established in 2000 to takeadvantage of growing technology industry risks and is basedin the Lloyd’s building in London. Although specialising inLiability insurance for technology businesses, it hasremained flexible in its approach to underwriting risk andhas developed new lines wherever an opportunity exists. Inthe USA, for example, it provides its broker clients with aLiability product designed to satisfy USA requirements forminimum insurance coverage of nursing homes.
DUALDUAL is the largest underwriting agency in Hyperion andconsists of eight offices in Germany, Italy, Spain, the UnitedKingdom, Hong Kong and Australia. These offices aresupported by a headquarters in London, DUAL International.Initially focusing on Directors & Officers and ProfessionalIndemnity, it has broadened its offering to brokers withPension Trustee Liability, Employment Practice Liability, andCommercial Crime and Fraud products. Its strategy hasalways been to sell insurance to low risk / low volatilityassureds focusing on profitable underwriting.
VK UNDERWRITERSThe origins of VK Underwriters date back to 2003, when a Miami-based intermediary established a contract tounderwrite Directors & Officers Liability insurance on behalfof several prominent insurance providers. Over the last fiveyears, the company has expanded its product offering toinclude a full suite of Liability products. VK Underwriterscontinues to focus on SME companies domiciled mostly inLatin America.
CFC UNDERWRITING OFFICE• CFC Underwriting Limited – London
DUAL OFFICES• DUAL International Underwriting Limited – London and
Hong Kong• DUAL Corporate Risks Limited – Dublin, London and
Manchester• DUAL Australia Pty. Limited – Brisbane, Melbourne,
Perth and Sydney• DUAL Deutschland GmbH – Cologne• DUAL Ibérica Riesgos Profesionales SA – Madrid• DUAL Italia SpA – Milan
VK UNDERWRITERS OFFICE• VK Underwriters – Bogota, Buenos Aires, Mexico City,Miami and Puerto Rico
DUAL INTERNATIONALDUAL’S CORE BUSINESS IS THE PROVISION of D&O Liability, Management Liability and Professional Indemnity insurance,principally to small to medium-sized enterprises and mid-market buyers in the UK, Europe, Australia and the Far East. In the last 5years DUAL has underwritten half a billion euros in premiums for our capacity providers, whilst delivering highly profitableunderwriting results.
The DUAL Group has enjoyed another strong year in a very challenging economic environment. GWP increased to €115 millionfrom €106 million in 2007-08. Rates continued to fall in most of our core product lines, albeit more slowly, but significant growthcame from new PI, D&O and Financial Lines initiatives in the UK, and from PI and Management Liability products in Australia.Over 44% of DUAL’s new premium income came from first-time buyers.
Our UK operation, DUAL Corporate Risks, launched its DUAL Focus product for mid-market Financial Lines D&O and PI and hasrecently recruited a respected team from ARGO-Heritage to expand this capability. It has just opened a new office in Dublin.
DUAL Australia became DUAL Asia Pacific with the opening of our Hong Kong office – our first in the Far East. It continues tooutperform its local competitors, with its fast, efficient product delivery and by providing service standards which others finddifficult to match.
DUAL Deutschland continues to grow well and to increase its profile in the local market. Its retention ratio of 90% is testament tothe superior service that the office provides to its German and Austrian clients. 85% of its new policy holders are first-time buyers.
In Southern Europe, the DUAL Ibérica and DUAL Italia offices performed well in extremely tough local conditions. DUAL Italiastands on the brink of an exciting new phase in its distribution plans, with its entry into bancassurance and the export of itsspecialist expertise into reinsurance solutions.
At the end of the year we welcomed VK Underwriters under the DUAL Group umbrella. VKU (formerly a division of Hyperion’sinsurance broking capability) underwrites Latin American and Caribbean business out of 5 offices, and brings welcomediversification to the DUAL Group – in product lines and territories, as well as in capacity providers.
22 HYPERION INSURANCE GROUP
GROUP UNDERWRITING - DUAL
“ In the last 5 yearsDUAL has underwrittenhalf a billion euros inpremiums for ourcapacity providers,whilst delivering highlyprofitable underwritingresults. ”
BOB VAN GIESONCHAIRMAN AND CHIEFEXECUTIVE OFFICER DUALINTERNATIONAL
23HYPERION INSURANCE GROUP
GROUP UNDERWRITING - DUAL
ASIA PACIFICTHE MARKET The Australian market maintains its position as one of thelargest Professional Lines markets in the world, totallingAUS$1.5 billion in insurance premiums.
The growth potential in the Professional Lines market, despitebeing competitive, remains buoyant (14% over the last 12months) due to the continuing rise in professions requiringPersonal Indemnity (PI) cover.
D&O and Management Liability has good growth potential asless than 10% of private companies purchase these forms ofinsurance. DUAL currently estimates its share of the marketto be between 6-7%.
The Asian market is however, considered less developed witha total market size of US$400 million. As Hong Kongrepresents over 25% of the market, the opening of an officethere is a logical entry point for our Asia Pacific expansion.
2008-2009 HIGHLIGHTSOur expansion geographically and in product developmentduring 2009 has been significant. A newly recruited team hasspearheaded our first major product expansion into theAccident and Health insurance market and we are nowoperating in Sydney, Melbourne, Perth, Brisbane and HongKong. Our gross premium base has increased by 26% duringthis period.
Our partnership with MSIG, one of the largest insurersthroughout Asia, will enable us to develop the AsianProfessional Lines market successfully.
OUR PEOPLEOur people are our strength and always will be. Over thelast 12 months, we have expanded our team from 28members to 35. We encourage a culture of “work hard, playhard”, a fact which has been key to our success and we havea strong commitment to invest in people and technology.
THE FUTUREThe expansion of DUAL in Asia Pacific continues to remain inline with the original plan prepared in 2004 which wouldinvolve an Asia Pacific Professional Lines capability focusing onthe mid-market. The plan for the future has now developedfurther for DUAL to be a Specialty Lines capability whilstcontinuing to focus on the mid market. In the coming yearswe will continue to expand our product range such as A&Halong with continuing our goal to build market share in theProfessional Lines market both in Asia and Australia.
“The expansion ofDUAL in Asia Pacificcontinues to remain inline with the originalplan prepared in 2004. ”
DAMIEN COATESMANAGING DIRECTORDUAL AUSTRALIA
GERMANYTHE MARKETThe German Non-Life insurance market’s value is around €55billion of gross written premium, of which D&O and Errors &Omissions (E&O) accounts for about €450 million. With anestimated 28 suppliers underwriting D&O, in a market which isonly 20 years old, it is highly competitive. The impact of thefinancial crisis has however, created a rise in D&O premiumsfor Financial Institutions and we are well placed to takeadvantage of this, helped by media coverage raising awarenessof the need for our product.
The SME market is underdeveloped and product penetrationstands at approximately 20% leaving us with an excellentopportunity for steady growth going forward. DUAL is alsoamong the few suppliers in Austria.
2008-2009 HIGHLIGHTSIn 2009, in testing market conditions, we succeeded inmeeting our planned budget. Our gross written premiumincome was approximately €10 million which demonstrates avery impressive achievement for a young business.
DUAL Deutschland’s reputation for expertise and knowledgeof the insurance market is well respected as is our exemplaryservice. Our market position is outstanding following theearly launch of our combined D&O/E&O product for FinancialInstitutions. With the support of Great Lakes/Munich Re, awell rated capacity provider, we are able to keep ahead of ourcompetitors.
OUR PEOPLEWe have been very successful in employing engaged, service-driven, highly motivated staff whose expertise covers keyareas including law, business administration and insurancescience, coupled with industry experience.
We maintain our fault-free, outstanding client service. Ourkey success is our people who understand that success isabout building and maintaining relationships with our clientsand their engagement and genuine enthusiasm is key togrowing our business going forward.
THE FUTUREThe German D&O and E&O market is still underdevelopedand gaining our market share will be a major objective as wellas continuing to build our presence in the Austrian market.We expect a continuation of the rapid increase in premiumvolume levels in these markets over the next years.
24 HYPERION INSURANCE GROUP
GROUP UNDERWRITING - DUAL
“Our gross writtenpremium income wasapproximately €10million whichdemonstrates a veryimpressive achievementfor a young business. ”
HEINER EICKHOFFMANAGING DIRECTORDUAL DEUTSCHLAND
ITALYTHE MARKETThe Italian market’s value of €95 billion GWP is sharedamong 246 insurance companies and 245,000 intermediaries.Banks largely dominate Life business whilst 76% of Non-Lifeand Non-Motor is placed by insurance agents with brokersaccounting for another 14% of the market share.
Recent laws based on EEC directives and new local insuranceregulations have significantly changed the market environmentincreasing the need for qualifications, transparency andresponsibility, aligning Italy with the most developed insurancemarkets and creating a fairer and more competitiveenvironment.
Market studies have demonstrated that Italian intermediariesbelieve that foreign insurers offering focused, specialisedinsurance solutions will be those most likely to dominate thedrive for growth, particularly in the PI arena.
2008-2009 HIGHLIGHTSSince its establishment, DUAL Italia has written more than€60 million of GWP with €12 million in 2009. Our ability tooffer tailor made sophisticated insurance solutions alongsideoff the shelf products resulted in the issue of 6,500 policies,an increase of 55% on the previous year.
Our strategy to build and reinforce our distribution networkhas come to fruition and now consists of 400 insuranceintermediaries of which 50 are agents.
This year DUAL Italia concluded two important reinsurancedeals enabling RSA Italy and UNIQA Protezione to issue their
own branded PI and D&O policies through their own networkof agents using DUAL’s products and expertise. Arch providesthe reinsurance capacity and DUAL Italia acts as a hub andspoke for any tailor made quotations and as a claims handler.
DUAL Italia is now unquestionably recognised as a marketleader in the Italian PI and D&O market.
OUR PEOPLEOur stated goals are to create innovative products, providehigh quality service, and retain and improve relationshipswith our distribution network. The only way to achieve thisis through employing and cultivating highly motivatedindividuals who want to achieve these goals with us andbelieve in our culture.
THE FUTUREGoing forward, we will focus on our ability to satisfy the needsof our distribution network, the quality of our products, andour brand awareness to maintain our enviable position as abenchmark company within the PI and D&O markets.
Our aim is to create a broad, diversified and loyal distributionbase alongside alternative distribution models includingreinsurance agreements with Italian companies. We are alsoexploring the potential of the emerging bancassurance D&Oand PI market. This represents an exciting opportunity forDUAL Italia going forward.
“DUAL Italia is nowunquestionablyrecognised as a marketleader in the Italian PIand D&O market. ”
MAURIZIO GHILOSSOMANAGING DIRECTORDUAL ITALIA
25HYPERION INSURANCE GROUP
GROUP UNDERWRITING - DUAL
SPAIN & PORTUGALTHE MARKETSpain and Portugal have both been strongly hit by the worldeconomic turmoil under which DUAL Ibérica has had totrade during the last year. Spain, in addition to the financialcrash, will need to recover from the bursting of anunprecedented housing market bubble.
Despite the difficult economic enviroment, the insuranceindustry has continued its constant softening trend. TheProfessional Liability insurance market appears once again tobe failing to take stock of the Spanish and Portugueseeconomy, and the forecast increase in the amount of claims.
2008-2009 HIGHLIGHTSDespite very competitive and aggressive market conditions,we have succeeded in achieving the budgeted revenuestream, €27.6 million in gross written premium. We haveachieved this by maintaining the prudent underwritingparameters established to ensure acceptable earnings fromprofit commissions.
Most of the strategic and commercial objectives defined atthe beginning of the year have been satisfactorily achieved.The shift to a portfolio in which non-construction relatedprofessionals have gained greater prominence is an impressiveachievement that has proven a key factor of success in thecurrent economic environment.
OUR PEOPLEDuring our 11 years of trading, the DUAL team has clearlydemonstrated an ability to meet budgets and maintain solidunderwriting parameters. This is a unique achievement in theSpanish and Portuguese market, and an enviable one from aglobal perspective.
We have only been able to achieve this success because ofthe outstanding levels of experience and expertise embodiedby our team.
THE FUTUREDUAL’s undeniable solid foundations will ensure we continueto maintain the levels of growth achieved over the last 11years. Our brand is based upon sustainable competitivedifferences and a strong commercial focus on new businessopportunities and is combined with a recognised reputationfor handling claims and an obsessive focus on underwritingprofitability.
DUAL is one of the leading choices in the market and ourchallenge is to make sure that we maintain this enviableposition.
26 HYPERION INSURANCE GROUP
GROUP UNDERWRITING - DUAL
“Despite verycompetitive andaggressive marketconditions, we havesucceeded in achievingthe budgeted revenuestream, €27.6 million ingross written premium.”
LUIS MUÑOZ-ROJASENTRECANALESMANAGING DIRECTORDUAL IBÉRICA
27HYPERION INSURANCE GROUP
GROUP UNDERWRITING - DUAL
UNITED KINGDOMTHE MARKETThe market continues to be broadly competitive particularlyin the commercial D&O and PI lines and we are witnessingsome sensible risk taking in the Financial Institutions lines. We believe this will continue for the rest of the year.
2008-2009 HIGHLIGHTSThere are a number of significant highlights to report duringthe past year.
Our gross written premium increased from £30 million to£43 million, an increase of 43% on the previous year.
Unfortunately, due to the large reserves for solicitors’ claimsin the year, the Profit Commission received in December washowever, significantly lower than in previous years. GWP forD&O increased from £20 million to £27 million (up 31%) andPI from £10 million to £16 million (up 66%).
During the year we launched our Broker RelationshipManagement Programme. This will enable us to betterunderstand the needs of our key brokers and identify andrealise new business opportunities with them.
We opened the doors to our Dublin office in November2009 and have successfully recruited two ex AIGunderwriters and Brian Martin will head up this operation.
The DUAL Focus product was launched during the year withGWP of £3 million being written. In October two ex ARGOunderwriters Liz Hanlon and Beth Whybrow joined us. GWP
is expected to grow from £3 million to £7.8 million in2009/2010.
We have repositioned our Manchester office as a NationalBusiness Unit. This will be responsible for the growth anddevelopment of all high volume/low premium initiatives. Thiswill enable our more specialist underwriters in London tofocus on more complex risks with a higher GWP value.
OUR PEOPLEDUAL has welcomed a significant number of new people intothe company this year, notably boosting our size and capacityacross all departments.
It is at the core of our philosophy that we invest in people ofthe highest quality, expertise and motivation in order toremain competitive in such difficult market conditions.
THE FUTUREOur success has always been founded upon offering asuperior service to our brokers and delivering excellentunderwriting results for our capital providers.
Predictions are that 2010 will remain a highly challengingmarket, with cautious economic forecasts and increased PIclaims activity. However, by sticking closely to our focusedunderwriting strategy we will continue to increase oursuccess and perform with strength.
“Our gross writtenpremium increasedfrom £30 million to£43 million, an increaseof 43% on the previousyear. ”
RUSSELL KILPATRICKMANAGING DIRECTORDUAL CORPORATE RISKS
UNITED KINGDOM (CFC)THE MARKETThe market has softened for all of our product lines over thelast five years, but the overall market size has grown as a resultof increasing market penetration. We expect continued growthin each of our key product lines over the next three years.
2008-2009 HIGHLIGHTSCFC had another very successful year with growth in revenue of22% and profit of 41% against the backdrop of a global recessionand a very competitive insurance market. However, the mostsignificant achievement during this period was the developmentof scalability in a number of different areas leaving the businessextremely well positioned to deliver on the exciting growthplans which form the next phase of our development.
One of our core values is to be 'product-obsessed' and thisinvolves regular reviews of our products and services. We havehoned our product development and launch processes and arewell positioned to refresh existing products and launch newones into multiple countries very quickly. This is fast becominga major source of competitive advantage and at the beginningof the year we re-packaged and re-launched our entireproduct range. Since then we developed and launched a highlyinnovative insurance product targetting drug developmentcompanies, entered the D&O insurance market and launched anew product suite, MedSuranceTM, which focuses on small longterm care facilities. The re-launch of the existing products andthe introduction of several new ones represented a significantinvestment for CFC, but it was just one of several large-scaleinvestments during the year.
The launch of our new internal computer system, NERD has
had a significant impact on our business providing us withgreat efficiencies and producing superior managementinformation that will drive better informed business decisionsgoing forward.
CFC has also developed online delivery of small businessinsurance via insurance brokers, developing and licensingonline systems to brokers in a number of countries that theyare able to 'white-label' as their own. We provide thesesystems at very low cost to brokers who manage securebooks of homogeneous business, or to brokers who areprepared to invest considerably in online marketing.
The combination of these two new systems enables us notonly to provide insurance brokers with a powerful and uniquetool but we can transact business on a ‘no-touch’ basisallowing us to enter the micro business insurance marketwithout incurring the high costs associated with distribution.As a result, we will benefit from economies of scale.
OUR PEOPLEWe now employ 32 people who are all based in London. Thecompany benefits from a strong management team with agreat deal of experience of the London and internationalinsurance markets. Significant emphasis is placed onenhancing the service and product culture of the business byemploying highly motivated, top calibre people.
THE FUTURESince its formation in 2000, CFC has achieved great success.The initiatives we have successfully implemented this yearwill provide the foundation to accelerate our growth.
28 HYPERION INSURANCE GROUP
GROUP UNDERWRITING - CFC UNDERWRITING
“CFC had anothervery successful yearwith growth inrevenue of 22% andprofit of 41% againstthe backdrop of aglobal recession and avery competitiveinsurance market. ”
DAVID WALSHMANAGING DIRECTORCFC UNDERWRITING
29HYPERION INSURANCE GROUP
GROUP UNDERWRITING - VK UNDERWRITERS
LATIN AMERICA & THE CARIBBEANTHE MARKET As expected, 2008-2009 presented challenges for businessgrowth. While there was some notable stability and increasein pricing for financial institution products the general trendremained a downward one, liability premiums, professional,management and general alike. New entrants into the LatinAmerica and Caribbean markets create new competitorswhose need to grow and diversify their business putssignificant pressure on pricing. The increased presence ofmultinational companies in the reinsurance arena createsgreater retention of risk and less facultative reinsuranceopportunities. These factors combine to influence “fac”underwriters to become more aggressive in their acquisitionand retention of business, thereby further perpetuating thedownward pressure on pricing.
2008-2009 HIGHLIGHTSVK Underwriters successfully concluded its spin-off andincorporation into Dual International. We secured separateMGA Licenses in Florida, which sets the stage fordevelopment into the North America liability market. Havingopened a new subsidiary in San Juan, Puerto Rico, with theincorporation of a General Agency to service Puerto Rico,we are positioning ourselves for a smooth and successfulemergence into neighbouring Caribbean countries. We alsohave increased our capacity for Professional Liability andsigned an agreement to begin offering Crime Insurance.
OUR PEOPLE All of our underwriters possess a vast amount of technicalknowledge coupled with extensive, practical experience inthe markets they serve. With the incorporation of oursubsidiary in Puerto Rico we have invested significantly inhuman resources and attracted both a recognized andrespected senior manager and the most seasonedProfessional Indemnity manager in Latin America.
Fortifying the core to our success, we have been fortunate inattracting people who are committed to providing outstandinglevels of service to both our clients and capacity providerpartners.
THE FUTUREThroughout 2009 and 2010 we will look to consolidate andleverage our now robust distribution and underwritingnetwork in Latin America and the Caribbean. We also planto initiate our underwriting operations in the US market.
In addition to pricing trends, two areas of concern that weplan to monitor closely are terms and conditions and trendsin liability awards. A combination of continued downwardpricing, increases in liability awards and enhanced terms andconditions will cause greater strain on profitability. And thismust be controlled in the weak investment incomeenvironment.
Although market conditions continue to be challenging andcompetitive , we remain optimistic about the ability of ourpeople to continue to deliver for our clients, capacityproviders and shareholders.
“Fortifying the core toour success, we havebeen fortunate inattracting people whoare committed toproviding outstandinglevels of service to bothour clients and capacityprovider partners. ”
MATT KELLYCHIEF UNDERWRITING OFFICERVK UNDERWRITERS
HYPERION INSURANCE GROUP LIMITED
FINANCIAL STATEMENTS
YEAR ENDED 30 SEPTEMBER 2009
Directors’ report 32 - 35
Statement of directors’ responsibilities 35
Independent auditors’ report 36
Consolidated profit and loss account 37
Consolidated statement of total recognised gains and losses 37
Consolidated and company balance sheets 38
Consolidated cash flow statement 39
Reconciliation of net cash flow to movement in net funds 39
Notes to the consolidated financial statements 40 - 61
Hyperion contact details 62 - 64
31HYPERION INSURANCE GROUP
FINANCIAL STATEMENTS
The directors submit their report and audited financial statements
for Hyperion Insurance Group Limited (“the Company”) together
with the consolidated financial statements of the Group for the year
ended 30 September 2009.
PRINCIPAL ACTIVITYThe principal activity of the Company during the year was that of a
holding and investment company for a group of insurance
intermediaries. The Group’s trading operations comprise wholesale and
retail insurance broking, reinsurance broking and underwriting agencies.
REVIEW OF THE BUSINESSThe Board is pleased to report that, against an extremely
challenging financial market background, the Group reported 19%
growth in operating income to £57.2m (2008 - £48.0m). EBITDA
excluding exceptionals was £8.8m, up 7% (2008 - £8.2m). Operating
profit, before exceptional items, was £5.9m (2008 - £6.0m).
Excluding profit commissions, operating income increased by 38%
and EBITDA excluding exceptionals grew by £6.4m. Profit
commissions were down by £5.6m in 2009 as expected in light of
the overall economic turmoil.
The Group’s broking operations reported revenues of £34.1m
(2008 - £23.8m). This 43% increase reflects further growth in
International and North America Property following the recruitment
of two teams in London as well as solid growth in Israel and Spain
and new offices in South East Asia and Latin America, partially offset
with the impact of further declines in premiums and brokerage, and
the impact of weak Sterling. Against this difficult background, the
Group’s broking operations reported profits of £4.6m (2008 - £0.6m)
and this reflects the maturity of the broking group as many of the
initiatives undertaken in the past start to pay off.
DUAL International’s underwriting agency operations had a
successful year. Gross written premium increased by 34% to £107m
and total revenues excluding profit commission by 43% to £14.9m.
This result reflects solid underlying growth. Whilst all DUAL offices
reported satisfactory results except DUAL Asia, which started to
trade only in May 2009, particularly strong performances were
achieved in the UK, Australia and Italy.
CFC, the Group’s other underwriting agency operation, had a very
successful year. Gross written premiums increased by 34% to
£30.0m, and profit after tax rose 44% to £1.7m.
Including VK Underwriters, the Group’s other underwriting agency
based in Miami, the total gross written premiums for the
underwriting agencies was £142m.
During the year, the Group raised £3m of additional working capital
through a shareholder loan facility, and also secured shareholder loan
note financing of €4.5m for the acquisition of Hendricks & Co GmbH,
of which €3m was received before year end. This loan note is the first
utilisation of the £25m funding committed in March 2008 by 3i,
supported by other major shareholders.
The Group’s trading operations are geographically diverse, with
different market positions and strong specialities. A number of
recently established businesses have yet to complete their initial
development phase. During the year the Group established
operations in five new countries; we now have 45 offices in 22
countries with over 600 employees across the Group including
associates. The management focus is on revenue and profit against
historic and budgeted performance levels, and in the DUAL and
CFC businesses, there is close monitoring of the underlying
underwriting performance. The Group also monitors revenue and
profit per employee, staff costs as a proportion of revenue and
overall brokerage as a percentage of premiums.
FUTURE DEVELOPMENTSWhilst the market background remains difficult, there is evidence
that premium and commission rates are beginning to stabilise and
that overseas earnings are improving following the weakening of
Sterling against a number of currencies. These place the Group in a
strong position and the prospects for its continued growth are very
positive.
RESULTS AND DIVIDENDSThe loss of the Group for the year after taxation and minority
interests amounted to £14,000 (2008 - profit of £1.2m). The loss of
the Company was £4.6m (2008 - profit of £2.5m). No equity
dividends were paid during the year (2008 - £nil). The subsidiary
and associated undertakings included within the Group are
disclosed in notes 14 and 15 to these financial statements.
CHARITABLE DONATIONSDuring the year to 30 September 2009 the Group made cash
donations of £14,000 (2008: £nil) for the benefit of charitable causes.
POST BALANCE SHEET DATE EVENTSOn 1 October 2009, the Group’s subsidiary Howden Broking Group
Limited completed the acquisition of 75% of the issued shares in
Hendricks & Co GmbH, the leading D&O insurance broker in
Germany. This is the first major acquisition since 3i acquired a
minority stake in the Group in March 2008. The acquisition of
Hendricks & Co GmbH is an important development in the further
expansion of the Group’s international broking network.
The Group is currently obtaining approval for a license in Singapore,
has just opened a Dual office in Ireland, and is in the process of
negotiating the sale of JK Buckenham Limited.
DIRECTORS’ REPORT
32 HYPERION INSURANCE GROUP
DIRECTORS’ REPORT
DIRECTORSThe directors who served during the year are listed below:
J P de Blocq van Kuffeler Chairman (appointed 1 February 2009)
D P Howden Chief Executive
L I Muñoz-Rojas Entrecanales
E R Fady
T S Howden
E H Woolf
D A Whileman
R T Van Gieson (appointed 22 July 2009)
R J R Elias (resigned 31 January 2009)
S J Crowther (resigned 20 July 2009)
B P Marsh (resigned 11 November 2009)
DIRECTORS AND OFFICERS LIABILITYINSURANCEThe Company has purchased insurance to cover directors’ and officers’
liability, as permitted by section 233 of the Companies Act 2006.
CORPORATE GOVERNANCEHyperion is committed to maintaining high standards of corporate
governance. We recognise that good governance helps the business to
deliver our strategy and safeguard shareholders’ long term interests.
We believe that the Combined Code provides a useful guide and we
apply these principles as appropriate to a group of our size.
In addition to the Chairman, the Board currently comprises four
executive directors, and five non-executive directors who bring an
appropriate balance of experience and knowledge, whereby the Board’s
decision making cannot be dominated by an individual or small group.
AUDIT, REMUNERATION AND INVESTMENTCOMMITTEESThe Board has delegated certain responsibilities to Committees that are
described below, all of which have formally constituted terms of
reference. It does not consider that the Group is of sufficient size to
justify the establishment of a permanent Nomination Committee and all
matters relating to Board appointments are therefore dealt with by the
Board itself, or by a subcommittee specifically formed for that purpose.
Audit Committee
The Audit Committee comprises three non-executive directors and
is chaired by Emile Woolf. The Committee meets at least four times
a year. Meetings are attended, by invitation, by the Company’s
external auditors, the finance director and members of his staff,
compliance officers and internal audit.
The Committee’s role is to assist the Boards of the Company and
its subsidiaries in fulfilling their responsibilities with regard to
accounting policies, internal control, financial reporting functions,
risk assessment, compliance and related matters.
Remuneration Committee
The Remuneration Committee comprises four non-executive
directors and is chaired by John van Kuffeler. The Committee meets
at least four times a year. Meetings are attended by the Chief
Executive and by the Group Human Resources manager. Other
individuals and external advisers may be invited to attend for all or
part of any meeting as and when appropriate.
The Committee’s overall responsibility is to balance the various
interests of shareholders, the Company and its employees, with the
aim of ensuring that the Company, through its remuneration policy
is able to attract, retain and motivate management and senior staff
of appropriate experience and expertise.
INTERNAL CONTROL & RISK MANAGEMENTThe Board is responsible for maintaining a sound system of internal
control and risk management, and for reviewing its effectiveness to
safeguard shareholders’ investments and Group assets. There is no
absolute means of preventing material loss and/or misstatement,
and the Group’s internal controls reflect a balanced judgement,
taking into account the direct costs of controls as well as the
indirect costs of being over-bureaucratic, which provide reasonable
assurance against material loss and/or misstatement.
The Group’s internal controls are tested and key business risks are
evaluated on a continuing basis, using Internal Audit, Compliance,
and other relevant expertise. The Group maintains insurance cover
against certain risks, including fidelity insurance.
THE BOARDThe Board is responsible for maintaining effective control over
significant strategy, financial, organisational, legal and regulatory
matters. It meets at least six times a year. Management supply the
Board with appropriate and timely information and the directors are
free to seek any further information they consider necessary.
PRINCIPAL BUSINESS RISKS AND UNCERTAINTIESThe Group’s operations specialise in business critical liability
insurance such as professional indemnity insurance, directors and
officers’ liability insurance and related products. The Group is
thus exposed to the cyclical factors that affect the insurance
market, and premiums and commissions. Whilst its underwriting
agency operations are not directly responsible for claims, claims
costs do affect the level of profit commission that the Group
receives.
Further, the Group’s international focus (which is one of its most
important strengths) exposes its revenues to currency fluctuations,
mainly sterling/dollar and sterling/euro. The Group has floating-rate
borrowings in Sterling, US dollars, Australian dollars and Euros and
is therefore also exposed to interest rate movements in those
DIRECTORS’ REPORT (CONTINUED)
33HYPERION INSURANCE GROUP
DIRECTORS’ REPORT
currencies. The Group has put in place appropriate hedging
strategies to manage this risk.
The Group is ambitious and seeks to grow by means of acquisitions
and organic growth. Such activities are inherently uncertain,
particularly start-up operations where the timing and quantum of
revenue build-up cannot be forecast with precision, and there is no
developed book of renewals. The Group seeks to minimize such
uncertainties with due diligence and warranties.
In all its principal operations, the Group is also exposed to
regulatory risk, and also an element of political risk in certain
geographic regions, such as the Middle East and Latin America.
The Group uses a number of internal performance indicators to
monitor and assess its business. In particular, renewal and attrition rates
are carefully reviewed. In the main, however, the Group focuses on the
profit before tax to revenue margin. It targets this to be at least 20%.
FINANCIAL RISK MANAGEMENTThe Group’s financial risk management objective is broadly to seek
to make neither profit nor loss from exposure to currency or
interest rate risks. Its policy is to finance working capital through
retained earnings and bank borrowings at prevailing market interest
rates. Acquisitions are funded through the combination of retained
earnings, additional equity and appropriate long-term finance.
Cash flow risk
The Group’s working capital comprises principally of insurance
debtors, creditors and cash as described in note 1(l). It is the
Group’s policy not to fund any insurance transaction therefore
minimising any credit exposure attaching to these insurance
balances. Insurance balances are denominated in various currencies,
predominantly Sterling, US Dollars and Euros. To minimise the
foreign exchange exposure the Group endeavours to match foreign
currency assets with liabilities of similar maturities and vice versa.
Where this is not possible, for material exposures, the Group
endeavours occasionally to purchase an appropriate financial
instrument. The Group’s exposure to the price risk of financial
instruments is therefore minimal.
Liquidity risk
In order to maintain liquidity to ensure that sufficient funds are
available for ongoing operations and future developments, the
Company uses a mixture of long-term and short-term debt finance.
Further details regarding the liquidity risk can be found in the
statement of accounting policies in the financial statements.
Credit risk
The Group’s principal financial assets are bank balances and cash, trade
and other receivables and investments. The amounts presented in the
balance sheet are net of allowances for doubtful receivables. An
allowance for impairment is made where there is an identified loss
event which, based on previous experience is evidence of a
reduction in the recoverability of cash flows. With regards to
insurance balances, the Group’s risk is limited as the Group acts as
the agent on these transactions. Further information on Insurance
balances receivable and the risk relating to these balances can be
found in the Statement of accounting policies in the financial
statements.
The Group has no significant concentration of credit risk, with
exposure spread over a large number of counterparties and
customers.
The credit risk on liquid funds and derivative financial instruments is
limited as the counterparties are the Group’s bankers with high
credit-ratings assigned by international credit-rating agencies.
GOING CONCERNThe Group’s business activities, internal controls and risk
management structure, including details of its financial instruments
and hedging activities, and its exposures to credit and liquidity risks,
are set out above.
The Group has adequate financial resources together with its
business being geographically diverse. As a consequence, the
directors believe that the Group is well placed to manage its
business risks successfully despite the current uncertain economic
outlook.
After making enquiries, the directors have a reasonable expectation
that the Company and the Group have adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the Annual Report and Accounts.
EMPLOYMENT POLICIESThe Board recognises that the continuing success of the Group
depends on its employees and its ability to continue to adopt
policies created to attract, motivate and retain employees of the
highest calibre.
The Group is an equal opportunities employer and bases decisions
on individual ability regardless of race, religion, gender, age or
disability. The Group’s equal opportunities policy is designed to
ensure that disabled persons are given the same consideration as
others when they apply for jobs, and enjoy the same training, career
development and prospects as other employees.
The Group seeks to achieve a common awareness among its
employees of the financial and economic factors affecting the
business by consultation and effective employee communication
through a variety of media.
DIRECTORS’ REPORT (CONTINUED)
34 HYPERION INSURANCE GROUP
DIRECTORS’ REPORT
The directors are responsible for preparing the Annual Report and
the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial statements
for each financial year. Under that law the directors have elected to
prepare the financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law). Under company law the
directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of
the company and of the profit or loss of the company for that
period. In preparing these financial statements, the directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• make judgments and accounting estimates that are reasonable and
prudent; and
• ensure that all applicable UK Accounting Standards have been
followed.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that the
financial statements comply with the Companies Act 2006. They are
also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The directors are responsible for the maintenance and integrity of
the corporate and financial information included on the company’s
website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation
in other jurisdictions.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
DISCLOSURE OF INFORMATION TO AUDITORSEach of the persons who is a director at the date of approval of this
report confirms that:
• so far as the directors are aware, there is no relevant audit
information of which the Group’s auditors are unaware; and
• the directors have taken all the steps that they ought to have
taken as directors in order to make themselves aware of any
relevant audit information and to establish that the Company’s
auditors are aware of that information.
This confirmation is given and should be interpreted in accordance
with the provisions of section 418 of the Companies Act 2006.
AUDITORSDeloitte LLP have indicated their willingness to be reappointed for
another term and appropriate arrangements have been put in place
for them to be deemed reappointed as auditors in the absence of
an Annual General Meeting.
Approved by the Board and signed on its behalf by:
HG PallotSecretary
22 December 2009
DIRECTORS’ REPORT (CONTINUED)
35HYPERION INSURANCE GROUP
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
We have audited the financial statements of Hyperion Insurance
Group Limited for the year ended 30 September 2009 which
comprise of the Consolidated Profit and Loss Account, the
Consolidated Statement of Total Recognised Gains and Losses, the
Consolidated and Parent Company Balance Sheets, the
Consolidated Cash Flow Statement, and the related notes 1 to 30.
The financial reporting framework that has been applied in their
preparation is applicable law and United Kingdom Accounting
Standards (United Kingdom Generally Accepted Accounting
Practice).
This report is made solely to the Company’s members, as a body, in
accordance with sections 495 and 496 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to
them in an auditors’ report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the
Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
RESPECTIVE RESPONSIBILITIES OF DIRECTORSAND AUDITORSAs explained more fully in the Directors’ Responsibilities
Statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and
fair view. Our responsibility is to audit the financial statements in
accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply
with the Auditing Practices Board’s (APB’s) Ethical Standards for
Auditors.
SCOPE OF THE AUDIT OF THE FINANCIALSTATEMENTSAn audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to
the Company’s circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall
presentation of the financial statements.
OPINION ON FINANCIAL STATEMENTSIn our opinion the financial statements:
• give a true and fair view of the state of the Group’s and Parent
Company’s affairs as at 30 September 2009 and of the Group’s
loss for the year then ended;
• have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the
Companies Act 2006.
OPINION ON OTHER MATTER PRESCRIBED BYTHE COMPANIES ACT 2006In our opinion the information given in the Directors’ Report for
the financial year for which the financial statements are prepared is
consistent with the financial statements.
MATTERS ON WHICH WE ARE REQUIRED TOREPORT BY EXCEPTIONWe have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
• adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the financial statements are not in agreement with the
accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law
are not made; or
• we have not received all the information and explanations we
require for our audit.
David Rush (Senior Statutory Auditor)For and on behalf of Deloitte LLPChartered Accountants and Statutory Auditors LondonUnited Kingdom
22 December 2009
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OFHYPERION INSURANCE GROUP LIMITED
36 HYPERION INSURANCE GROUP
INDEPENDENT AUDITORS’ REPORT
NOTES BEFORE EXCEPTIONAL BEFORE EXCEPTIONAL
EXCEPTIONAL ITEMS 2009 EXCEPTIONAL ITEMS 2008
ITEMS (NOTE 5) TOTAL ITEMS (NOTE 5) TOTAL
£’000 £’000 £’000 £’000 £’000 £’000
Turnover including share of associate 56,962 - 56,962 47,074 - 47,074
Less: share of associate (361) - (361) (418) - (418)
Group turnover 2 56,601 - 56,601 46,656 - 46,656
Fiduciary investment income 311 - 311 860 - 860
Other income 248 - 248 514 - 514
Group operating income 57,160 - 57,160 48,030 - 48,030
Administrative expenses (51,273) (1,799) (53,072) (42,048) (1,800) (43,848)
Operating profit/(loss) 3 5,887 (1,799) 4,088 5,982 (1,800) 4,182
Share of operating loss
of associated undertakings 15 (20) (60) (80) (98) - (98)
(Loss)/profit on sale or termination
of operations 9 - (306) (306) 914 - 914
Loss on sale of tangible
fixed assets - - - (2) - (2)
Non fiduciary investment income 90 - 90 290 - 290
Interest payable and similar charges 10 (1,440) - (1,440) (1,051) - (1,051)
Profit/(loss) on ordinary activities before taxation 4,517 (2,165) 2,352 6,035 (1,800) 4,235
Taxation 11 (1,800) 262 (1,538) (2,762) 456 (2,306)
Profit/(loss) on ordinary activities
after taxation 2,717 (1,903) 814 3,273 (1,344) 1,929
Minority interests (828) - (828) (750) - (750)
Profit/(loss) for the financial year 1,889 (1,903) (14) 2,523 (1,344) 1,179
Turnover and operating profit for the year arose from continuing operations. The notes on pages 10 to 31 form part of these financial statements.
CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 30 SEPTEMBER 2009
37HYPERION INSURANCE GROUP
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFOR THE YEAR ENDED 30 SEPTEMBER 2009
2009 2008
£’000 £’000
(Loss)/profit for the financial year (14) 1,179
Currency translation differences (229) 327
Total recognised gains and losses relating to the year (243) 1,506
All amounts relate to continuing operations. The notes on pages 10 to 31 form part of these financial statements.
2009 2009 2008 2008
GROUP COMPANY GROUP COMPANY
NOTE £’000 £’000 £’000 £’000
Fixed assets
Intangible 12 30,887 - 30,612 -
Tangible 13 3,025 - 2,935 -
Investments in subsidiary undertakings 14 - 21,892 - 23,042
Investments in associated undertakings 15 - - 16 -
33,912 21,892 33,563 23,042
Current assets
Debtors due within one year 16 129,918 38,481 91,926 28,558
Debtors due after more than one year 17 2,021 1,733 2,544 2,257
Cash at bank and in hand 18 57,549 - 37,097 573
189,488 40,214 131,567 31,388
Creditors
Amounts falling due within one year 19 (166,735) (15,340) (114,096) (5,774)
Net current assets 22,753 24,874 17,471 25,614
Total assets less current liabilities 56,665 46,766 51,034 48,656
Creditors
Amounts falling due after more
than one year 20 (18,124) (13,965) (13,781) (12,603)
Net assets 38,541 32,801 37,253 36,053
Capital and reserves
Called up share capital 22 418 422 407 407
Share premium account 23 34,852 35,181 34,330 34,330
Other reserves 23 778 355 95 88
Profit and loss account 23 1,762 (3,157) 1,707 1,228
Shareholders’ funds 37,810 32,801 36,539 36,053
Minority interests 24 731 - 714 -
Capital employed 38,541 32,801 37,253 36,053
The notes on pages 10 to 31 form part of these financial statements. 2008 numbers have been restated to reflect the split between short term and long term debtors.
The financial statements were signed as approved and authorised for issue by the Board on 22 December 2009.
Signed on behalf of the board of directors
DP Howden ERM FadyDirector Director
Company Number 2937398
CONSOLIDATED AND COMPANY BALANCE SHEETSAS AT 30 SEPTEMBER 2009
38 HYPERION INSURANCE GROUP
FINANCIAL STATEMENTS
2009 2008
NOTE £’000 £’000
Net cash inflow from operating activities 4 20,973 8,548
Returns on investments and servicing of finance 28(a) (1,024) (2,454)
Taxation (2,839) (2,470)
Capital expenditure and financial investment 28(a) (1,092) (1,379)
Net cash outflow from acquisitions and disposals 28(a) (2,296) (24,005)
Cash inflow/(outflow) before use of liquid resources and financing 13,722 (21,760)
Financing 28(a) 6,519 26,279
Increase in cash 20,241 4,519
All amounts relate to continuing operations.
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDSFOR THE YEAR ENDED 30 SEPTEMBER 2009
2009 2008
NOTE £’000 £’000
Increase in cash in the year 20,241 4,519
Cash outflow from debt and lease financing 28(a) (6,839) (4,472)
Movement in net funds in the year resulting from cash flows 13,402 47
New finance leases (13) (178)
Premium paid on redemption of ‘A’ ordinary redeemable shares - (424)
Conversion of preferred shares to ‘A’ ordinary £0.01 shares - 3,339
Amortisation of bank and loan arrangement costs (658) (322)
Movement in net funds in the year 12,731 2,462
Net funds at beginning of year 26,776 24,314
Net funds at end of year 28(b) 39,507 26,776
CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 30 SEPTEMBER 2009
39HYPERION INSURANCE GROUP
FINANCIAL STATEMENTS
The following accounting policies have been applied consistently
throughout the year and preceding year in dealing with items that
are considered material in relation to the financial statements.
(A) BASIS OF PREPARATIONThe financial statements have been prepared under the historical
cost convention and in accordance with applicable UK accounting
standards. The directors have made the appropriate enquiries, and
have a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for
the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the Annual Report and Accounts.
(B) BASIS OF CONSOLIDATIONThe Group’s financial statements consolidate the financial
statements of the Company and its subsidiary undertakings for
the year ended 30 September 2009 using the acquisition method.
The results of acquired businesses are consolidated from the
date on which effective control passes to the Group. Associated
undertakings are accounted for using the net equity method.
As permitted by section 408 of the Companies Act 2006 no
separate profit and loss account has been provided for
Hyperion Insurance Group Limited.
(C) TURNOVERTurnover consists principally of brokerage, commission and fees
associated with the placement of insurance and reinsurance
contracts, net of commissions payable to other directly involved
parties. Revenues from brokerage, commissions and fees are
recognised on the inception date of the risk. Any adjustments to
commission arising from premium additions or reductions are
recognised as and when they are notified by third parties.
Where contractual obligations exist for the performance of post
placement activities, and the cost of these activities is not
expected to be covered by future revenue, a relevant proportion
of revenue received on placement is deferred and recognised
over the period during which the activities are performed.
(D) TANGIBLE FIXED ASSETS ANDDEPRECIATIONTangible fixed assets are stated at cost less depreciation.
Depreciation is provided on all tangible fixed assets, including
those held under finance lease, at rates calculated to write off
the cost of fixed assets less their estimated residual value
over their expected useful lives on the following bases:
Short leasehold Over the outstanding
improvements lease period
Furniture, fixtures and fittings 5 years to 10 years
Computer hardware 4 years to 5 years
Computer software 3 years
Motor Vehicles 4 years
(E) GOODWILLGoodwill, being the difference between the fair values of the
net assets acquired and consideration paid, is capitalised and
carried at its book value (original cost less cumulative
amortisation), less any impairment subsequently incurred.
Goodwill is amortised on a straight line basis over its
expected useful life, with a maximum period of 20 years.
(F) INVESTMENTSInvestments in subsidiary and associated undertakings are
carried at cost less any provision for impairment. In the
Group financial statements investments in associates are
accounted for using the equity method. The consolidated
profit and loss account includes the Group’s share of
associates’ profits less losses while the Group’s share of the
net assets of the associates is shown in the consolidated
balance sheet.
(G) OPERATING LEASESOperating lease rentals are charged to the profit and loss
account on a straight-line basis over the lease term.
(H) PENSIONSThe Group operates a defined contribution scheme and the
amount charged to the profit and loss account in respect of
pension costs and other post-retirement benefits is the
contributions payable in the year. Differences between
contributions payable in the year and contributions actually
paid are shown as either accruals or prepayments in the
balance sheet.
(I) FOREIGN CURRENCYThe results of the foreign subsidiaries have been translated
using the average of monthly exchange rates. Assets and
liabilities of foreign subsidiary undertakings are translated into
sterling at the rates of exchange ruling on the balance sheet
date. Exchange differences which arise from translation of the
opening net investment in foreign subsidiary undertakings are
taken to reserves. All other differences are taken to the profit
and loss account.
Transactions denominated in foreign currencies are translated
to sterling at the exchange rates ruling at the date of the
transaction. Assets and liabilities denominated in foreign
currencies at the balance sheet date are translated into
sterling at the rates ruling at the balance sheet date.
Exchange differences arising are dealt with through the profit
and loss account.
(J) TAXATIONCorporation tax on the profit or loss for the year comprises
current and deferred tax.
Current tax is the expected tax payable on the taxable
1. PRINCIPAL ACCOUNTING POLICIES
40 HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
income for the year, using tax rates substantively enacted at
the balance sheet date, and any adjustments to tax payable in
respect of previous years.
Deferred taxation is provided on material timing differences
between the incidence of income and expenditure for
taxation and accounts purposes using the full provision basis.
Deferred tax assets are only recognised to the extent that
they are considered recoverable against future taxable profits.
Deferred tax balances are not discounted. Deferred tax is
determined using the tax rates that have been enacted or
substantively enacted by the balance sheet date, and are
expected to apply when the deferred tax liability is settled or
the deferred tax asset is realised.
(K) DIVIDENDSEquity dividends declared at the discretion of the Company
are recognised in the period in which they are declared and
approved by shareholders.
(L) INSURANCE INTERMEDIARY ASSETS ANDLIABILITIESInsurance brokers usually act as agents in placing the insurable
risks of their clients with insurers and as such, generally, are
not liable as principals for the amounts arising from such
transactions. Notwithstanding these legal relationships,
debtors and creditors arising from insurance broking
transactions are shown as assets and liabilities as set out in
notes 17-19. This recognises that the insurance broker is
entitled to retain the investment income on any cash flows
arising from these transactions.
Debtors and creditors arising from a transaction between a
client and insurers (e.g. a premium or a claim) are recorded
simultaneously. Consequently, there is a high level of
correlation between the totals reported in respect of
insurance broking debtors and insurance broking creditors.
The position of the insurance broker as an agent means that
generally the credit risk is borne by the principals. There can
be circumstances where the insurance broker acquires credit
risk – through statute, or through the act or omission of the
insurance broker or one of the principals. There is much legal
uncertainty surrounding the circumstances and the extent of
such exposure and consequently they cannot be evaluated.
Therefore, the total of insurance broking debtors appearing in
the balance sheet is not an indication of credit risk.
It is normal practice for insurance brokers to settle accounts
with other intermediaries, clients, insurers and market
settlement bureaux on a net basis. Thus, large changes in
both insurance broking debtors and creditors can result from
comparatively small cash settlements. For this reason, the
totals of insurance broking debtors give no indication of
future cash flows.
The legal status of this practice of net settlement is uncertain
and in the event of insolvency it is generally abandoned.
Financial Reporting Standard No. 5 “Reporting the substance
of transactions” requires that the offset of assets and liabilities
should be recognised in the financial statements where, and
only where, the offset would survive the insolvency of the
other party. Accordingly, only such offsets have been
recognised in calculating insurance broking debtors and
creditors.
(M) SHARE CAPITALOrdinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the
proceeds.
Where any Group company purchases the Company’s equity
share capital (treasury shares), the consideration paid, including
any directly attributable incremental costs (net of income
taxes), is deducted on consolidation from equity attributable to
the equity holders of the Company until the shares are
cancelled, reissued or disposed of. Where such shares are
subsequently sold or reissued, any consideration received, net
of any directly attributable incremental transaction costs and
the related income tax effects, is included in equity attributable
to the equity holders of the Company.
(N) SHARE-BASED PAYMENTSThe Group operates a number of share-based compensation
schemes and applies the requirements of FRS 20 “Share-based
payments” in respect of awards granted after 7 November
2002, until such time as they are fully vested.
The cost of employees’ services received in exchange for the
grant of rights under these schemes is measured at the fair value
of the equity instruments granted and is charged against profits
over the vesting period. For cash settled schemes the fair value is
re-assessed each year and any changes are recognised in the
profit and loss account until the liability is settled.
(O) FINANCE CHARGESFinance charges are accounted for on an accruals basis in the
profit and loss account and are added to the carrying amount
of the instrument to the extent that they are not settled in
the period in which they arise. Professional and other fees
incurred directly in raising long-term debt finance are
capitalised and amortised over the period of the instrument.
1. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
41HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
2009 2008
Turnover is analysed by business unit as follows: GROUP GROUP
£’000 £’000
Broking 34,087 23,848
Underwriting 22,514 22,808
56,601 46,656
Turnover is analysed by geographical markets as follows:
United Kingdom 14,079 14,126
Northern Europe 6,369 6,093
Southern Europe 9,737 9,221
Israel 4,182 2,772
Australasia 4,198 5,170
North and South America 8,595 3,901
Latin America 4,856 2,379
Middle East 2,074 1,076
Other 2,511 1,918
56,601 46,656
3. OPERATING PROFIT2009 2008
The operating profit is stated after charging/(crediting): GROUP GROUP
£’000 £’000
Depreciation of tangible fixed assets owned by the Group (note 13) 977 897
Amortisation of goodwill and other intangible assets (note 12) 1,930 1,197
Goodwill impairment (note 12) 246 -
Auditors’ remuneration (see below) 773 1,915
Operating lease rentals:
- Equipment 154 121
- Land and buildings 1,053 1,549
Gain on foreign currency exchange (83) (416)
The total remuneration payable by the Group, excluding VAT, to its principal auditors, Deloitte LLP, in respect of the audit of these accounts
is shown below, together with fees payable in respect of other work.
Audit services
- statutory audit of the Company 53 32
- statutory audit of subsidiaries 272 218
- audit-related regulatory and supplementary reporting - 11
Total audit services 325 261
Taxation services 136 40
Professional fees associated with corporate finance advisory services - 1,575
Professional fees associated with other advisory services 312 39
773 1,915
In addition to the above amounts payable to the principal auditors, fees for audit services of £35,000 (2008 - £2,000) were payable to other
firms. The total fees payable for audit services were therefore £360,000 (2008 - £263,000).
2. TURNOVER
42 HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
2009 2008
GROUP GROUP
£’000 £’000
Operating profit 4,088 4,182
Depreciation charge 977 897
Amortisation of goodwill and other intangible assets 1,930 1,197
Goodwill impairment 246 -
Share scheme incentives 683 95
Increase in debtors (36,932) (5,710)
Increase in creditors 49,981 7,887
Net cash inflow from operating activities 20,973 8,548
5. EXCEPTIONAL ITEMS2009 2008
GROUP GROUP
£’000 £’000
Professional fees associated in raising new equity and debt finance - 359
Restructuring and valuation costs - 218
Terminating and replacing senior executives 705 147
Costs attributable to restructuring investments 234 -
Costs of fundamental restructuring 939 724
Share scheme costs 269 498
Other one-off staff incentives 345 578
Goodwill impairment 246 -
Other exceptional administrative expenses 860 1,076
Administrative expenses 1,799 1,800
Office closure costs of subsidiary (note 9) 306 -
Office closure costs of associate 60 -
Total exceptional items before tax 2,165 1,800
Tax related to exceptional items (262) (456)
Total exceptional items after tax 1,903 1,344
A number of one-off exceptional items were incurred by the Group during the year. These included the crystallisation of a share option cost,
the costs to close two offices and associated write-down of one of the investments, and the restructuring of the Dual management structure.
4. RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOWS FROM OPERATING ACTIVITIES
43HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
2009 2008
GROUP GROUP
£’000 £’000
Aggregate emoluments 1,037 1,331
Aggregate pension contributions 377 216
Severance payments 280 43
1,694 1,590
Highest paid director:
Salary and benefits 330 328
Annual bonus 48 100
Pension contributions 156 147
534 575
Number Number
Directors 9 10
Directors accruing benefits under personal pension schemes 2 4
7. STAFF COSTS
Staff costs, including directors’ remuneration, were as follows:
2009 2008 2009 2008
COMPANY COMPANY GROUP GROUP
£’000 £’000 £’000 £’000
Wages and salaries 1,108 871 29,456 22,658
Social security costs 120 125 3,071 2,679
Share based incentives (note 8) 530 693 913 700
Pension contributions 136 112 1,389 1,220
1,894 1,801 34,829 27,257
Company staff costs include amounts recharged by the Group’s service company, HIG Services Limited which holds the contracts for service
with the relevant employees.
The average monthly number of employees, including directors, during the year was:
2009 2008 2009 2008
COMPANY COMPANY GROUP GROUP
Number Number Number Number
Directors and senior management 3 3 81 81
Insurance professionals - - 236 178
Administration - 7 131 124
3 10 448 383
6. DIRECTORS’ EMOLUMENTS
44 HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
During the year the total cost recognised by the Group for share-based incentive schemes was £913,000 (2008: £700,000).
The Company continues to operate an executive share option scheme to executive directors and other senior employees enabling them to
purchase ordinary ‘A’ £0.01 shares in the Company. The price at which options are offered is based upon the estimated market value of the
shares at the date of grant. Options may be exercised after 3 years, and lapse 10 years after the grant date. The charge for the year in
respect of these options amounted to £533,000 (2008 - £88,000).
During the year a share scheme was set up by Howden Insurance Brokers Limited, a principal subsidiary of the Group to incentivise a key
team. The options are exercisable over the next 3 years and were valued at inception at £345,000 using the Black Scholes model.
The balance of option cost of £38,000 (2008 - £7,000) was incurred in respect of a closed scheme operated by Howden Property Insurance
Services Limited, a subsidiary of the group.
All share scheme incentives are at the absolute discretion of the Remuneration Committee, with no employee having the right to receive
such a grant. The fair values of share based incentives are determined at their date of grant using the Black-Scholes valuation model.
The significant variables used in the calculations for the above schemes are as follows:
Company Howden Insurance Brokers Ltd
• Share value at date of grant £2.6004 £34.50
• Expected share price volatility 30.0% 30.0%
• Dividend yield 3.0% 0.0%
• Risk free interest rate 4.7% 0.5%
2,632,000 ‘B’ ordinary shares were issued to management on 30 September 2008 at nominal value, and an additional 46,200 issued during
2009. The fair value was determined as nominal value at the time of grant and no further charges will arise in respect of this arrangement.
Outstanding share options
At 30 September 2009 there were 300,600 unexercised options in respect of the Company’s ‘A’ ordinary shares of £0.01 each, which were
issued to various executives in the Group. An analysis of the movement in the number of share options issued is given below;
HELD AT HELD AT
BEGINNING END OF
OF YEAR GRANTED EXERCISED SURRENDERED LAPSED YEAR
DATE OF GRANT NUMBER NUMBER NUMBER NUMBER NUMBER NUMBER
5 December 2001 60,000 - - - - 60,000
10 February 2003 43,800 - - - - 43,800
14 June 2004 42,500 - - - - 42,500
14 December 2005 50,000 - - - - 50,000
19 July 2007 37,500 - - - - 37,500
8 December 2007 7,500 - - - - 7,500
26 March 2007 125,000 - - - (125,000) -
22 October 2007 9,900 - - - - 9,900
21 November 2007 49,400 - - - - 49,400
31 March 2008 432,000 - - (432,000) - -
857,600 - - (432,000) (125,000) 300,600
On 31 July 2009 the holder of the 26 March 2007 and 31 March 2008 options left the employment of the Group. The first parcel of options
then lapsed as the vesting criteria (based on the period of service) could not then be met by the employee, while the employee surrendered
the performance based options granted on 31 March 2008.
8. SHARE-BASED INCENTIVES
45HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
An analysis of the exercise price and the dates the share options may be exercised is set out below:
DATE OF GRANT HELD AT EXERCISE PRICE EXERCISABLE FROM EXPIRY DATE
END OF YEAR P
NUMBER
5 December 2001 60,000 22 6 December 2004 6 December 2011
10 February 2003 43,800 28 11 February 2007 11 February 2013
14 June 2004 42,500 46 15 June 2008 15 June 2014
14 December 2005 50,000 147 15 December 2009 15 December 2015
19 July 2007 37,500 150 20 July 2009 20 July 2016
8 December 2007 7,500 150 9 December 2009 9 December 2016
22 October 2008 9,900 152 23 October 2010 23 October 2017
21 November 2008 49,400 152 22 November 2010 22 November 2017
300,600
9. PROFIT/(LOSS) ON SALE OR TERMINATION OF OPERATIONS
2009 2008
GROUP GROUP
£’000 £’000
Sale proceeds - 1,092
Cost of sales - (178)
Closure costs (306) -
(306) 914
Closure costs incurred in 2009 relate to closure of the Avant office in Spain. The 2008 profit on disposal was made in respect of the part
disposal by the Group of 9.4% of its interest in its subsidiary, Howden Insurance Brokers Limited.
8. SHARE-BASED INCENTIVES (CONTINUED)
46 HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
2009 2008
GROUP GROUP
£’000 £’000
Bank loans and overdrafts 641 569
Preferred dividends (13) (97)
Interest on finance leases 13 16
Interest payable on other loans 139 193
Amortisation of bank and loan arrangement fees 660 322
Other interest - 48
1,440 1,051
Group 1,440 1,040
Associate - 11
1,440 1,051
No further preferred dividends have been payable since 31 March 2008 when the preferred cumulative ordinary shares were converted to
ordinary shares (see note 22). The preferred dividend income above reflects the reversal of a prior year accrual.
10. INTEREST PAYABLE AND SIMILAR CHARGES
47HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
2009 2008
GROUP GROUP
£’000 £’000
11(i) The tax charge/(credit) comprises:
Current tax
UK corporation tax on profits for the year 724 1,108
Adjustments in respect of previous years (325) (234)
Overseas tax 1,409 1,574
Total current tax (note 11(ii)) 1,808 2,448
Deferred tax
Origination and reversal of timing differences 143 (62)
Impact of change in UK tax rate (19) -
Adjustments in respect of previous years (394) (80)
Total deferred tax (note 21) (270) (142)
Tax on profit on ordinary activities 1,538 2,306
11(ii) Factors affecting the tax charge for the year:
The tax assessed for the year is higher than the standard rate of
corporation tax of 28% (2008 – 29%) due to the following reasons:
Profit on ordinary activities before tax 2,352 4,235
Profit on ordinary activities multiplied by the standard rate of
corporation tax in the UK of 28% (2008 – 29%) 659 1,228
Effects of:
Expenses not deductible for taxation purposes 647 203
Preferred dividends not deductible for taxation purposes - (24)
(Decelerated)/accelerated capital allowances (21) (25)
Increase in general provisions (40) -
Overseas tax in excess of UK tax 29 134
Non taxable overseas income (56) (27)
Unrelieved overseas taxation 43 40
Amortisation and impairment of goodwill 609 348
Unrelieved losses 50 1,137
Profit on part disposal of subsidiary undertaking - (265)
Adjustments to tax charge in respect of previous years (325) (234)
Other timing differences 190 (67)
Other taxes 23 -
Current tax charge for the year (note 11(i)) 1,808 2,448
11. TAXATION ON PROFIT ON ORDINARY ACTIVITIES
48 HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
12. INTANGIBLE FIXED ASSETS
49HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
POSITIVE NEGATIVE PATENTS
GOODWILL GOODWILL & OTHER TOTAL
GROUP £’000 £’000 £’000 £’000
Cost
At beginning of year 34,172 (55) 6 34,123
Additions 2,437 - - 2,437
Reclassification from tangible assets - - 106 106
At end of year 36,609 (55) 112 36,666
Amortisation and impairment
At beginning of year (3,559) 50 (2) (3,511)
Impairment during the year (246) - - (246)
Amortisation during the year (1,931) 2 (1) (1,930)
Reclassification from tangible assets - - (92) (92)
At end of year (5,736) 52 (95) (5,779)
Net book value at 30 September 2009 30,873 (3) 17 30,887
Net book value at 30 September 2008 30,613 (5) 4 30,612
BROKING
DIVISION DEFERRED
ACQUIRED CONSIDERATION PURCHASE OF
GOODWILL INCREASE MINORITIES TOTAL
£’000 £’000 £’000 £’000
Goodwill additions
Tangible fixed assets - - 10 10
Current assets - - 250 250
Cash - - 96 96
Current liabilities - - (102) (102)
Net assets acquired - - 254 254
Cash consideration 650 - 362 1,012
Shares issued - - 853 853
Legal and related costs 279 - - 279
Deferred consideration 200 347 - 547
Total consideration 1,129 347 1,215 2,691
Total 1,129 347 961 2,437
During the year the Group purchased the minority interests in Dual Australia Pty Ltd and Dual Italia SpA for £1,215,000 with a combination
of cash and shares.
The Group also agreed to pay £850,000 to acquire books of business in the Broking division.
The VK Howden LLC goodwill was adjusted upwards based on an increase in consideration payable for that business.
SHORT FIXTURES,
LEASEHOLD MOTOR FITTINGS &
IMPROVEMENTS VEHICLES EQUIPMENT TOTAL
GROUP £’000 £’000 £’000 £’000
Cost
At beginning of year 1,656 85 4,383 6,124
Reclassification - (15) 15 -
Additions 19 54 1,032 1,105
Disposals - - (42) (42)
Reclassify to debtors - (11) - (11)
Reclassify to intangibles (106) - - (106)
At end of year 1,569 113 5,388 7,070
Depreciation
At beginning of year 1,009 37 2,143 3,189
Reclassification - (13) 13 -
Charge for the year 346 23 610 979
Disposals - - (42) (42)
Reclassify to intangibles (92) - - (92)
Other movement - - 11 11
At end of year 1,263 47 2,735 4,045
Net book value at 30 September 2009 306 66 2,653 3,025
Net book value at 30 September 2008 647 48 2,240 2,935
Included in the cost of fixtures, fittings and equipment is £298,000 (2008 - £285,000) in respect of assets held under finance leases. The net
book value of these assets was £128,000 (2008 - £221,000) and depreciation charged during the year was £78,000 (2008 - £39,000).
14. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
2009 2008
COMPANY £’000 £’000
Cost
At beginning of year 23,042 7,938
Provision (2,004) -
Additions 872 15,104
Reclassification to investment in associates (18) -
At end of year 21,892 23,042
During the year the Company increased its investment in Dual International Limited to enable that subsidiary to acquire the minority interests in
Dual Iberica and Dual Australia Pty Ltd. A provision was also booked against the value of four directly owned subsidiaries based on the decrease
in those companies’ net asset positions. The material decreases were the result of market value transfers of business between subsidiaries and
there is no impact of these provisions upon the Group.
50 HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
13. TANGIBLE FIXED ASSETS
51HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
14. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS (CONTINUED)
The parent Company and the Group have investments in the following subsidiary undertakings:
COUNTRY OF NATURE
NAME OF COMPANY INCORPORATION OWNERSHIP % OF BUSINESS
DUAL International Limited + England 100.0 Intermediate holding company and
insurance underwriting agency
CFC Underwriting Limited + England 59.5 Insurance underwriting agency
DUAL Ibérica Riesgos Profesionales S.A. Spain 100.0 Insurance underwriting agency
DUAL Italia SpA Italy 90.0 Insurance underwriting agency
DCR (Holdings) Limited England 100.0 Intermediate holding company and
insurance underwriting agency
DUAL Corporate Risks Limited England 100.0 Insurance underwriting agency
DUAL Corporate Risks (PI) Limited England 76.0 Insurance underwriting agency
DUAL Australia Pty Limited Australia 100.0 Insurance underwriting agency
DUAL Deutschland GmbH Germany 90.0 Insurance underwriting agency
Howden Broking Group Limited + England 100.0 Intermediate holding company and
insurance broking
Howden Insurance Brokers Limited England 100.0 Insurance broking
Howden Property Insurance Services Limited England 100.0 Insurance broking
Global Services 1999 Limited England 100.0 Intermediate holding company and
insurance broking
Howden Insurance Brokers (2002) Limited Israel 100.0 Insurance broking
Howden Insurance Brokers AB Sweden 87.5 Insurance broking
Howden Insurance LLC USA 100.0 Insurance broking and
underwriting agency
Howden Insurance Brokers Inc USA 100.0 Insurance broking
Howden Insurance Brokers LLC Dubai 63.0 Insurance broking
Howden Iberia SA Spain 99.0 Insurance broking
Howden Insurance Brokers Oy Finland 92.6 Insurance broking
HIG Services Limited + England 100.0 Management services
J K Buckenham Limited + England 100.0 Reinsurance broking
Avant Garantías SL + Spain 100.0 Motor extended warranties and
motor management services
+ Held directly by Hyperion Insurance Group Limited
All subsidiaries are included in the Group consolidated financial statements. CFC Underwriting Limited has issued share options to senior
executives. If these were fully exercised the dilution to the Group’s interests would be 1.5%.
52 HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
15. INVESTMENTS IN ASSOCIATED UNDERTAKINGS
The Group has a 26% participating interest in the ordinary share capital of Howden Insurance Brokers India Private Limited, an insurance
broker operating in India. The interest is held via subsidiaries. A summary of the Group’s share in Howden Insurance Brokers India Private
Limited’s net assets at 30 September 2009 and results for the year then ended were as follows:
ASSOCIATE GROUP SHARE
100% 26%
£’000 £’000
Turnover 1,390 361
Loss on ordinary activities before interest and tax (718) (187)
Interest (127) (33)
Taxation - -
Loss on ordinary activities after tax (845) (220)
Fixed assets 65 17
Current assets 761 198
Current liabilities (1,117) (290)
Long-term liabilities (214) (56)
Net liabilities (505) (131)
The Group’s share of associate results for the year was as follows:
2009
£’000
Investment, at beginning of year 16
Additional investment 71
Foreign exchange on investment (7)
Net investment 80
Share of loss before interest and tax arising in the year (80)
Share of interest charge -
Share of tax charge -
Investment, at end of year -
In line with its policy on accounting for associates (refer note 1(b)) the Group has recognised £80,000 of its share of its associate’s losses,
being the company’s net investment in the company. £166,000 of the £220,000 losses for the year related to the closure of the Retail office
in India. A proportionate amount of the associate’s loss is included at exceptional items, in office closure costs (refer note 5).
53HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
16. DEBTORS DUE WITHIN ONE YEAR
RESTATED RESTATED
2009 2009 2008 2008
GROUP COMPANY GROUP COMPANY
£’000 £’000 £’000 £’000
Insurance debtors (note 1(l)) 119,857 - 77,600 -
Deferred tax recoverable (note 21) 684 - 545 16
Tax recoverable 772 - 166 39
Other debtors 3,836 11 2,602 208
Group relief debtor - 943 - -
Prepayments and accrued income 4,528 692 10,887 645
Amounts due from associated undertaking 241 - 126 -
Amounts due from Group undertakings - 25,492 - 15,629
Dividends receivable from Group undertakings - 726 - 315
Loans due from Group undertakings - 10,617 - 11,706
129,918 38,481 91,926 28,558
The comparative Company and Group numbers have been restated to reflect the
split between long and short term prepayments and accrued income amounts.
Opening balance per signed accounts 94,183 30,815
Adjustment to opening debtors (2,257) (2,257)
Restated opening balance 91,926 28,558
Company debtors include a £943,000 group relief debtor that represents the estimated value of losses to be surrendered to Group
companies in respect of the 2009 year. In prior years the estimate was recorded via loans with Group undertakings.
17. DEBTORS DUE AFTER MORE THAN ONE YEAR
RESTATED RESTATED
2009 2009 2008 2008
GROUP COMPANY GROUP COMPANY
£’000 £’000 £’000 £’000
Deferred tax recoverable (note 21) 258 - - -
Prepayments and accrued income 1,733 1,733 2,257 2,257
Other debtors 30 - 287 -
2,021 1,733 2,544 2,257
The restated comparatives reflect the split between long and short term prepayments and accrued income amounts.
Opening balance per signed accounts 287 -
Adjustment to opening debtors 2,257 2,257
Restated opening balance 2,544 2,257
54 HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
18. CASH AND BANK BALANCES
2009 2009 2008 2008
GROUP COMPANY GROUP COMPANY
£’000 £’000 £’000 £’000
Insurance balances held on behalf
of clients and insurers (note 1(l)) 42,577 - 31,825 206
Other cash balances 14,972 - 5,272 367
57,549 - 37,097 573
The use of insurance balances is restricted in accordance with the regulations governing those accounts.
In December 2008 the £265,000 security deposit that was previously included in the Group’s other cash balances was released upon
cancellation of the £214,000 guarantee over Howden Insurance Brokers India Private Limited’s borrowings.
19. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2009 2009 2008 2008
GROUP COMPANY GROUP COMPANY
£’000 £’000 £’000 £’000
Bank overdrafts, secured 521 14 310 -
Bank loans (secured) - - 15 -
Shareholder loans, secured (note 27) 3,000 3,000 - -
Insurance creditors (note 1(l)) 148,426 - 101,823 -
Amounts owed to Group undertakings - 11,731 - 5,033
Corporation tax 1,413 - 1,838 -
Other taxation and social security costs 1,072 - 805 -
Obligations due under finance leases 60 - 64 -
Dividends payable to minority shareholders 494 - 214 -
Estimated deferred consideration 494 - 1,448 -
Other creditors 2,965 278 2,579 516
Accruals and deferred income 8,163 317 5,000 225
Deferred tax liability (note 21) 127 - - -
166,735 15,340 114,096 5,774
The overdraft with Bank of Scotland is secured by means of a debenture over certain of the Group’s assets and bears interest of 1.5% pa
over the bank’s Euro base rate.
14% shareholder loans were received in June 2009 to fund the working capital requirements of the group. Additional details are provided in
note 27.
Included within other creditors are pension contributions amounting to £106,000 (2008 - £71,000).
55HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
20. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
2009 2009 2008 2008
GROUP COMPANY GROUP COMPANY
£’000 £’000 £’000 £’000
Bank loans 13,965 13,965 12,603 12,603
Loans owed to third parties 100 - 117 -
Loan notes, secured (note 27) 2,736 - - -
Obligations due under finance leases 86 - 131 -
Estimated deferred consideration 566 - - -
Other 671 - 930 -
18,124 13,965 13,781 12,603
The bank loans of £13,965,000 are part of a £14,000,000 five year revolving credit facility with HSBC Bank Plc. This facility bears interest at
2.8% over LIBOR and is secured by cross-guarantees and debentures over the Company and certain of its UK subsidiary undertakings and is
repayable within 5 years.
Shareholder loan notes bearing 13% interest were issued in September 2009 for funds provided in respect of the Hendricks & Co GmbH
acquisition. Additional details are provided in note 27.
Obligations due under finance leases are payable within two years.
Deferred consideration has been estimated at 30 September 2009 based on the current performance of the relevant acquired entities.
21. DEFERRED TAX
2009 2009 2008 2008
GROUP COMPANY GROUP COMPANY
£’000 £’000 £’000 £’000
Decelerated capital allowances 303 - 218 -
Losses carried forward 216 - 306 16
Other short term timing differences 296 - 21 -
Net deferred tax balance 815 - 545 16
Deferred tax asset
(i) Amount recoverable within one year:
Balance at beginning of year 545 16 403 67
Deferred tax credit in
profit and loss account for period 139 (16) 142 (51)
Balance at end of year (note 16) 684 - 545 16
(ii) Amount recoverable in more than one year:
Balance at beginning of year - - - -
Deferred tax credit in
profit and loss account for period 258 - - -
Balance at end of year (note 17) 258 - - -
56 HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
21. DEFERRED TAX (CONTINUED)
2009 2009 2008 2008
GROUP COMPANY GROUP COMPANY
£’000 £’000 £’000 £’000
Deferred tax liability
Balance at beginning of year - - - -
Deferred tax credit in
profit and loss account for period (127) - - -
Balance at end of year (note 19) (127) - - -
Net deferred tax asset at end of year 815 - 545 16
Total deferred tax credit in profit
and loss account for period (note 11(i)) 270 - 142 (51)
The recoverability of tax losses is dependent on there being sufficient future taxable profits. Current forecasts support the partial
recoverability of these losses in the foreseeable future. Accordingly no debtor has been recognised in respect of losses not expected to be
recovered in the foreseeable future.
Factors that may affect future tax charges
The Group has capital losses of £84,000 (2008 - £184,000) available to carry forward for offset against future capital gains.
The Group has eligible unrelieved foreign tax of £99,000 (2008 - £182,000) available to carry forward for offset against any tax arising on
future overseas Group dividends.
The Group has trade losses of £3,348,000 (2008 - £6,793,000) for offset against future income, subject to certain restrictions.
22. CALLED UP SHARE CAPITAL
2009 2009
GROUP AND COMPANY ALLOTTED AND CALLED UP AUTHORISED
NUMBER NUMBER
‘000 £’000 ‘000 £’000
Classified as equity:
‘A’ ordinary shares of £0.01 each 38,844 388 39,105 391
‘B’ ordinary shares of £0.01 each 3,324 33 3,395 34
Company 42,168 422 42,500 425
Adjustment for employee benefit trust
‘A’ ordinary shares of £0.01 each (127) (4) - -
Group 42,041 418 42,500 425
57HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
22. CALLED UP SHARE CAPITAL (CONTINUED)
2008 2008
GROUP AND COMPANY ALLOTTED AND CALLED UP AUTHORISED
NUMBER NUMBER
‘000 £’000 ‘000 £’000
Classified as equity
‘A’ ordinary shares of £0.01 each 38,090 381 38,105 381
‘B’ ordinary shares of £0.01 each 2,632 26 3,395 34
Group and Company 40,722 407 41,500 415
The ‘A’ ordinary and ‘B’ ordinary shares of £0.01 each rank pari passu in all respects except that on the sale or liquidation of the Company
the proceeds shall be divided between the shareholders as follows:
• The ‘A’ ordinary shareholders will receive the first £2.6004 per share; and
• The balance shall be distributed between the ‘A’ ordinary and ‘B’ ordinary shareholders equally as though they were one class of share.
23. SHAREHOLDERS’ EQUITY
GROUP SHARE SHARE OTHER PROFIT &
CAPITAL PREMIUM RESERVES LOSS TOTAL
£’000 £’000 £’000 £’000 £’000
At beginning of year 407 34,330 95 1,707 36,539
Share capital issued 15 851 - - 866
Share capital owned via employee benefit trust (4) (329) - - (333)
Profit for the year - - - (14) (14)
Net exchange adjustments - - - 69 69
Share scheme incentives - - 649 - 649
Other reserves - - 34 - 34
At end of year 418 34,852 778 1,762 37,810
COMPANY SHARE SHARE SHARE PROFIT &
CAPITAL PREMIUM INCENTIVES LOSS TOTAL
£’000 £’000 £’000 £’000 £’000
At beginning of year 407 34,330 88 1,228 36,053
Share capital issued 15 851 - - 866
Loss for the year - - - (4,553) (4,553)
Net exchange adjustments - - - 168 168
Share scheme incentives (note 8) - - 267 - 267
At end of year 422 35,181 355 (3,157) 32,801
58 HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
24. MINORITY INTERESTS
2009 2008
£’000 £’000
At beginning of year 714 2,931
Profit on ordinary activities after taxation 828 750
Foreign exchange differences 37 33
Arising on acquisition and disposals (302) (1,796)
Dividends payable to minorities (546) (1,204)
At end of year 731 714
25. OPERATING LEASES
At 30 September 2009 the Group had annual commitments under operating leases as follows:
LAND AND BUILDINGS OTHER
2009 2008 2009 2008
£’000 £’000 £’000 £’000
Expiry date:
- within 1 year 555 1,070 69 86
- between 2 and 5 years 1,332 621 117 215
- in more than 5 years 1,001 16 - 3
2,888 1,707 186 304
26. PENSION COSTS
The Group operates a defined contribution pension scheme for all qualifying employees. The assets of scheme are held separately from
those of the Group and the fund is independently administered. The total cost charged to income of £1,389,000 (2008 - £1,220,000)
represents contributions payable to the scheme by the Group.
As at 30 September 2009, there was £106,000 of contributions due in respect of the current reporting period that had not been paid over
to the scheme (2008 - £71,000).
59HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
27. RELATED PARTY TRANSACTIONS
The Group had the following transactions with related parties during the year:
2009 2008
£’000 £’000
Amount received/(expensed) in the year
Fees payable to Davidoff Insurance Brokers Limited (22) (8)
IT and other expenses paid to Femi Premium Limited (42) (24)
Fees paid to B P Marsh & Company Limited (210) (200)
Interest paid/payable to B P Marsh & Company Limited (111) (185)
Interest paid/payable to Murofo Investments SL (17) -
Interest paid/payable to Inversiones Muroca SL (8) -
Fees paid/payable to 3i Group plc and associated undertakings (50) (25)
Amounts receivable/(payable) at the end of the year
B P Marsh & Company Limited fees payable (18) 20
3i Group plc and associated undertakings (24) (25)
Amounts included within other short term debtors and creditors (42) (5)
Loan from B P Marsh & Company Limited (2,460) -
Loan from Murofo Investments SL (369) -
Loan from Inversiones Muroca SL (171) -
Amounts included in shareholder loans (note 19) (3,000) -
Loans from 3i Group (1,779) -
Loan from B P Marsh & Company Limited (547) -
Loan from Marsh Christian Trust (410) -
Amounts included in shareholder loan notes (note 20) (2,736) -
The Company has no ultimate controlling party.
3i Group plc and associated undertakings had a 27.4% interest in the Company at the end of the year.
B P Marsh & Company Limited, a wholly owned subsidiary of B P Marsh & Partners Plc, owned 19.5% of the Company’s issued shares at the
end of the year. B P Marsh, a director of the Company during the year, is also a director of B P Marsh & Company Limited and B P Marsh &
Partners Plc.
R Davidoff, a former director of the Company, is also a director of Davidoff Insurance Brokers Limited and Femi Premium Limited.
Murofo Investments SL and Inversiones Muroca SL are companies associated with Luis Muñoz-Rojas Entrecanales, a director of the Company.
Shareholder loans of £3,000,000 were received in June 2009 to cover the working capital requirements of the Group. The loans are secured
by a debenture over the assets of the Company and bear interest at 14% pa and are repayable in 5 years.
€3,000,000 of loan notes were issued in September 2009 to shareholders who provided the initial funds for the Hendricks & Co GmbH
acquisition that took place on 1 October 2009. The notes are repayable in September 2013 and the interest rate applicable is 13%. The
shareholders have committed to providing an additional €1.5m of funding to the Group in March 2010 on the same terms to fund the
second instalment due in respect of the Hendricks acquisition.
60 HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
28. NOTES TO THE CASH FLOW STATEMENT
2009 2008
GROUP GROUP
(a) ANALYSIS OF CASH FLOW FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT £’000 £’000
Returns on investments and servicing of finance
Interest received 90 267
Interest paid (823) (728)
Preferred dividends paid (13) (332)
Interest element of finance lease payments (12) (16)
Dividends paid to minorities (266) (1,645)
(1,024) (2,454)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (1,092) (1,389)
Proceeds from sale of tangible fixed assets - 10
(1,092) (1,379)
Acquisitions and disposals
Purchase of subsidiary undertakings - (1,248)
Purchase of intangible assets (note 12) (650) -
Payment of deferred consideration (934) (136)
Purchase of minority shareholdings (note 12) (362) (25,850)
Additional investment in associate (note 15) (71) -
Costs associated with the purchase of subsidiaries (note 12) (279) (206)
Cash acquired on acquisition of subsidiaries - 1,454
Proceeds from shares issued in subsidiaries - 1,981
(2,296) (24,005)
Financing
Defered ‘B’ ordinary shares of £1 each paid up - 1,210
Issue of ordinary shares, net of £853,000 issued in
respect of acquisition (notes 23, 12) 13 21,368
Share issue costs (note 23) - (680)
Purchase of employee benefit trust’s shares (note 23) (333) (91)
(320) 21,807
Shareholder loans received (note 19, note 27) 3,000 -
Issue of new shareholder loan notes (note 20, note 27) 2,736 -
Drawdown of bank loans 1,361 12,603
Bank loan repaid (15) -
Repayment of ‘A’ ordinary redeemable £1 shares - (1,210)
Repayments of loans to third parties - (2,350)
Bank and other loan arrangement costs (181) (3,224)
Repayment of bank loans - (1,070)
Repayment of loan notes - (215)
Capital element of finance leases (62) (62)
6,839 4,472
6,519 26,279
61HYPERION INSURANCE GROUP
NOTES TO THE FINANCIAL STATEMENTS
28. NOTES TO THE CASH FLOW STATEMENT (CONTINUED)
BEGINNING CASH FLOWS NON-CASH END
OF YEAR CHANGES OF YEAR
(b) ANALYSIS OF NET FUNDS - GROUP £’000 £’000 £’000 £’000
Cash in hand and at bank (note 18) 37,097 20,452 - 57,549
Bank overdrafts due within one year (note 19) (310) (211) - (521)
36,787 20,241 - 57,028
Bank loans due within one year (15) 15 - -
Bank loans due after more than one year (12,603) (1,361) - (13,964)
Shareholder loans - (3,000) - (3,000)
Shareholder loan notes - (2,736) - (2,736)
Bank and loan arrangement costs 2,902 181 (658) 2,425
Finance leases (195) 62 (13) (146)
Other debt due after more than one year (100) - - (100)
26,776 13,402 (671) 39,507
Non cash changes
The Group entered into new finance leases in respect of computer hardware with total capital value at inception of £13,000 (2008 - £178,000).
29. POST BALANCE SHEET DATE EVENTS
On 1 October the Group acquired a 75% interest in Hendricks & Co GmbH, the leading D&O insurance broker in Germany for €7,000,000
of which €4,500,000 is funded via shareholder loan notes. The remainder of the purchase price is due in March 2011 and March 2012. Final
consideration is dependent upon the performance of the business over the next two and a half years.
The Group is currently in negotiations to sell its interest in JK Buckenham Limited to a third party which would manage that Company in
run-off and return a percentage of recoveries to the Group. The sale is expected to complete by 31 December 2009.
The Group is in the process of obtaining approval for its licence in Singapore and has recently opened a Dual office in Ireland.
30. CONTINGENT LIABILITIES
At 30 September 2009 the Group had contingent liabilities in respect of guarantees and indemnities entered into as part of the ordinary course
of the Group’s business. No material losses are likely to arise from such contingent liabilities and therefore no provision has been recorded.
The Group is involved from time to time in the ordinary course of its business in certain claims and legal proceedings related to the Group’s
operations, including employment-related matters. In the opinion of management, liabilities, if any, arising from these claims and proceedings
will not have a material adverse effect on the Group’s consolidated financial position or the results of its operations.
The Group analyses its litigation exposure based on available information, including external legal consultation, where appropriate, to assess
its potential liability. The Group has accordingly made no provision in the financial statements.
62 HYPERION INSURANCE GROUP
HYPERION CONTACT DETAILS
HEAD OFFICE
HYPERION INSURANCE GROUPLIMITEDBevis Marks House24 Bevis MarksLondon EC3A 7JBUnited Kingdom
Tel: +44 (0)20 7398 4888Fax: +44 (0)20 7645 9398Email: [email protected]: www.hyperiongrp.com
BROKING OFFICES
HOWDEN INSURANCEBROKERS LIMITED (LONDON)Bevis Marks House24 Bevis MarksLondonEC3A 7JBUnited Kingdom
Tel: +44 (0)20 7623 3806Fax: +44 (0)20 7623 3807enquiries@howdeninsurancebrokers.co.ukwww.howdeninsurancebrokers.co.uk
HOWDEN INSURANCEBROKERS LIMITED(LEEDS)1200 Century WayThorpe Park Business ParkColtonLeedsUnited Kingdom
Tel: +44 (0)113 251 5011Fax: +44 (0)113 251 5100Email: [email protected]: www.howdenpro.com
HOWDEN INSURANCEBROKERS OYKalevankatu 20, 2nd floorFI-00100 HelsinkiFinland
Tel: + 358 (9) 2513 7500Fax: + 358 (9) 6220 0130Email: [email protected]: www.howdenins.com
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Tel: +46 8 545 670 20Fax: +46 8 667 29 10Email: [email protected]: www.howden.se
HOWDEN INSURANCEBROKERS (2002) LIMITED2 Habarzel StreetRamat HaChayalTel-Aviv 69710Israel
Tel: +972 3 627 0700Fax: +972 3 760 2618Email: [email protected]: www.howden.co.il
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Tel: +972 3 627 0700Fax: +972 3 760 2618Email: [email protected]: www.howden.co.il
HOWDEN IBERIA SA (MADRID)C/Casado del Alisal, 1028014 MadridSpain
Tel: +34 (0)91 429 9699Fax: +34 (0)91 369 2182Email: [email protected]: www.howdeniberia.com
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Tel: + 34 (0)954 296 122Fax: + 34 (0)954 623 824Email: [email protected]: www.howdeniberia.com
HOWDEN INSURANCE BROKERSINDIA PRIVATE LIMITED(MUMBAI)The Bombay Dyeing Administrative OfficeGround FloorPandurang Budhkar Marg, WorliMumbai 400 025India
Tel: +91 (0)22 6655 8888/00Fax: +91 (0)22 6654 8833Email: [email protected]: www.howdenindia.com
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Tel: +91 (0)11 4655 8010Fax: +91 (0)11 4655 8020Email: [email protected]
HOWDEN INSURANCE BROKERSINDIA PRIVATE LIMITED (CHENNAI)Abacus Business CentreUnit No 10, Raja Annamalai Building72 Marshalls RoadEgmore, Chennai 600 08India
Tel: +91 (0)11 442858 6921Email: [email protected]
63HYPERION INSURANCE GROUP
HYPERION CONTACT DETAILS
HOWDEN INSURANCE BROKERSINDIA PRIVATE LIMITED (BANGALORE)No S -4 BPMP Khata No 1221203rd Floor Monarch ChambersInfantry RoadBangalore 560 001India
Tel: +91 (0)80 658 32972Email: [email protected]
HOWDEN INSURANCE BROKERSINDIA PRIVATE LIMITED(HYDERABAD)6-3-550, 4th Floor, LB BhavanOpp. Medinova Diagnostic ServicesSomajiguda, Hyderabad 500 082India
Tel: +91 (0)40 3048 4004Fax: +91 (0)40 2339 2464Email: [email protected]
HOWDEN INSURANCE BROKERS LLCOffice No 301,304,305Al Nasr Plaza BuildingNear Al Nasr ClubOud MethaDubai
Tel: +971 4 357 3835Fax: +971 4 357 3892Email: [email protected]
HOWDEN ASIA (HONG KONG)LIMITEDUnit 3328 33/FChina Merchants Tower168 Connaught RoadCentralHong Kong
Tel: +852 98361061Email: [email protected]
HOWDEN ASIA PTE LTD#24-08CPF Building79 Robinson RoadSingapore 068897Singapore
Tel: +852 98361061Email: [email protected]
HOWDEN INSURANCE BROKERS INC(BALTIMORE)37 Walker AvenueSuite 200BaltimoreMD.21208United States
Tel: +1 410 486 2400Fax: +1 410 486 2998Email: [email protected]: www.howdenbrokers.com
HOWDEN INSURANCE BROKERSLIMITED (TAIWAN BRANCH)Floor 11, Room 218No.51 Hengyang RoadJhongjheng DistrictTaipeiTaiwan
Tel: +886 2 2313 1188Email: [email protected]
HOWDEN CORRETORA DERESSEGUROS LTDA.Avenida Luís Carlos Prestes, 180Sala 351Rio de Janeiro, Rio de Janeiro 22775-055Brazil
Tel: +55 (21) 2112 4628Email: [email protected]
VK HOWDEN LLC TRADING ASHOWDEN INSURANCE LLC(MIAMI)9100 S.Dadeland BlvdDatran 1-Suite 1500MiamiFlorida 33156United States
Tel: +1 (786) 497 7042Fax: +1 (786) 228 0521Email: [email protected]: www.vkhowden.com
HENDRICKS & CO GMBHArnheimer Straße 14240489 DüsseldorfGermany
Tel: +49 211 940 830Fax: +49 211 940 8383Email: [email protected]
HENDRICKS & CO GMBH Jungfernstieg 120095 HamburgGermany
Tel: +49 40 767 94760Fax: +49 40 767 94769Email: [email protected]
HENDRICKS & CO GMBH Maximilianstraße 2280539 MünchenGermany
Tel: +49 89 1799790Fax: +49 89 179977Email: [email protected]
UNDERWRITING OFFICES
DUAL INTERNATIONAL LIMITEDBevis Marks House24 Bevis MarksLondonEC3A 7JBUnited Kingdom
Tel: +44 (0)20 7337 9888Fax: +44 (0)20 7398 4801Email: [email protected]: www.dualinternational.com
DUAL AUSTRALIA PTY LTD(SYDNEY)Level 4332 Kent StreetSydneyNSW 2000Australia
Tel: +61 (0)2 9248 6300Fax: +61 (0)2 9248 6301Email: [email protected]: www.dualaustralia.com.au
DUAL AUSTRALIA PTY LTD(MELBOURNE)Level 11454 Collins StreetMelbourneVIC 3000Australia
Tel: +61 (0)3 8611 3500Fax: +61 (0)2 9248 6301Email: [email protected]: www.dualaustralia.com.au
64 HYPERION INSURANCE GROUP
HYPERION CONTACT DETAILS
DUAL AUSTRALIA PTY LTD(PERTH)177 Oxford StreetLeedervilleWA 6007Australia
Tel: +61 (0)8 9443 1445Fax: +61 (0)2 924806301Email: [email protected]: www.dualaustralia.com.au
DUAL AUSTRAILIA PTY LTD(BRISBANE)Level 7127 Creek StreetBrisbane QLD 4000Australia
Tel: +61 (0) 73218 2728
DUAL ASIA HONG KONG45/F The Lee Gardens33 Hysan AvenueCauseway BayHong Kong
Tel: +852 3180 2248Fax: +852 3180 1732Email: [email protected]
DUAL DEUTSCHLAND GMBHSchanzenstr. 3551063 KölnGermany
Tel: +49 (0)221 16 80 26-0Fax: +49 (0)221 16 80 26-66Email: [email protected]: www.dualdeutschland.com
DUAL ITALIA S.P.AVia Santa Maria Fulcorina, 2020123 MilanoItaly
Tel: +39 02 72 08 05 97Fax: +39 02 72 08 05 92Email: [email protected]: www.dualitalia.com
DUAL IBÉRICA RIESGOSPROFESIONALES SAUC/Alfonso XII, 32, 128014 MadridSpain
Tel: +34 91 369 1258Fax: +34 91 429 5925Email: [email protected]: www.dualiberica.com
DUAL IBERICA RIESGOSPROFESIONALES S.A.U.Balmes Business CentreC/Balmes, 188, 7°, 1ª08006 BarcelonaSpain
Tel: +34 91 369 1258Fax: +34 91 429 5925Email: [email protected]
DUAL CORPORATE RISKS LIMITED(LONDON)4th Floor140 Leadenhall StreetLondonEC3V 4QTUnited Kingdom
Tel: +44 (0)20 7337 9888Fax: +44 (0)20 7337 9889Email: [email protected]: www.dualcorporaterisks.com
DUAL CORPORATE RISKS LIMITED(MANCHESTER)Barnett House53 Fountain StreetManchester M2 2ANUnited Kingdom
Tel: +44 (0)161 233 7150Fax: +44 (0)161 233 7160Email: [email protected]: www.dualcorporaterisks.com
DUAL CORPORATE RISKS LIMITED(IRISH BRANCH)Glandore Business CentreGO1, 33 Fitzwilliam SquareArthur StreetDublin 2Ireland
Tel: +353 (0) 1 699 4640Email: [email protected]
CFC UNDERWRITING LIMITED2nd Floor85 Gracechurch StreetLondonEC3V 0AA United Kingdom
Tel: +44 (0) 207 220 8500Fax: +44 (0) 207 220 8501Email: [email protected]: www.cfcunderwriting.com
VK UNDERWRITERS LLC80 SW StreetSuite 2068Floor 20Miami FL 33130United States
Tel: +1 (786) 275 3233Fax: +1 (786) 228 0521Email: [email protected]: www.vk-ow.com
VK UNDERWRITERS (BUENOS AIRES)Basavilbaso 1350(C1006AAD)Buenos AiresArgentina
Tel: +54 11 5258 7178Web: www.vk-uw.com
VK UNDERWRITERS (BOGOTA)Carrera 18 No. 86a-14Oficina 305BogotaColombia
Tel: +571 638 6178Fax: +571 616 3030Email: [email protected]: www.vk-uw.com
VK UNDERWRITERS INC (SAN JUAN)Atrium Office Center530 Avenue de las ConstitucionSan JuanPR 00901 - 2304
Tel: +1 787 708 6376Web: www.vk-uw.com
VK UNDERWRITERS (MEXICO)Avenida Presidente Masaryk III – Piso 1Colonia PolancoMexico DF, 11560Mexico
Tel: +52 (55) 1168 9737Fax: +52 (55) 3300 5999
Working together to create the Group of the future.
HYPERION INSURANCE GROUP LIMITEDBevis Marks House24 Bevis Marks
London EC3A 7JBTel: +44(0)20 7398 4888Fax: +44(0)20 7645 9398
Email: [email protected]: www.hyperiongrp.com