Monday, Tawa Plc's (TAW.L), a run-off consolidator, posted a pre-tax loss for the six months ended June 30. Further, the company announced the acquisition of the PRO group of companies from Swiss Reinsurance Group.
For the latest half year, the UK- based company posted a pre-tax loss of US$ 2.1 million compared with a pre-tax profit of US$ 11.7 million a year ago.
For the period, the loss from continuing operations was US$ 2.1 million or US$ 0.01 per share as against a profit of US$ 11.7 million or US$ 0.10 per share in the prior year. However, the profit attributable to Tawa's common shareholders rose 64% year-over-year to US$ 2.3 million from US$ 1.4 million.
For the recent first half, total income plunged to US$ 2.5 million from US$ 14.5 million in the year earlier period.
The net insurance claims for the period was US$ 10.6 million, higher than US$ 6.8 million a year earlier. Total expenses fell to US$ 8.9 million from US$ 13.4 million. Tawa reduced gearing through US$ 37.4 million debt repayment. Net assets increased to US$ 220.2 million at June 30, with Net asset value per share of US$ 1.95 or GBP 1.18.
The company noted that the strong positive movement of financial markets and the enhanced liquidity of the Tawa Group's reinsurance carriers have enabled to significantly deleverage its balance sheet during the first half of the year by reducing goodwill and repaying bank debt within the balance sheet.
PRO Group Acquisition
Tawa also announced that it will acquire Swiss Re's PRO group of companies, comprising PRO Insurance Solutions Limited, PRO Insurance Solutions, Inc and Participant Run-Off (PRO), Iberica, SLU.
The deal entails an initial cash consideration of GBP 4 million and deferred cash consideration of up to GBP 12 million dependent on PRO's earnings over the five years to December 31, 2014, with total maximum consideration of GBP 38 million.
The group noted that Swiss Re will receive dividends of approximately GBP 22 million from the PRO companies, prior to acquisition, as well as, confirmed that PRO will enjoy preferred provider status for servicing its run-off operations.
KX Re, a wholly owned subsidiary of Tawa, will purchase an estimated GBP 7 million of insurance receivables from PRO at the time of closing, as part of the transaction.
Tawa Plc is an investment vehicle, which acquires and manages run-off of insurance companies and portfolios of policies and also provides run-off related services. PRO, a member of the Swiss Re Group since 1996, provides run-off management and professional services to insurance and reinsurance industry.
PRO's total consolidated revenues for 2008 were GBP 30.3 million, consolidated post tax earnings were GBP 6.7 million and its disclosed net assets was GBP 20 million. Expected net assets of the PRO group of companies at acquisition are GBP 0.5 million.
Tawa said that the deal will be funded from its existing cash resources and also confirmed that there will be no change made to its board or senior management arising from this acquisition.
"The portfolio management, claims and consultancy services offered by PRO along with its successful new debt purchase product will complement Tawa's proven expertise and capability in acquiring portfolios in run-off." added the group.
TAW.L is currently trading up 3.89% at 86.75 pence, on the LSE.
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