Hiscox Dedicated
Transaction Background
In 1993 Graphite Capital invested in Hiscox Dedicated, a Lloyd's of London company established to participate in the underwriting capacity of the four in-house Hiscox syndicates. The total size of the fund-raising was £11.2 million. The Hiscox syndicates had a combined capital of £376 million, making them the fourth largest managing agency group. Two syndicates were Marine and two were Non-Marine.
Deal Attractions
The Hiscox Dedicated vehicle was intended to be a cost efficient method of participating in Hiscox managed syndicates. The Hiscox group had a superior track record and had out-performed the Lloyd's market in six of the seven years before the investment. Additionally, the Hiscox syndicates' underwriters focused on specialist lines and therefore influenced the terms and conditions of the risk. The overall returns from Lloyds were expected to improve as the market conditions for insurance became more favourable.
Achievements
- to balance the volatile Lloyds business Hiscox successfully developed a retail business servicing high net worth individuals and professional firms
- Hiscox syndicates continued to achieve lower cost ratios that its competitors
- in a rapidly changing marketplace Hiscox was able to build a platform for long term growth
- the company was admitted to the Alternative Investment Market (AIM) in 1995
Exit
- in 1997 Hiscox was admitted to full listing on the London Stock Exchange
- Graphite retained all its holding post full listing and gradually received its interest over the following few years
- the overall return represented a 52 per cent uplift over the initial investment