News
Tawa moves into profit
26 March 2010
 Tawa plc has announced an after tax profit for 2009 of $11.2 million (2008: loss of $42.4 million). The group’s net assets increased by $13.8 million to $228.4 million at 31 December 2009. Net assets per share in US dollars increased from $1.90 to $2.02; net assets per share in sterling were £1.26 (2008: £1.27). The Financial Services Authority has not objected to a $35 million capital reduction in KX Re.
In November last year Tawa acquired PRO for $8.7 million in cash. PRO’s contribution to 2009 profits was $1.4 million. From 1 January 2010 Tawa will share profits with Swiss Re on a 50/50 basis over the next five financial years subject to an overall cap of £12 million.
Gilles Erulin, chief executive, says: 'Our flexible approach to the insurance market has been an important factor in our success in 2009. We were not satisfied with the profitability potential of the run-off acquisitions that we saw, so we decided to modify our platform through the acquisition of PRO to gain a profitable income stream, significantly enhanced distribution and an involvement in the live insurance market.
Tawa's move towards offering services into the live market serves a double purpose, Erulin explained to Run Off & Restructuring: 'Technically we are making a lateral move to extend our services and PRO has been servicing the live markets for some time. However it is also very important that all our people stay in touch with the current market, that they permanently regenerate their knowledge of what is going on in today's market so that when a new run-off comes on the market they are in touch with relevant issues, for example the Chilean earthquake claims.
'We have also been able to maintain the rate of descaling of our run-off portfolios and are particularly pleased that on 31 March 2010 Tawa plc will be receiving $35 million in cash resulting from a capital reduction in KX Re.'
Referring to Tawa's plans for descaling, Erulin told Run Off & Restructuring that he was confident that the company's current run-offs would be run off to finality within a few years: 'Our expertise has always been focused on rapidly downscaling liability; our three run-offs are now very mature and we are looking to accelerate their finality, so I expect CXRe to be finished within the next two years, PXRe within three to five years and KX within eight years.
'We are confident that our current platform puts us in an excellent position to take advantage of opportunities in 2010, both in portfolio acquisition and in providing services to the market, and we look forward to continued success.'
In response to scepticism from competitors in the market about the possible outcome of the PRO acquisition Erulin stresses that 'we are in this business for the long term; our senior management, who are behind all key decisions, are the same people who were there at the start 10 years ago and they are long term players, not short term bonus players.'
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