Lloyds gives underwriter to buffett
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Buffett to buy Lloyd's underwriter for a pound
By Andrew Cave, Associate City Editor (Filed: 27/10/2004)
Euclidian, the Lloyd's underwriter that was a target of a failed attempt at insurance consolidation earlier this year, is to be bought by part of Warren Buffett's Berkshire Hathaway for just £1.
The company, which manages Lloyd's syndicate 1243, has been looking for a partner after being told by Lloyd's franchising director Rolf Tolle that it will not be allowed to underwrite in the market next year without fresh capital.
Euclidian was set to be bought by Capital Insurance, a vehicle led by Lloyd's veteran Michael Wade that planned to raise £125m in a placing to consolidate small Lloyd's companies.
However, Mr Wade's fundraising attempt failed and Euclidian has recently been in talks to merge with Lloyd's insurer Canopius.
Now, Berkshire is to exercise a right to acquire Euclidian's Lloyd's operations for £1, leaving the Euclidian group with its financial services subsidiary.
Berkshire, which currently provides capital support to Euclidian's underwriting capacity of £250m at Lloyd's, is planning to combine Euclidian with its Marlborough underwriting arm.
One option would be to put Euclidian's existing Lloyd's policies into run-off, meaning that no new business would be accepted. However, this would cost Berkshire about £20m to manage.
Euclidian declined to comment. A Lloyd's spokesman said: "They have kept us informed of their proposals. Implementation of the plans will require Lloyds's consent."