REG - Financials Acqn.Corp Financials Acqn-FNWR - Proposed Transaction Update

Financials AcquisitionAnnouncement

21/06/2023 07:00

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RNS Number : 3711D  Financials Acquisition Corp  21 June 2023

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21 June 2023

Financials Acquisition Corp

(the "Company")

Proposed Transaction Update and Proposed Extension of Business Combination
Deadline

Today, Financials Acquisition Corp (the "Company"), a special purpose
acquisition company, announces that it will be seeking shareholder approval to
amend its Articles of Association to extend the deadline by which it may
complete a Business Combination (as such term is defined below) to 31 December
2023, amongst other matters (the "Extension"). Notice of Extraordinary General
Meeting is expected to be circulated by the Company in due course. It is
currently expected that the Extraordinary General Meeting will be held on 10
July 2023.

The Company was formed for the purpose of entering into a business combination
with a technology enabled company or business operating principally in (or
adjacent to) the insurance or broader financial services industry ("Business
Combination"). The Company has, since the date of its initial public offering
in April 2022, engaged with a select number of opportunities about a potential
Business Combination in the insurance or broader financial services
industries.

The Company has recently identified a Business Combination opportunity that it
proposes to pursue, which could involve the Company raising additional capital
and becoming a listed operating company deploying funds into the Lloyds of
London insurance market for reinsurance purposes (the "Proposed Transaction").
Proposals in relation to the Proposed Transaction are at an early stage and,
while there is no certainty that any such transaction can be completed, the
Company remains confident that with the benefit of this extension it would be
able to complete this or another Business Combination.

During the Company's search process it became clear that the global specialty
insurance market and specifically risk underwritten in the Lloyd's market
offered some of most attractive risk adjusted returns globally. The Company
notes that since 2017 rates have been hardening in this market rising on
average by over 70% adjusted for inflation. The Company notes that this
hardening market has been driven by core claims inflation, large losses from
Covid-19, natural catastrophes, Ukrainian war and capital markets uncertainty.
The Company notes that the market as a whole has also been benefitting from
improved efficiency driven by both technology and the work of the Lloyd's
management team.

The Company further notes that over the last year Lloyd's has created a new
structure, London Bridge 2 PCC Ltd, which allows easier access for
institutional capital into the market. This, combined with the Company's
management team, board of director and advisor relationships within the market
leads the Company to believe that it can create an efficient vehicle for
investors to access attractive returns without paying significant goodwill or
adding further fee structures. Upon completion of the Proposed Transaction,
the Company's core strategy will be to focus on the Lloyd's market, and
understands that it will be one of the only Main Market listed companies in
London with such a core focus.

It is the Company's intention that the portfolio of insurance risk will be
curated to provide optimum diversification and hence capital leverage. The
Company's management team has relationships with some of the best underwriters
in the market and has selected a group of core and seed syndicates to work
with. Combined with treaty reinsurance programs written with select
participants in the market the Company expects to have access to up to £1bn
of capacity into the 2024 underwriting year of account and the Company notes
that this portfolio is forecast to have a lower level of natural catastrophe
exposure (particularly in the US).

The Company notes that the market as a whole produced 91.9% combined ratio in
2022 despite significant large losses. The Company further notes that since
then, rates have risen another 9% on average, which suggests that there will
be an improvement on last year's results. With a capital requirement forecast
below 50% and with the current level of risk-free rate investment returns over
the next five years the Company will be targeting an average return on equity
of more than 20%. Upon completion of the Proposed Transaction the ratio of
price to net asset value of the transaction is expected to be under 1.1x net
of expenses.

Given the opportunity that it has identified, the Company is seeking plans to
raise substantial funds beyond its existing amounts held in escrow to support
the Proposed Transaction. Existing shareholders (other than the Sponsor
Entities) will have the opportunity to redeem their Ordinary Shares in the
event that the shareholder resolution relating to the Extension is approved
and they will also have a further opportunity to redeem their Ordinary Shares
upon completion of the Proposed Transaction. It is the Board's current
intention that non-redeeming shareholders will be entitled to receive their
pro-rata (post redemptions) share of a 200,000 bonus pool of new Ordinary
Shares on completion of the Proposed Transaction. The Company's existing
Cornerstone Investors (as such term is defined in the Company's prospectus
dated 7 April 2022) have indicated that they would be supportive of the
Proposed Transaction.

Enquiries:

FGS Global - Financial PR Adviser
Conor McClafferty

Charlie Chichester

+44 20 7251 3801
FINSAC-LON@fgsglobal.com

The Company's LEI is 254900SWRQCI5ZUQEF15.

 

 

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