Goshawk Ups Hurricane Loss Estimates; Plans to Raise Capital

October 10, 2005

The U.K.’s Goshawk Insurance Holdings plc announced that it has increased its gross hurricane loss estimates from by 30 percent – from $99 million to $130 million. For Katrina Goshawk’s estimate is now up to $60 million net from an earlier $25-30 million. Rita’s net losses are estimated at around $30 million.

The company noted that “market loss estimates have nearly doubled and we have received additional loss information” since its first preliminary estimates were made. It also, indicated that its loss estimate for Rita “assumes a total loss to the remaining marine retrocession limits.”

“Our two core lines of property and marine business have been heavily impacted by the unprecedented losses of 2004 and 2005,” the bulletin continued. “As a result, 2006 is expected to provide the best underwriting conditions in these two lines since 1992, driven by supply and demand imbalances, higher capital requirements and fundamental changes in the assessment of frequency and severity of windstorm activity.”

Goshawk admitted, however, that it badly needs to raise additional capital if it wants to participate in that market. “If the Company is unsuccessful in raising capital, the Company’s ability to write new business will be severely impaired,” said the announcement.

As a consequence the Board of Directors is considering several proposals “which would either entail a significant capital injection into Rosemont Re or a sale of Rosemont Re [Goshawk’s Bermuda-based reinsurance subsidiary]”. Any possible sale, however, is conditioned upon Rosement Re maintaining its “A-” (Excellent) rating from A.M. Best. “In the event this rating is downgraded, the Company’s ability to earn existing unearned premium or write new business will be severely impaired,” said the bulletin.

It concluded on a positive note, indicating that, “any one of these proposals, if consummated, would allow Rosemont Re to participate fully in the excellent trading conditions expected in 2006 as a much stronger company. A firm proposal will be put to shareholders as soon as possible.”

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