Report: Byrne’s Sportscover deal in doubt
Former Bermuda-based insurance executive Mark Byrne's Sportscover deal is in danger of unravelling, according to a UK insurance news website.
Mr Byrne is founder of class of 2005 Flagstone Re.
His proposed deal to acquire the struggling Lloyd's managing agency Sportscover, a sports and leisure syndicate, looks increasingly unlikely to go ahead after talks all but broke down, The Insurance Insider states.
“According to sources, Byrne has even threatened to withdraw at the end of 2014 the £10 million of Funds at Lloyd's (FaL) he injected to support the current underwriting year, which means the insurer will, once again, face a challenge to ‘come into line' later this year,” the publication states.
Insurance Insider explained that ‘coming into line' is the process by which Lloyd's ensures that each syndicate has sufficient regulatory capital in place to support its business plan for the new underwriting year.
Insurance Insider stated: “In addition to the Byrne capital, Sportscover also depends upon reinsurance capital from Japanese big three member Sompo for its 2014 FaL. If either or both withdrew their support, then it would mean Sportscover would need to find alternative capital to gain Lloyd's approval to underwrite in 2015.
“At the end of January, having injected the funds to support the £46 million stamp capacity of Syndicate 3334, Byrne signed a letter of intent to buy the business and the Flagstone founder looked set to realise a long-held ambition to once again own a Lloyd's platform.
“However, it is understood that negotiations have since stumbled, with the relationship between Byrne and the Sportscover leadership breaking down.
“It is further understood that another weak quarter of underwriting results, where the bantamweight business delivered a combined ratio of 109 percent versus a Lloyd's average of around 85 percent for Q4 2013, also played a part in derailing the talks.”
Insurance Insider says that although some parties close to the process still hope a deal can be salvaged, “the rancour engendered by the talks suggests that the shorter odds are on a bitter ending with each side attempting to shift blame onto the other”.
It continues: “The terms of the proposed Sportscover deal are not known but sources had suggested that Byrne would likely pay a consideration at, or quite possibly below, the lower end of the £10 million to £20 million minimum price range typically cited for a Lloyd's managing agency.”
Sportscover says on its website they are the only dedicated sports and leisure syndicate in Lloyd's.
Originally based in Melbourne, Australia, the insurance operation has group offices in London, Sydney, Melbourne, Perth and Toronto.