Regulatory Filings • Apr 2, 2015
Regulatory Filings
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THIS SCHEME DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PART TWO OF THIS SCHEME DOCUMENT, TOGETHER WITH THE REST OF THIS SCHEME DOCUMENT, COMPRISES AN EXPLANATORY STATEMENT IN COMPLIANCE WITH THE COMPANIES ACT 1981. This Scheme Document relates to a scheme of arrangement which, if implemented, will result in the cancellation of the listing of Catlin Shares on the Official List and of trading of Catlin Shares on the London Stock Exchange's main market for listed securities. If you are in any doubt as to the action you should take, you are recommended to seek your own financial advice immediately from your stockbroker, bank manager, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000, if you are in the United Kingdom, or from another appropriately authorised independent financial adviser if you are taking advice in a jurisdiction outside the United Kingdom.
If you have sold or otherwise transferred all of your Catlin Shares, please send this Scheme Document together with the accompanying documents (but not any personalised accompanying documents) at once to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee. However, such documents should not be forwarded or transmitted in or into any jurisdiction in which such act would constitute a violation of the relevant laws of such jurisdiction.
The release, publication or distribution of this Scheme Document in, into or from jurisdictions other than Bermuda, the United Kingdom, the United States of America and the Republic of Ireland may be restricted by the laws of those other jurisdictions. Persons into whose possession this Scheme Document and any accompanying documents come should inform themselves about, and observe, any such restrictions. Failure to comply with any such restrictions may constitute a violation of the laws of any such jurisdiction.
Enclosed with this Scheme Document are personalised Forms of Proxy and a Form of Election (for use by holders of Catlin Shares in certificated form) or personalised Forms of Direction (for use by holders of Catlin Shares in uncertificated form). If you have recently purchased or been transferred Catlin Shares, you should contact Catlin's registrar and receiving agent, Capita Asset Services, on the telephone number set out over the page, to obtain replacements of these documents.
by
by means of a scheme of arrangement of Catlin Group Limited
under section 99 of the Companies Act 1981
This Scheme Document should be read as a whole and in conjunction with XL's Irish Prospectus, which has been prepared and published by XL in accordance with applicable law and regulation in the Republic of Ireland and which constitutes an approved prospectus in the United Kingdom for the purpose of section 85 of the Financial Services and Markets Act 2000. XL's Irish Prospectus is available (in each case subject to certain access restrictions) on XL's website at www.xlgroup.com and on Catlin's website at www.catlin.com, until the Effective Date.
Your attention is drawn to the letter from the Chairman of Catlin in Part One of this Scheme Document, which contains the unanimous recommendation of the Catlin Directors that you vote in favour of the Scheme at the Court Meeting and in favour of the special resolution to be proposed at the Special General Meeting. An explanatory statement from J.P. Morgan Cazenove and Evercore explaining the Scheme (in compliance with section 100 of the Companies Act 1981) appears in Part Two of this Scheme Document.
Notices of the Court Meeting and the Special General Meeting, which will be held at 5th Floor, Washington House, 16 Church Street, Hamilton HM11, Bermuda on 21 April 2015, are set out at the end of this Scheme Document. The Court Meeting will start at 11.00 a.m. (Bermuda time) on that date and the Special General Meeting will start at 11.15 a.m. (Bermuda time) on that date (or as soon thereafter as the Court Meeting has concluded or been adjourned).
Holders of Catlin Shares in certificated form wishing to appoint a proxy to vote on their behalf should complete the enclosed BLUE and WHITE Forms of Proxy in accordance with the instructions printed thereon and return them as soon as possible, but in any event so as to be received by Catlin's registrar and receiving agent, Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom by 6.00 p.m. (London time) on 17 April 2015 or, if the Court Meeting or Special General Meeting is adjourned, by 6.00 p.m. (London time) on the day that is two business days before the day fixed for the holding of the relevant adjourned meeting.
Holders of Catlin Shares in uncertificated form (that is, depositary interests in CREST) wishing to instruct Capita IRG Trustees Limited (the ''Depositary'') to vote the Catlin Shares underlying such depositary interests on their behalf, should complete the enclosed PINK and YELLOW Forms of Direction in accordance with the instructions printed thereon and return them as soon as possible, but in any event so as to be received by Catlin's registrar and receiving agent, Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom by 6.00 p.m. (London time) on 16 April 2015 or, if the Court Meeting or Special General Meeting is adjourned, by 6.00 p.m. (London time) on the day that is three business days before the date fixed for the holding of the relevant adjourned meeting. Alternatively, holders of Catlin Shares in uncertificated form wishing to instruct the Depositary to vote the Catlin Shares underlying their depositary interests on their behalf may do so electronically through CREST by following the instructions on page 9 of this Scheme Document. The Depositary will also permit registered holders of depositary interests to attend and vote at the Court Meeting and Special General Meeting, by appointing such registered holders of Depositary Interests as its corporate representative in relation to the relevant underlying Catlin Shares.
If you have any questions about this Scheme Document, the Court Meeting or the Special General Meeting, or if you did not receive the Forms of Proxy and a Form of Election (if you hold Catlin Shares in certificated form) or if you did not receive the Forms of Direction (if you hold Catlin Shares in uncertificated form (that is, depositary interests in CREST)) or if you are in any doubt as to how to complete and return the Forms of Proxy, Forms of Direction or the Form of Election, or how to submit electronic voting instructions through CREST, please telephone the Catlin Group Limited Shareholder Helpline on 0333 300 1573 from within the UK or on + 44 333 300 1573 if calling from outside the UK. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The Catlin Group Limited Shareholder Helpline is open between 9.00 a.m. and 5.30 p.m. (London time), Monday to Friday (excluding UK public holidays). Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Scheme or the Offer, nor give any financial, legal or tax advice.
J.P. Morgan Cazenove, which is authorised and regulated by the Financial Conduct Authority, is acting as joint financial adviser and corporate broker to Catlin and no one else in connection with the Offer and will not be responsible to anyone other than Catlin for providing the protections afforded to its clients or for providing advice in connection with the Offer. Neither J.P. Morgan Cazenove, nor any of its subsidiaries, branches and affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of J.P. Morgan Cazenove, for the contents of this Scheme Document, including its accuracy, correctness or for any other statement made or purported to be made by it, or on its behalf, in connection with Catlin or the Offer. J.P. Morgan Cazenove, its subsidiaries, branches and affiliates accordingly disclaim all and any liability whether arising in tort, contract or otherwise in respect of this Scheme Document or any such statement. Nothing in this Scheme Document excludes, or attempts to exclude, J.P. Morgan Cazenove's liability for fraud or fraudulent misrepresentation.
Evercore, which is authorised and regulated by the Financial Conduct Authority, is acting as joint financial adviser for Catlin and no one else in connection with the matters referred to in this Scheme Document and will not be responsible to anyone other than Catlin for providing the protections afforded to its clients or for providing advice in relation to the matters referred to in this Scheme Document. Apart from the responsibilities and liabilities, if any, which may be imposed on it by FSMA or the regulatory regime established thereunder, Evercore does not accept any responsibility whatsoever nor does it make any representation or warranty, express or implied, for the contents of this Scheme Document, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with Catlin or the Scheme, and nothing in this Scheme Document is or will be relied upon as a promise or representation in this respect, whether as to the past, present or future. Evercore accordingly disclaims to the fullest extent permitted by law all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this Scheme Document or any such statement.
Barclays, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively for Catlin as a financial adviser and corporate broker and no one else in connection with the Offer and will not be responsible to anyone other than Catlin for providing the protections afforded to its clients or for providing advice in relation to the Offer or in relation to the contents of this Scheme Document or any transaction or any other matters referred to herein.
Morgan Stanley, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority in the United Kingdom, is acting as joint financial adviser to XL and no one else in connection with the Offer, and will not be responsible to anyone other than XL for providing the protections afforded to clients of Morgan Stanley nor for providing advice in relation to the Offer. Neither Morgan Stanley, nor any of its subsidiaries, branches and affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Morgan Stanley, for the contents of this Scheme Document, including its accuracy, correctness or for any other statement made or purported to be made by it, or on its behalf, in connection with Catlin or the Offer. Morgan Stanley, its subsidiaries, branches and affiliates accordingly disclaim all and any liability whether arising in tort, contract or otherwise in respect of this Scheme Document or any such statement. Nothing in this Scheme Document excludes, or attempts to exclude, Morgan Stanley's liability for fraud or fraudulent misrepresentation.
Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting as joint financial adviser to XL and no one else in connection with the Offer and the other matters referred to in this Scheme Document. In connection with the Offer and any other such matters, Goldman Sachs International, its affiliates and its and their respective partners, directors, officers, employees and agents will not regard any other person as their client, nor will they be responsible to anyone other than XL for providing the protections afforded to their clients or for giving advice in connection with the Offer or any other matter referred to herein. Neither Goldman Sachs International, nor any of its subsidiaries, branches and affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Goldman Sachs International, for the contents of this Scheme Document, including its accuracy, correctness or for any other statement made or purported to be made by it, or on its behalf, in connection with Catlin or the Offer. Goldman Sachs International, its subsidiaries, branches and affiliates accordingly disclaim all and any liability whether arising in tort, contract or otherwise in respect of this Scheme Document or any such statement. Nothing in this Scheme Document excludes, or attempts to exclude, Goldman Sachs International's liability for fraud or fraudulent misrepresentation.
By virtue of its status as an exempted company incorporated in Bermuda, the Code does not apply to Catlin. Catlin has incorporated certain takeover-related provisions into its Bye-Laws but these do not provide Catlin Shareholders with the full protections offered by the Code and enforcement of such provisions is the responsibility of Catlin, not the Panel. Accordingly, Catlin Shareholders are reminded that the Panel does not have responsibility, in relation to Catlin, for ensuring compliance with the Code and is not able to answer shareholders' queries. Catlin and XL have agreed certain matters regarding the application of the Code to the Offer, and the terms of that agreement are summarised in paragraph 13 of Part Eight of this Scheme Document.
In particular, public disclosures consistent with the provisions of Rule 8 of the Code (as if it applied to Catlin) should not be emailed to the Panel but, as described below, should be released directly through a Regulatory Information Service.
The distribution of this Scheme Document in or into jurisdictions other than Bermuda, the United Kingdom, the United States of America and the Republic of Ireland may be restricted by law and therefore any persons who are subject to the laws of any other jurisdiction should inform themselves about, and observe, such restrictions. Any failure to comply with the applicable restrictions may constitute a violation of the laws of such jurisdiction. This Scheme Document does not constitute an offer or invitation to purchase or subscribe for any securities or a solicitation of an offer to buy any securities pursuant to this Scheme Document or otherwise in any jurisdiction in which such offer or solicitation is unlawful. This Scheme Document has been prepared to comply with Bermuda and English law and the Listing Rules and the information disclosed may not be the same as that which would have been disclosed if this Scheme Document had been prepared in accordance with the laws of jurisdictions outside Bermuda and the United Kingdom.
The statements contained in this Scheme Document are made as at the date of this Scheme Document, unless some other time is specified in relation to them, and publication or dispatch of this Scheme Document shall not give rise to any implication that there has been no change in the facts set out in this Scheme Document since such date. Nothing in this Scheme Document shall be deemed to be a forecast, projection or estimate of the future financial performance of Catlin, the Catlin Group, XL or the XL Group except where otherwise stated.
The Offer relates to the shares of a Bermuda company and is being made by means of a scheme of arrangement provided for under section 99 of the Companies Act. The transaction, implemented by way of a scheme of arrangement, is not subject to the tender offer rules or the proxy solicitation rules under the US Exchange Act. Accordingly, the Offer is subject to the disclosure requirements and practices applicable to a scheme of arrangement involving a target company in Bermuda listed on the London Stock Exchange and applicable to the issuance of consideration shares under the laws of the Republic of Ireland, which differ from the disclosure requirements of US tender offer and proxy solicitation rules. If, in the future, XL exercises its right to implement the Offer by way of a Bermuda Merger or by way of a Takeover Offer and determines to extend the Takeover Offer into the US, the Offer will be made in compliance with applicable US laws and regulations.
The New XL Shares to be issued pursuant to the Offer have not been registered under the US Securities Act, and may not be offered or sold in the US absent registration or an applicable exemption from the registration requirements of the US Securities Act. The New XL Shares to be issued pursuant to the Offer will be issued pursuant to the exemption from registration provided by section 3(a)(10) under the US Securities Act. If, in the future, XL exercises its right to implement the Offer by way of a Takeover Offer, a Bermuda Merger or otherwise in a manner that is not exempt from the registration requirements of the US Securities Act, it will file a registration statement with the SEC that will contain a prospectus with respect to the issuance of the New XL Shares. In this event, Catlin Shareholders are urged to read these documents and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information, and such documents will be available free of charge at the SEC's website at www.sec.gov.
Neither the SEC nor any US state securities commission has approved or disapproved of the New XL Shares to be issued in connection with the Offer, or determined if this Scheme Document is accurate or complete. Any representation to the contrary is a criminal offence in the US.
XL and Catlin are incorporated under the laws of the Republic of Ireland and Bermuda, respectively. In addition, some of their respective officers and directors reside outside the US and all or much of their assets are or may be located in jurisdictions outside the US. Therefore, investors may have difficulty effecting service of process within the US upon those persons or recovering against XL, Catlin or their respective officers or directors on judgments of US courts, including judgments based upon the civil liability provisions of the US federal securities laws. It may not be possible to sue XL or Catlin or their respective officers or directors in a non-US court for violations of the US securities laws. There is also doubt as to enforceability in the Republic of Ireland and in Bermuda, in original actions or in actions for enforcement, of the judgments of US courts, based on the civil liability provisions of US federal securities laws. In particular, there is no treaty between the Republic of Ireland and the US providing for the reciprocal recognition and enforcement of foreign judgments, and there is no treaty in force between the US and Bermuda providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters.
Catlin Shareholders that will, on completion of the Offer, hold XL Shares valued at more than US\$76.3 million may be required, before acquiring XL Shares, to file a Notification and Report Form with the Federal Trade Commission and the Antitrust Division of the Department of Justice under the US Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, unless an exemption applies under that Act.
The laws of certain jurisdictions may affect the availability of the Offer to persons who are not resident in the UK, the US, the Republic of Ireland or Bermuda. Persons who are not resident in the UK, the US, the Republic of Ireland or Bermuda or who are subject to laws of any jurisdiction other than the UK, the US, the Republic of Ireland or Bermuda, should inform themselves about, and observe, any applicable requirements. In particular, the ability of Catlin Shareholders who are not resident in the UK, the US, the Republic of Ireland or Bermuda to vote their Catlin Shares with respect to the Offer at the Court Meeting and the Special General Meeting may be affected by the laws of the relevant jurisdiction in which they are located. Any person (including, without limitation, nominees, trustees and custodians) who would, or otherwise intends to, forward this Scheme Document or any accompanying document to any jurisdiction outside the UK, the US, the Republic of Ireland or Bermuda should refrain from doing so and seek appropriate professional advice before taking any action.
The Offer will not be made, directly or indirectly, in or into a Restricted Jurisdiction. Accordingly, copies of this Scheme Document, any accompanying documents and any other documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded or distributed in, into or from a Restricted Jurisdiction. Persons receiving this Scheme Document and any accompanying documents (including custodians, nominees and trustees) must not distribute or send it or them in, into or from any Restricted Jurisdiction.
The Mix and Match Facility is not being extended to any Overseas Shareholder with a registered address in, or which Catlin or XL reasonably believes to be incorporated or resident in, a Restricted Jurisdiction. Any purported election by any such Overseas Shareholder pursuant to the Mix and Match Facility shall be invalid.
Neither the fact that a registration statement or an application for a licence has been filed under Chapter 421-B of the New Hampshire Revised Statutes (''RSA 421- B'') with the state of New Hampshire nor the fact that a security is effectively registered or a person is licenced in the state of New Hampshire constitutes a finding by the secretary of state of the state of New Hampshire that any document filed under RSA 421-B is true, complete and not misleading. Neither any such fact nor the fact that an exemption or exception is available for a security or a transaction means that the secretary of state has passed in any way upon the merits or qualifications of, or recommended or given approval to, any person, security or transaction. It is unlawful to make, or cause to be made, to any prospective purchaser, customer or client any representation inconsistent with the provisions of this paragraph.
This Scheme Document contains forward-looking statements, with respect to both XL and Catlin and their industries, that reflect their current views with respect to future events and financial performance. Statements that are not historical facts, including statements about XL's or Catlin's beliefs, plans or expectations, are forward-looking statements. These statements are based on current plans, estimates and expectations, all of which involve risk and uncertainty. Statements that include the words ''expect'', ''intend'', ''plan'', ''believe'', ''project'', ''anticipate'', ''may'', ''could'' or ''would'' or similar statements of a future or forward-looking nature identify forward-looking statements. Actual results may differ materially from those included in such forward-looking statements and therefore you should not place undue reliance on them.
A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes: (a) changes in the size of claims relating to natural or man-made catastrophe losses due to the preliminary nature of some reports and estimates of loss and damage to date; (b) trends in rates for property and casualty insurance and reinsurance; (c) the timely and full recoverability of reinsurance placed by XL or Catlin with third parties, or other amounts due to XL or Catlin; (d) changes in the projected amount of ceded reinsurance recoverables and the ratings and creditworthiness of reinsurers; (e) actual loss experience from insured or reinsured events and the timing of claims payments being faster or the receipt of reinsurance recoverables being slower than anticipated; (f) increased competition on the basis of pricing, capacity, coverage terms or other factors such as the increased inflow of third party capital into reinsurance markets, which could harm either XL's or Catlin's ability to maintain or increase its business volumes or profitability; (g) greater frequency or severity of claims and loss activity than XL's or Catlin's respective underwriting, reserving or investment practices anticipate based on historical experience or industry data; (h) changes in the global financial markets, including the effects of inflation on XL's or Catlin's business, including on pricing and reserving, increased government involvement or intervention in the financial services industry and changes in interest rates, credit spreads, foreign currency exchange rates and future volatility in the world's credit, financial and capital markets that adversely affect the performance and valuation of either XL's or Catlin's investments, financing planning and access to such markets or general financial condition; (i) changes in ratings, rating agency policies or practices; (j) the potential for changes to methodologies, estimations and assumptions that underlie the valuation of XL's or Catlin's respective financial instruments that could result in changes to investment valuations; (k) changes to XL's or Catlin's respective assessment as to whether it is more likely than not that it will be required to sell, or has the intent to sell, availablefor-sale debt securities before their anticipated recovery; (l) the ability of XL's or Catlin's subsidiaries to pay dividends; (m) the potential effect of legislative or regulatory developments in the jurisdictions in which XL or Catlin operates, such as those that could impact the financial markets or increase their respective business costs and required capital levels, including but not limited to changes in regulatory capital balances that must be maintained by operating subsidiaries and governmental actions for the purpose of stabilising the financial markets; (n) the actual amount of new and renewal business and acceptance of products and services, including new products and services and the materialisation of risks related to such products and services; (o) changes in applicable tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof; (p) the effects of mergers, offers, divestitures and retrocession agreements; and (q) in the case of XL, the other factors set forth in XL's reports on Form 10-K, Form 10-Q and other documents on file with the SEC.
Additionally, the Offer is subject to risks and uncertainties, including: (i) XL and Catlin may be unable to complete the Offer because, among other reasons, conditions to the completion of the Offer may not be satisfied or waived, including the failure to obtain required regulatory approvals, or a party may be entitled to terminate the Offer; (ii) receipt of regulatory approvals required by the Offer may be subject to conditions, limitations and restrictions that could negatively impact the business and operations of the Enlarged XL Group; (iii) uncertainty as to the timing of completion of the Offer; (iv) the ability to obtain approval of the Offer by Catlin Shareholders; (v) uncertainty as to the actual premium (if any) that will be realised by Catlin Shareholders in connection with the Offer; (vi) uncertainty as to the long-term value of the New XL Shares to be issued to Catlin Shareholders in connection with the Offer; (vii) inability to retain key personnel of Catlin or XL during the pendency of the Offer or after completion of the Offer; (viii) failure to realise the potential synergies from the Offer, including as a result of the failure, difficulty or delay in integrating Catlin's businesses into XL; (ix) the ability of the Catlin Board to withdraw its recommendation of the Offer; and (x) the outcome of any legal proceedings to the extent initiated against XL, Catlin and others relating to the Offer, as well as XL and Catlin's management's responses to any of the aforementioned factors.
Neither Catlin nor XL undertakes any obligation to update publicly or revise any forwardlooking statement, whether as a result of new information, future developments or otherwise.
Catlin is a Bermuda exempted company and is therefore not subject to the Code. Accordingly, shareholders of Catlin and others dealing in Catlin Shares are not obliged to disclose any of their dealings under the provisions of the Code. However, market participants are requested to make disclosures of dealings as if the Code applied and as if Catlin were in an ''offer period'' under the Code. Catlin Shareholders and persons considering the offer or disposal of any interest in Catlin Shares are reminded that they are subject to the Disclosure and Transparency Rules made by the UKLA and other applicable regulatory rules regarding transactions in or relating to Catlin Shares.
Catlin's website contains the form of disclosure requested. If you are in any doubt whether you should disclose dealings, you should contact an independent financial adviser authorised by the FCA under the FSMA (or, if you are resident in a jurisdiction other than the UK, a financial adviser authorised under the laws of such jurisdiction).
In light of the foregoing, as provided in Rule 8.3(a) of the Code, any person who is ''interested'', directly or indirectly, in one per cent. or more of any class of ''relevant securities'' of Catlin or of any ''securities exchange offeror'' (being any ''offeror'' other than an ''offeror'' in respect of which it has been announced that its ''offer'' is, or is likely to be, solely in ''cash'') should have made an Opening Position Disclosure following the commencement of the ''offer period'' which began when the Possible Offer Announcement was released on 17 December 2014.
An Opening Position Disclosure should contain details of the person's interests and short positions in, and rights to subscribe for, any ''relevant securities'' of each of (i) Catlin and (ii) XL (being a ''securities exchange offeror''). Persons to whom Rule 8.3(a) would have applied had the Code been applicable should have made an Opening Position Disclosure by no later than 3.30 p.m. (London time) on the tenth ''business day'' following the commencement of the ''offer period'' which began when the Possible Offer Announcement was released on 17 December 2014. Relevant persons who undertake ''dealings'' in the ''relevant securities'' of Catlin or of a ''securities exchange offeror'' prior to the deadline for making an Opening Position Disclosure should instead make a Dealing Disclosure.
Rule 8.3(b) of the Code provides that if any person is, or becomes ''interested'' (directly or indirectly) in one per cent. or more of any class of ''relevant securities'' of an offeree or of any ''securities exchange offeror'', all ''dealings'' in any ''relevant securities'' of that offeree or of any ''securities exchange offeror'' (including by means of an option in respect of, or a derivative referenced to, any such ''relevant securities'') should be publicly disclosed in a Dealing Disclosure by no later than 3.30 p.m. (London time) on the ''business day'' following the date of the relevant transaction. In a situation where the Code applies, this requirement would continue until the date on which any ''offer'' becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the ''offer period'' otherwise ends. Under Rule 8 of the Code, a Dealing Disclosure would contain details of the ''dealing'' concerned and of the person's interests and short positions in, and rights to subscribe for, any ''relevant securities'' of (i) Catlin and (ii) any ''securities exchange offeror'', save to the extent that these details have previously been disclosed under Rule 8.
Accordingly, in the case of both an Opening Position Disclosure and a Dealing Disclosure (if any), disclosures of interests in the shares of each of XL and Catlin should be made.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an ''interest'' in ''relevant securities'' of Catlin or a ''securities exchange offeror'', they would, if the Code were applicable, be deemed to be a single person for the purpose of Rule 8.3 of the Code.
Consistent with the provisions of Rules 8.1 and 8.2 of the Code, Opening Position Disclosures should be made by Catlin and by any ''offeror'', and all ''dealings'' in ''relevant securities'' of Catlin by Catlin, by any ''offeror'' or by any persons ''acting in concert'' with any of them, should be disclosed in a Dealing Disclosure by no later than 12.00 p.m. (London time) on the ''business day'' following the date of the relevant transaction.
''Interests in securities'' arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of ''securities''. In particular, a person will be treated as having an ''interest'' by virtue of the ownership or control of ''securities'', or by virtue of any option in respect of, or derivative referenced to, ''securities''.
Terms in quotation marks are defined in the Code, which can be found on the Panel's website. If you are in any doubt whether you should disclose a ''dealing'' by reference to the above, you should contact an independent financial adviser authorised by the FCA under the FSMA (or, if you are resident in a jurisdiction other than the UK, a financial adviser authorised under the laws of such jurisdiction).
A copy of this Scheme Document will be made available (in each case subject to certain access restrictions) on the Catlin website at www.catlin.com and on XL's website at www.xlgroup.com by 12.00 p.m. (London time) on the business day following the date of this Scheme Document. For the avoidance of doubt, save as expressly referred to in this Scheme Document, the contents of those websites are not incorporated into and do not form part of this Scheme Document.
You may request a hard copy of this Scheme Document (and any information incorporated by reference in this Scheme Document) by contacting the Catlin Group Limited Shareholder Helpline on 0333 300 1573 from within the UK or on + 44 333 300 1573 if calling from outside the UK. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The Catlin Group Limited Shareholder Helpline is open between 9.00 a.m. and 5.30 p.m. (London time), Monday to Friday (excluding UK public holidays). Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Scheme or the Offer, nor give any financial, legal or tax advice.
This Scheme Document is dated 2 April 2015.
This page should be read in conjunction with the rest of this Scheme Document and, in particular, the notices of the Court Meeting and the Special General Meeting at the end of this Scheme Document and the instructions printed on the Forms of Proxy and Forms of Direction.
Whether or not you plan to attend the Court Meeting and/or the Special General Meeting, holders of Catlin Shares in certificated form wishing to appoint a proxy to vote on their behalf in respect of such holding should:
Once returned, a Form of Proxy will remain valid at any adjourned Court Meeting or any Special General Meeting, unless it is validly revoked. If the Court Meeting or Special General Meeting is adjourned, a Form of Proxy not previously completed and returned must be completed and returned, so as to be received by Catlin's registrar and receiving agent, Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom, by 6.00 p.m. (London time) on the day that is two business days before the date fixed for the holding of the relevant adjourned meeting.
If the BLUE Form of Proxy for the Court Meeting is not returned so as to be received by the above time, it may be handed to Capita Asset Services, or to the Chairman of the Court Meeting at the Court Meeting (or any adjournment thereof), before the poll is taken. However, in the case of the Special General Meeting, if the WHITE Form of Proxy is not returned so as to be received by the above time and in accordance with the instructions in the Form of Proxy, it will be invalid.
The completion and return of Forms of Proxy will not prevent Catlin Shareholders from attending and voting at the Court Meeting and/or Special General Meeting, or any adjournments thereof, in person, should they wish to do so and should they be so entitled.
Depositary interests, each representing one underlying Catlin Share, are traded electronically in the United Kingdom through CREST. The depositary is Capita IRG Trustees Limited (the ''Depositary'').
Holders of Catlin Shares in uncertificated form (that is, depositary interests in CREST) wishing to instruct the Depositary to vote the Catlin Shares underlying their depositary interests on their behalf, should:
If the Court Meeting or Special General Meeting is adjourned, the relevant Form of Direction must be returned by 6.00 p.m. (London time) on the day that is three business days before the date fixed for the holding of the relevant adjourned meeting.
Alternatively, holders of Catlin Shares in uncertificated form (that is, depositary interests in CREST) may instruct the Depositary to vote the Catlin Shares underlying their depositary interests on their behalf, using the CREST electronic voting service. To instruct the Depositary how to vote or amend an instruction to vote via the CREST system, the CREST Message must be received by Catlin's registrar and receiving agent, Capita Asset Services (CREST Participant ID: RA10) by 6.00 p.m. (London time) on 16 April 2015 (or, if the Court Meeting or Special General Meeting is adjourned, by 6.00 p.m. (London time) on the day that is three business days before the date fixed for the holding of the relevant adjourned meeting). For the instructions to the Depositary made by means of CREST to be valid, the appropriate CREST Message must be properly authenticated in accordance with Euroclear's specifications and must contain the information required for such instructions, as described in the CREST Manual. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message. CREST personal members or other CREST sponsored members, and those CREST members who have appointed voting service provider(s), should contact their CREST sponsor or voting service provider(s) for assistance. For further information on CREST procedures, limitations and system timings please refer to the CREST Manual, which is available at www.euroclear.com/CREST.
If no indication is given how you want your vote cast on a resolution, you will be deemed as instructing the Depositary to abstain from voting on that resolution.
Holders of Catlin Shares in uncertificated form who wish to attend the Court Meeting or Special General Meeting in person should contact the Depositary to obtain a letter of representation in respect of the Catlin Shares underlying the depositary interests.
It is important that, for the Court Meeting, as many votes as possible are cast so that the court may be satisfied that there is a fair representation of the opinion of Scheme Shareholders. You are therefore strongly urged to complete, sign and return your Forms of Proxy, Forms of Direction or, alternatively, submit your voting direction via electronic means in CREST, as soon as possible.
Under the terms of the Offer, all Scheme Shareholders will receive 388 pence in cash and 0.130 New XL Shares in respect of each Scheme Share they hold, unless they actively elect to vary the proportions of cash or New XL Shares they receive in respect of their holdings of Scheme Shares, under the Mix and Match Facility, subject to off-setting elections by other Scheme Shareholders.
If you hold Catlin Shares in certificated form and you wish to make an election under the Mix and Match Facility in respect of such holding, please complete and return the enclosed GREEN Form of Election in accordance with the instructions printed thereon so as to be received by Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom by the Election Return Time, which is currently expected to be 1.00 p.m. (London time) on 28 April 2015. A reply-paid envelope (marked with a GREEN flash) is provided for use only in the UK.
If you hold Catlin Shares in certificated form as well as Catlin Shares in uncertificated form, and you wish to make an election under the Mix and Match Facility in respect of both such holdings, you must make a separate election in respect of each holding.
Holders of Catlin Shares in certificated form who do not wish to make an election under the Mix and Match Facility are not required to return the GREEN Form of Election.
Holders of Catlin Shares in uncertificated form wishing to make an election under the Mix and Match Facility in respect of such holding may submit a TTE Instruction using the CREST system. The TTE Instruction must be received by Capita Asset Services (CREST Participant ID: RA10) by the Election Return Time, which is currently expected to be 1.00 p.m. (London time) on 28 April 2015. For the TTE Instruction made by means of CREST to be valid, the appropriate CREST Message must be properly authenticated in accordance with Euroclear's specifications and must contain the information required for such instructions, as described in the CREST Manual. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message. CREST personal members or other CREST sponsored members, and those CREST members who have appointed voting service provider(s), should contact their CREST sponsor or voting service provider(s) for assistance. For further information on CREST procedures, limitations and system timings please refer to the CREST Manual, which is available at www.euroclear.com/ CREST.
If you hold Catlin Shares in uncertificated form as well as Catlin Shares in certificated form, and you wish to make an election under the Mix and Match Facility in respect of both such holdings, you must make a separate election in respect of each holding.
Holders of Catlin Shares in uncertificated form who do not wish to make an election under the Mix and Match Facility are not required to submit a TTE Instruction.
The latest time for lodging your GREEN Form of Election (in respect of holdings of Catlin Shares in certificated form) or for submitting a TTE Instruction (in respect of holdings of Catlin Shares in uncertificated form) is the Election Return Time, which is currently expected to be 1.00 p.m. (London time) on 28 April 2015. Catlin will advise of any changes to this date and time, by issuing an announcement through a Regulatory Information Service.
The Mix and Match Facility has not been extended to Overseas Shareholders with a registered address in a Restricted Jurisdiction, or whom Catlin or XL reasonably believes to be resident or incorporated in, or a citizen of, a Restricted Jurisdiction, and no GREEN Form of Election will be sent to them nor will they be entitled to submit a TTE Instruction. Any purported election under the Mix and Match Facility by any such Overseas Shareholder shall be void. Further details are set out in Part Nine of this Scheme Document.
If you have any questions about this Scheme Document or about the Court Meeting or the Special General Meeting, or if you did not receive the Forms of Proxy and a Form of Election (if you hold Catlin Shares in certificated form) or if you did not receive the Forms of Direction (if you hold Catlin Shares in uncertificated form), or if you are in any doubt as to how to complete and return the Forms of Proxy, Forms of Direction of the Form of Election, or how to submit electronic voting instructions through CREST, please telephone the Catlin Group Limited Shareholder Helpline on 0333 300 1573 from within the UK or on + 44 333 300 1573 if calling from outside the UK. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The Catlin Group Limited Shareholder Helpline is open between 9.00 a.m. and 5.30 p.m. (London time), Monday to Friday (excluding UK public holidays). Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Scheme or the Offer, nor give any financial, legal or tax advice.
| Publication of this Scheme Document | 2 April 2015 |
|---|---|
| Record date for ITB Special Dividend (11.7p) | 10 April 2015 |
| Latest time for holders of Catlin Shares in uncertificated form to return Forms of Direction or voting instructions via CREST for the: |
|
| – Court Meeting (PINK form) | 6.00 p.m. on 16 April 2015(2) |
| – Special General Meeting (YELLOW form) | 6.00 p.m. on 16 April 2015(3) |
| Latest time for holders of Catlin Shares in certificated form to return Forms of Proxy for the: |
|
| – Court Meeting (BLUE form) | 6.00 p.m. on 17 April 2015(4) |
| – Special General Meeting (WHITE form) | 6.00 p.m. on 17 April 2015(5) |
| Voting Record Time | 6.00 p.m. on 17 April 2015(6) |
| Court Meeting | 11.00 a.m. (Bermuda time) on 21 April 2015 |
| Special General Meeting | 11.15 a.m. (Bermuda time) on 21 April 2015(7) |
| Payment date for ITB Special Dividend (11.7p) | 24 April 2015 |
| Last day of dealings in, and for registration of transfers of, Catlin Shares |
28 April 2015 |
| Election Return Time | 1.00 p.m. on 28 April 2015 |
| Dealings in Catlin Shares suspended in London and disablement in CREST |
7.30 a.m. on 29 April 2015 |
| Court Hearing to sanction the Scheme | 9.30 a.m. (Bermuda time) 29 April 2015 |
| Scheme Record Time | 6.00 p.m. on 30 April 2015 |
| Effective Date | 1 May 2015 |
| Delisting of Catlin Shares becomes effective | 1 May 2015 |
| Admission of New XL Shares to the New York Stock Exchange and the Bermuda Stock Exchange |
1 May 2015 |
| CREST accounts of holders of Catlin Shares in uncertificated form credited with New XL Shares |
1 May 2015 |
| Dispatch of cheques in respect of cash consideration (or electronic settlement through CREST) |
By 15 May 2015 |
| Dispatch of statements of entitlements, in respect of New XL Shares |
By 15 May 2015 |
| Long Stop Date | 9 October 2015(8) |
Notes:
(1) All dates and times shown are indicative only and are subject to change and will depend, among other things, on the date on which the Conditions to the Scheme are satisfied (or, if capable of waiver, waived) and on the date on which the Court sanctions the Scheme. Catlin will give advance notice of all these dates and times, when known, by issuing an announcement through a Regulatory Information Service. Further updates or changes to these dates or times will be notified in the same way.
(2) PINK Forms of Direction for the Court Meeting, or voting instructions via CREST, must be returned or submitted by holders of Catlin Shares in uncertificated form by 6.00 p.m. (London time) on 16 April 2015 or, if the Court Meeting is adjourned, by 6.00 p.m. (London time) on the day that is three business days before the date fixed for the holding of the adjourned meeting. If the PINK Form of Direction or CREST voting instructions is/are not returned or submitted by such time, it/they will be invalid.
(3) YELLOW Forms of Direction for the Special General Meeting, or voting instructions via CREST, must be returned or submitted by holders of Catlin Shares in uncertificated form by 6.00 p.m. (London time) on 16 April 2015 or, if the Special General Meeting is adjourned, by 6.00 p.m. (London time) on the day that is three business days before the date fixed for the holding of the adjourned meeting. If the YELLOW Form of Direction or CREST voting instructions is/are not returned or submitted by such time, it/they will be invalid.
All references in this Scheme Document to times are to London time unless otherwise stated.
| PART ONE: | LETTER FROM THE CHAIRMAN OF CATLIN GROUP LIMITED |
16 |
|---|---|---|
| PART TWO: | EXPLANATORY STATEMENT | 32 |
| PART THREE: | CONDITIONS TO THE IMPLEMENTATION OF THE SCHEME AND TO THE OFFER |
42 |
| PART FOUR: | THE SCHEME OF ARRANGEMENT | 54 |
| PART FIVE: | FINANCIAL INFORMATION | 66 |
| PART SIX: | ADDITIONAL INFORMATION FOR OVERSEAS SHAREHOLDERS |
68 |
| PART SEVEN: | TAXATION | 70 |
| PART EIGHT: | ADDITIONAL INFORMATION | 85 |
| PART NINE: | NOTES FOR MAKING ELECTIONS UNDER THE MIX AND MATCH FACILITY |
112 |
| PART TEN: | DEFINITIONS | 118 |
| PART ELEVEN: | NOTICE OF COURT MEETING | 126 |
| PART TWELVE: | NOTICE OF CATLIN SPECIAL GENERAL MEETING | 129 |
| APPENDIX 1: | LIST OF RELEVANT TERRITORIES FOR THE PURPOSES OF IRISH DIVIDEND WITHHOLDING TAX |
134 |
| APPENDIX 2: | TERMS AND CONDITIONS OF THE XL SPONSORED NOMINEE ARRANGEMENT |
135 |
Catlin Group Limited Registered office: Canon's Court 22 Victoria Street Hamilton HM12 Bermuda Incorporated and registered in Bermuda under registration number 26680
John Barton (Chairman) Stephen Catlin (Chief Executive Officer and Deputy Chairman) Benjamin Meuli (Chief Financial Officer) Nicholas Lyons (Senior Independent Non-executive Director) Claus-Michael Dill (Independent Non-executive Director) Robert Gowdy (Independent Non-executive Director) Beatrice Hollond (Independent Non-executive Director) Fiona Luck (Independent Non-executive Director)
2 April 2015
To Catlin Shareholders and, for information only, to holders of options or awards under the Catlin Share Schemes
Dear Catlin Shareholder,
On 9 January 2015, the Boards of Catlin and XL announced that they had agreed the terms of a recommended offer by XL for Catlin.
The Offer is to be implemented by way of a two-step, integrated process comprising a courtsanctioned scheme of arrangement under section 99 of the Companies Act, followed immediately by the merger of Catlin with and into XL Sub (such that XL Sub is the surviving company) under section 104H of the Companies Act. XL Sub is a wholly owned subsidiary of XL Group incorporated in Bermuda for the purpose of completing the Offer.
I am writing to you today to set out a summary of the terms of the Offer, to give you details of the Scheme, the background to the Offer and the reasons why the Catlin Board considers the terms of the Offer to be fair and reasonable and the Catlin Directors are unanimously recommending that you vote in favour of the Scheme at the Court Meeting and in favour of the special resolution to be proposed at the Special General Meeting. Both meetings will be held at 5th Floor, Washington House, 16 Church Street, Hamilton HM11, Bermuda on 21 April 2015. The Court Meeting will start at 11.00 a.m. (Bermuda time) on that date and the Special General Meeting at 11.15 a.m. (Bermuda time) on that date (or as soon thereafter as the Court Meeting has concluded or been adjourned).
XL has also published XL's Irish Prospectus, which contains further information on the Enlarged XL Group and the New XL Shares. This Scheme Document should be read in conjunction with XL's Irish Prospectus, which is available on XL's website at www.xlgroup.com and on Catlin's website at www.catlin.com (in each case subject to certain access restrictions), until the Effective Date.
Details of the actions to be taken by Catlin Shareholders in order to vote on the Offer are set out in the section headed ''ACTIONS TO BE TAKEN'' starting on page 9 of this Scheme Document. The unanimous recommendation of the Catlin Directors is set out in paragraph 20 of this letter.
Under the terms of the Offer and the Scheme, which is subject to the Conditions and to the further terms set out in full in Part Three of this Scheme Document, Scheme Shareholders will receive:
| for each Catlin Share | 388 pence in cash |
|---|---|
| and | |
| 0.130 New XL Share |
On 10 February 2015, the Catlin Board declared the 2014 Final Dividend of 22 pence per Catlin Share, which was paid on 19 March 2015 to holders of Catlin Shares of record on 20 February 2015. In addition, following completion of the disposal of Catlin's investment in Box Innovation Group Limited (trading as ''insurethebox'') (''ITB'') as announced on 31 March 2015, the Catlin Board has declared the ITB Special Dividend of 11.7 pence per Catlin Share, payable on 24 April 2015 to holders of Catlin Shares of record on 10 April 2015 (the ''ITB Special Dividend'').
Based on the Closing Price per XL Share of US\$35.42 and the exchange rate of US\$1.5084:£1 on 8 January 2015 (being the day before the date of the Announcement), the Offer (together with the 2014 Final Dividend, but excluding the ITB Special Dividend) valued each Catlin Share at approximately 715.3 pence and the entire issued and to be issued share capital of Catlin at approximately £2.79 billion (based on an assumed fully-diluted share capital of up to 390 million Catlin Shares), representing a premium of approximately:
Based on the Closing Price per XL Share of US\$36.80 and the exchange rate of US\$1.4829:£1 on 31 March 2015 (being the latest practicable date before the date of this Scheme Document), the Offer (together with the 2014 Final Dividend but excluding the ITB Special Dividend) values each Catlin Share at approximately 732.6 pence and the entire issued and to be issued share capital of Catlin at approximately £2.86 billion (based on an assumed fully-diluted share capital of up to 390 million Catlin Shares).
Catlin Shareholders (except certain Overseas Shareholders) are also being offered the opportunity, under the Mix and Match Facility, to elect to vary the proportions of cash consideration and New XL Shares they receive in respect of their holdings of Catlin Shares, subject to off-setting elections made by other Catlin Shareholders so that the total number of New XL Shares to be issued and the total cash consideration to be paid by XL pursuant to the Scheme is not varied. Under the Mix and Match Facility, Scheme Shareholders may elect to swap their 388 pence cash entitlement for an additional 0.15635 New XL Shares or, alternatively, to swap their entitlement to 0.130 New XL Shares for an additional 323 pence in cash. This ratio has been determined with reference to the Closing Price per XL Share of US\$36.80 and the exchange rate of US\$1.4829:£1 on 31 March 2015 (being the latest practicable date before the date of this Scheme Document). To the extent that elections for additional New XL Shares or additional cash consideration cannot be satisfied in full, they will be scaled down on a pro rata basis. Further information about the Mix and Match Facility is provided in Part Nine of this Scheme Document.
If the Scheme becomes effective, and on the assumption that there will be up to 390 million Catlin Shares in issue at the Scheme Record Time, the Scheme would result in the issue of up to 50.7 million New XL Shares to Scheme Shareholders. On that basis, Scheme Shareholders would hold up to 16.3 per cent., and existing XL Shareholders up to 83.7 per cent. of the enlarged share capital of XL immediately following the Effective Date.
The New XL Shares will be allotted and issued credited as fully paid and will rank pari passu in all respects with the XL Shares in issue on the Effective Date, save that they will not participate in any dividend payable by XL by reference to a record date prior to the Effective Date. Application will be made for all the New XL Shares to be admitted to trading on the New York Stock Exchange and the Bermuda Stock Exchange. The New XL Shares will not be admitted to the Official List in the United Kingdom or to trading on any stock exchange in the United Kingdom or any other stock exchange except as stated. Further information about how the New XL Shares may be dealt with after the Effective Date is set out in paragraph 7 of Part Two of this Scheme Document.
Fractions of New XL Shares will not be allotted and the entitlement of Scheme Shareholders will be rounded down to the nearest whole number of New XL Shares. All fractions of New XL Shares to which Scheme Shareholders would otherwise have been entitled will be aggregated, rounded down to the nearest whole number of New XL Shares, allotted and issued to a person appointed by XL, and sold in the market following the Effective Date and the net proceeds of such sale (after the deduction of all expenses and commissions, including any amounts in respect of value added tax payable thereon) will be converted to sterling and be paid by XL to the person(s) entitled thereto in due proportions, rounded down to the nearest whole penny. Fractions of a penny will not be paid and any fractional entitlement to cash will be rounded down to the nearest whole penny.
XL and Catlin have for some time shared a belief in the benefits of creating a combined company. While both companies are well positioned to succeed on their own, they each believe that in combination they will be better positioned to deal with some of the challenges posed by key market forces shaping the Property and Casualty insurance sector including:
XL believes that the combination of XL and Catlin will result in a broader, better balanced and more efficient underwriting platform by bringing together two highly compatible cultures based on being best-in-class, underwriting-driven organisations. XL expects the combination of XL and Catlin to result in double-digit EPS and meaningful ROE accretion, upon full phase-in of the expected synergies described in paragraph 4 below, and to yield an estimated internal rate of return well in excess of cost of capital. While the parent company of the Enlarged XL Group will remain XL Group plc, the intention is to market the combined business as ''XL Catlin'', reflecting the strong reputation of both brands.
With a combined US\$17 billion of total capital, and approximately US\$10 billion of combined net premiums written based on the 31 December 2014 audited financial statements of each company, the Enlarged XL Group is anticipated to achieve significant scale within its core competencies of global specialty insurance and reinsurance. The Enlarged XL Group is expected to be able to access clients through a variety of channels, including Lloyd's, where Catlin is the largest underwriting syndicate, and through the enhanced global network of the Enlarged XL Group. Both XL and Catlin have made significant investments in international offices and underwriting hubs – the combination of which is anticipated to increase the relevance of each company in these regions and therefore enable the Enlarged XL Group to participate in the most attractive underwriting opportunities across the regions.
In specialty insurance, the Enlarged XL Group will benefit from Catlin's core Lloyd's businesses, such as Aviation, Marine and Energy, in which the combined company will represent a best-in-class platform, and expects to be among the world's largest writers in many lines, including Aerospace (in which it expects to be among the world's top three writers), Fine Art & Specie (in which it expects to be among the world's top three writers) and Political Risk and Crisis Management (in which it expects to be among the world's top five writers). Increased relevance with brokers will be enhanced through greater premium volume, broader product offering and an expanded global network. Approximately US\$3.8 billion(1) of combined ceded reinsurance will allow for increased purchasing power and further optimisation with the reinsurance and retrocession markets. In addition, XL expects to achieve a significant scale increase in the reinsurance market, affirming itself as a global reinsurer with multi-line capabilities, with gross premiums written nearly doubling to more than US\$3.9 billion based on gross premiums written in 2014. XL believes the Enlarged XL Group will be a top three property catastrophe writer among broker market peers, based on the combined historical property catastrophe gross premiums written in 2014. XL believes that this will significantly increase its attractiveness and flexibility to third party capital providers.
The Enlarged XL Group's greater size will also enable it to leverage more effectively the investments in technology and data analytics that XL believes all underwriting organisations will have to make over the next few years.
Significant opportunities exist for Catlin and XL to consolidate their operations where there are overlapping footprints in multiple jurisdictions. Examples of areas in which the Enlarged XL Group would be able to achieve greater efficiency include consolidation of the combined infrastructure related to technology, real estate and operations as well as consolidation of business and central support functions.
Similar to XL, Catlin is first and foremost an underwriting business focused on the core principles of discipline, diversification and underwriting profitability. As a result of this focus, Catlin has produced a consistently low loss ratio, averaging 57.7 per cent. over the last six years. Catlin has released reserves every year since its initial public offering and admission to listing on the London Stock Exchange in 2004. Catlin's underwriting-driven culture is embodied in its senior management team, led by Stephen Catlin, the founder and Chief Executive Officer, who commenced underwriting at Lloyd's in 1973. Stephen Catlin's continued involvement in the Enlarged XL Group as Executive Deputy Chairman, along with the senior roles to be assumed by Paul Brand, Catlin's Chief Underwriting Officer, Benjamin Meuli, Catlin's Chief Financial Officer, and Paul Jardine, Catlin's Chief Operating Officer, will encourage continuity and consistency in the organisation's core values and business practices.
XL expects to issue approximately US\$1.9 billion of New XL Shares in connection with the Offer (based on the Closing Price per XL Share of US\$36.80 on 31 March 2015 (being the latest practicable date before the date of this Scheme Document)). Although XL has entered into the Bridge Facility, it expects that the cash component of the consideration due to Scheme Shareholders under the Offer will be funded with cash on hand and through the proceeds from the issuance of the Subordinated Notes. XL expects this funding structure, combined with the operating and other efficiencies described above, to lead to double-digit EPS and meaningful ROE accretion, upon full phase-in of the expected synergies described below. XL also expects the combination of XL and Catlin to result in a positive impact to XL's EPS and ROE in the first full year following completion of the Offer. The Enlarged XL Group will have debt and preferred equity of US\$4.7 billion on completion of the Offer, resulting in leverage of under 30 per cent. (which would be intended to reduce over time).
XL, having reviewed and analysed the potential benefits of combining XL and Catlin, based on its experience of operating in the insurance sector, and taking into account the factors it can influence, believes that the Enlarged XL Group will be able to achieve cost synergies of at least US\$200 million on a recurring basis(2).
(1) This amount includes reinsurance ceded between XL and Catlin as independent organisations.
(2) No statement in this Scheme Document is intended as a profit forecast or estimate for any period and no statement in this Scheme Document should be interpreted to mean that earnings or EPS for XL or Catlin for the current or future financial years would necessarily match or exceed the historical published earnings or EPS for XL or Catlin. These statements of estimated cost synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost synergies referred to may not be achieved, or those achieved could be materially different from those estimated. Neither these statements nor any other statement in this Scheme Document should be construed as a profit forecast or interpreted to mean that the Enlarged XL Group earnings in the first full year following the Offer, or in any subsequent period, would necessarily match or be greater than or be less than those of XL and/or Catlin for the relevant preceding financial period or any other period.
XL expects that the full recurring synergies will be achieved by the end of 2017.
The principal sources of potential quantified synergies are:
In addition to these potential quantified synergies, XL believes that significant further value can be created through realisation of incremental capital, financial and business benefits, including:
The integration of the businesses will require combining the Catlin businesses and group functions into XL, with selection of the optimal platforms and operating model.
XL envisages that the realisation of the potential quantified synergies will result in one-off integration costs of approximately US\$250 million (in aggregate), which are all anticipated to be incurred by the end of 2017.
As has been the case in prior transactions which combined insurance or reinsurance companies, XL expects to face some challenges in retaining the total amount of combined premiums written. Given the inherent uncertainty of the factors which may influence this, XL is unable to provide an estimate of the possible material impact the combination could have in this regard. XL intends to take steps to minimise any such effects.
The identified synergies will accrue as a direct result of successful completion of the Offer and would not be achieved on a standalone basis.
The above statements as to XL's expectations of the estimated cost savings, synergies and value enhancements expected to arise from successful completion of the Offer, as well as XL's bases of belief, were included in the Announcement, and the XL Officers confirm that they remain valid. Each of Ernst & Young, and XL's financial advisers, Morgan Stanley & Co. International plc and Goldman Sachs International, confirms that their respective reports produced in connection with these statements, which were annexed to the Announcement, continue to apply.
Catlin is a highly regarded, specialty insurance and reinsurance business, with a strong presence at Lloyd's and a broader underwriting platform that is supported by a diverse international network of offices and underpinned by excellent people and culture. Disciplined underwriting combined with geographic and product diversification has been at the core of Catlin's strategy. Since the Catlin Group was established in 1984, it has sought to underwrite for profit, with good top-line growth in premiums driving attractive growth in the bottom-line. Outside London, Catlin has five underwriting hubs, which have demonstrated meaningful growth in terms of both premium volume and net underwriting contribution over recent years. Catlin continues to see profitable growth opportunities outside London, and its decade-long investment in a global infrastructure will allow it to pursue these opportunities as they arise.
Despite the progress Catlin has made as a standalone company, the outlook for the insurance and reinsurance markets is becoming increasingly challenging. While the Catlin Board believes that Catlin is well positioned to succeed as an independent business, it recognises that further economies of scale, increased diversification (in terms of business mix) and improved standing with insurance intermediaries will be critical factors for the development of the industry in future years.
The proposed combination with XL builds on each business's core strengths, creating one of the largest global specialty insurance players with an improved client proposition. This combination is expected to enable the two businesses to deliver sustainable and more attractive returns to shareholders against this changing industry backdrop.
The Catlin Board has considered the terms of the Offer in relation to the value and prospects and the potential medium-term standalone value of Catlin. In particular, the Catlin Board considered the following factors:
In light of these factors, and having received advice from its financial advisers, the Catlin Board unanimously recommends the Offer to Catlin Shareholders as set out in paragraph 20 below.
XL has received irrevocable undertakings from each of the Catlin Directors to vote or procure votes in favour of the Scheme at the Court Meeting and in favour of the special resolution to be proposed at the Special General Meeting, in respect of 8,423,502 Catlin Shares, in aggregate, representing approximately 2.29 per cent. of the issued share capital of Catlin on 31 March 2015 (being the latest practicable date before the date of this Scheme Document). Further details of these irrevocable undertakings are set out in paragraph 14 of Part Eight of this Scheme Document.
Stephen Catlin intends to continue to hold New XL Shares as a long-term investment, reflecting the parties' shared belief in the benefits of creating a combined company.
Catlin Group Limited, incorporated and domiciled in Bermuda, is an international specialist property/casualty insurer and reinsurer that underwrites worldwide through six underwriting hubs.
Catlin was originally established in 1984 as a Lloyd's underwriting agency formed to manage a new underwriting syndicate. During the past 30 years, Catlin has grown to become a leading international specialist insurer and reinsurer that includes the largest underwriting syndicate at Lloyd's and (re)insurance companies/branches based in Bermuda, the United Kingdom, the US, Switzerland and Singapore.
Since 1999, Catlin has diversified geographically from its traditional London base, establishing more than 50 offices in 25 countries worldwide. To reflect this international focus, Catlin has organised its operations into underwriting hubs located in London, Bermuda, the US, the Asia-Pacific region, Europe and Canada. Through these hubs, Catlin works closely with policyholders and their brokers. The hubs also provide Catlin with product and geographic diversity.
Catlin's financial reporting segments are based on its international hub structure: London, US, Bermuda and International (Europe, Asia-Pacific and Canada).
Catlin underwrites a broad range of property/casualty insurance for businesses and professionals. It also underwrites a small amount of Life business through Lloyd's syndicate 3002, which is owned and managed by Catlin. Catlin's underwriting operations are split into six product groups:
* Aerospace, which includes Airline, General Aviation, Airport, Aviation Products and Space/Satellite coverages;
The following table sets out Catlin's gross premiums written by reporting segment for the years ended 31 December 2014, 31 December 2013 and 31 December 2012.
| (US dollars in millions) | Gross premiums written | ||
|---|---|---|---|
| 2012 | 2013 | 2014 | |
| London | 2,525 | 2,474 | 2,763 |
| US | 1,045 | 1,213 | 1,374 |
| Bermuda | 523 | 577 | 577 |
| International | 879 | 1,045 | 1,252 |
| Group total | 4,972 | 5,309 | 5,966 |
At 31 December 2014, Catlin had 2,517 employees, including 983 employees in London across four offices, 431 employees in Europe across 18 offices, 390 employees across ten offices in Asia Pacific, 575 employees in the US across 18 offices, 70 employees in Canada across four offices and 68 employees in Bermuda in a single office.
Catlin Shares, each of US\$0.01 par value, are admitted to the premium listing segment of the Official List and depositary interests (each representing one underlying Catlin Share) trade on the London Stock Exchange's main market for listed securities under the symbol ''CGL''. Catlin's total shareholders' equity amounted to US\$4.0 billion at 31 December 2014 (including US\$590 million of non-controlling interest in preferred stock of consolidated subsidiaries), while total assets exceeded US\$15 billion.
XL Group plc, incorporated and domiciled in the Republic of Ireland, is a global insurance and reinsurance business providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises on a worldwide basis.
XL was founded in 1986 with the formation of EXEL Limited. XL Capital Ltd was formed as a result of the merger of EXEL Limited and Mid Ocean Limited in 1998. In 1990, XL opened its first office outside the Caribbean when XL Insurance Company opened in Dublin, Ireland. In 1999, XL Capital Ltd merged with NAC Re Corp. in a stock merger. In 2001, XL acquired certain Winterthur International insurance operations for its fit for purpose network of international offices and to facilitate XL's global expansion. In July 2010, XL Group plc, a newly formed Irish public limited company and XL Capital Ltd (now known as XLIT Ltd.), an exempted company organised under the laws of the Cayman Islands (''XL-Cayman'' or ''XLIT''), completed a redomestication transaction in which all the ordinary shares of XL-Cayman were exchanged for all the ordinary shares of XL. As a result, XL-Cayman became a wholly-owned subsidiary of XL.
XL is organised into two operating segments: Insurance and Reinsurance. XL's general investment and financing operations and run-off life operations are reflected in ''Corporate and Other''.
* Insurance: XL's insurance operations provide customised insurance policies for complex corporate risks that may require large limits and are marketed and distributed through a wide variety of local, national and international producers. Large deductibles and selfinsured retentions are incorporated into these policies to further manage risk along with stringent underwriting guidelines. While XL's insurance operations are known for insuring large complex risks, certain of XL's products are targeted to small and mid-size companies and organisations, such as XL's professional liability and program business. XL focuses on those lines of business that XL believes will provide the best return on capital over time.
* Reinsurance: This segment provides casualty, property risk, property catastrophe, marine, aviation, treaty and other specialty reinsurance on a global basis with business being written on both a proportional and non-proportional basis and also on a facultative basis. XL's lines of business within the reinsurance segment continue to focus on those that provide the best return on capital. For XL's Reinsurance segment, challenging market conditions and the changing economic environment experienced since 2008 resulted, in certain instances, in a greater emphasis being placed on short-tail lines of business.
The following table sets out XL's gross premiums written by segment for the years ended 31 December 2014, 31 December 2013 and 31 December 2012.
| (US dollars in millions) | Gross premiums written | ||
|---|---|---|---|
| 2012 | 2013 | 2014 | |
| Insurance | 5,167 | 5,523 | 5,976 |
| Reinsurance | 2,008 | 1,894 | 1,786 |
| Corporate and Other | 356 | 324 | 333 |
| Group total | 7,531 | 7,741 | 8,095 |
Through a series of transactions from 2009 through 2014, XL has largely exited the life reinsurance business. Most recently, in May 2014, XL entered into a retrocession transaction with GreyCastle Holdings Ltd. that included the sale of XL Life Reinsurance (SAC) Ltd for US\$570 million in cash.
At 31 December 2014, XL had 4,663 employees.
XL's ordinary shares, with a US\$0.01 par value per share, are listed on the NYSE under the symbol ''XL''. As at 30 March 2015, being the latest practicable date for obtaining such information, XL had a diluted market capitalisation of US\$9.6 billion.
XL expects to cease share buybacks until after the Effective Date. At that time, XL will reevaluate its stock buyback programme.
Further information about the Enlarged XL Group and the New XL Shares is set out in XL's Irish Prospectus, which is available on XL's website at www.xlgroup.com and on Catlin's website at www.catlin.com (in each case subject to certain access restrictions), until the Effective Date.
Each of Morgan Stanley and Goldman Sachs International, financial advisers to XL, is satisfied that cash resources are available to XL sufficient to enable it to satisfy in full the cash consideration payable to Scheme Shareholders under the terms of the Offer.
While the cash consideration payable by XL under the terms of the Offer is anticipated to be funded by approximately US\$1.25 billion of cash on hand and through the approximately US\$980 million net proceeds of the issuance of the Subordinated Notes, XL is able to rely on commitments to provide £1,600,000,000 of loans to XLIT, a wholly-owned subsidiary of XL, as borrower under the Bridge Facility arranged by Morgan Stanley Senior Funding, Inc. and Goldman Sachs Bank USA (the ''Arrangers''), which loans would be onlent to XL to fund the cash consideration payable by XL under the terms of the Offer.
On 9 January 2015 (the ''Bridge Facility Effective Date''), in connection with the Offer, XLIT, as borrower, XL, X.L. America, Inc., XL Insurance (Bermuda) Ltd, XL Re Ltd, and XL Life Ltd, as guarantors, Morgan Stanley Senior Funding, Inc., as administrative agent, Morgan Stanley Senior Funding, Inc. and Goldman Sachs Bank USA, as lenders entered into a senior unsecured 364-Day Bridge Loan Agreement (the ''Bridge Loan Agreement''). On 30 January 2015, the Arrangers assigned a portion of their commitments under the Bridge Facility to Morgan Stanley Bank, N.A., Citibank, N.A., Deutsche Bank AG Cayman Islands Branch, HSBC Bank Bermuda Limited, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Credit Agricole Corporate and Investment Bank, The Royal Bank of Scotland plc, Lloyds Bank plc, ING Bank N.V., London Branch, Credit Suisse AG, Cayman Islands Branch and BNP Paribas who became additional lenders to the Bridge Facility pursuant to an assignment and assumption agreement of the same date.
Advances under the Bridge Facility will be available on a date after the Bridge Facility Effective Date, subject to satisfaction of certain conditions set forth in the Bridge Loan Agreement (the ''Closing Date''). One of the conditions to the lenders' obligation to fund the Bridge Facility is that the Offer be consummated in all material respects pursuant to the relevant documents provided to the lenders relating to the Offer, without giving effect to any modifications, consents, amendments or waivers that would be materially adverse to the interests of the lenders or the Arrangers, unless such modifications, consents, amendments or waivers are required by the Code Committee (and, if applicable, the Code Expert) in accordance with the terms of the Implementation Agreement, or each of the Arrangers have provided their written consent thereto, and that in the case of any such modifications, consents, amendments or waivers required by the Code Committee that would be materially adverse to the interests of the lenders or the joint lead arrangers, upon the request of either Arranger, XLIT will be required to obtain written confirmation from the Code Expert that the Code Expert concurs with such requirement of the Code Committee. All principal and interest payable under the Bridge Facility will be due on the earlier of (a) the date that is 364 days after the Closing Date or (b) the date on which the maturity of the loans is accelerated in accordance with the terms thereof. The maturity of the loans may be accelerated following the occurrence and continuation of certain events of default, and will be automatically accelerated in the case of certain events of default relating to insolvency or bankruptcy of XLIT Ltd or XL.
Commitments under the Bridge Facility (or, to the extent such commitments are funded, loans outstanding under the Bridge Facility) may be voluntarily reduced (or prepaid) by XLIT without premium or penalty, other than payment of customary breakage costs. Such voluntary reductions, except in certain circumstances, will require cash equal to such reduction to be placed in an escrow account to satisfy ''funds certain'' requirements for the Offer as required by XL's financial advisers. Commitments under the Bridge Facility (or, to the extent such commitments are funded, loans outstanding under the Bridge Facility) will be subject to mandatory reduction (or, in the case of loans, mandatory prepayment), by (a) the net cash proceeds of any sale, transfer or other disposition of, or casualty or condemnation event with respect to, assets of XL and its subsidiaries (other than the sale of investments in the ordinary course) to the extent such proceeds are not reinvested, subject to certain exceptions and thresholds, (b) the net cash proceeds of the sale or issuance of debt securities or incurrence of other debt of XL or any of its subsidiaries, subject to certain exceptions and thresholds and (c) the net cash proceeds of the sale or issuance of equity securities or equitylinked securities issued by XL or any of its subsidiaries, subject to certain exceptions and thresholds. Such mandatory commitment reductions, except in certain circumstances, will require cash equal to such reduction to be placed in an escrow account to satisfy ''funds certain'' requirements for the Offer as required by XL's financial advisers.
Borrowings under the Bridge Facility will bear interest at an adjusted LIBO rate plus an applicable margin. The applicable margin ranges from 1.125 per cent. to 2.00 per cent. per annum depending on the public debt rating of XLIT then in effect, increasing by 0.25 per cent. (with respect to each level of public debt rating) every 90 days after the Closing Date. The commitments outstanding under the Bridge Facility will be subject to an unused commitment fee at a rate per annum equal to, from the Bridge Facility Effective Date through the date that is 179 days after the Bridge Facility Effective Date, 0.10 per cent., and, thereafter, 0.175 per cent., on the daily average undrawn commitments under the Bridge Facility. In addition, XLIT has agreed to pay a duration fee under the Bridge Facility on the aggregate principal amount of any loans outstanding (i) on the 90th day after the Closing Date equal to 0.50 per cent., (ii) on the 180th day after the Closing Date equal to 0.75 per cent. and (iii) on the 270th day after the Closing Date equal to 1.00 per cent.
The commitments under the Bridge Facility, unless previously terminated, will terminate on the earliest of (i) certain mandatory cancellation events, (ii) the date on which the obligations of XL to pay the cash consideration payable to Scheme Shareholders pursuant to and in accordance with the Implementation Agreement and applicable laws and regulations have been discharged in full, (iii) if the Closing Date has not occurred by then, 11.59 p.m. (New York City time) on the later of (a) 9 October 2015 and (b) in the event that on or before 9 October 2015, the Scheme becomes effective in accordance with its terms (or, to the extent permitted by the Bridge Loan Agreement, a merger (in lieu of the Scheme) becomes effective or a Takeover Offer closes) and XLIT has submitted a borrowing request for bridge loans, then the date that is three business days following the date of such borrowing request and (iv) the earlier of the date that is 90 days following the Closing Date and the date of consummation of a second step acquisition in the event the Offer is completed pursuant to a Takeover Offer.
The Bridge Loan Agreement contains financial covenants that require XL to maintain a minimum consolidated net worth and a maximum ratio of total consolidated debt to the sum of total consolidated debt plus consolidated net worth, and that require each of XL Insurance (Bermuda) Ltd, XL Re Ltd and XL Re Europe SE to maintain a financial strength rating of no less than ''A-'' from A.M. Best. The terms of the Bridge Facility also include customary affirmative covenants, negative covenants and events of default. Subsequent to any funding of loans under the Bridge Facility, if an event of default under the Bridge Loan Agreement shall occur and be continuing, the maturity of such loans and all other obligations of XLIT under the Bridge Loan Agreement may be accelerated.
Catlin announced its financial results for the year ended 31 December 2014 on 10 February 2015. Those results included:
Stephen Catlin, Chief Executive, said: ''Catlin continued to grow profitably during 2014, which demonstrates that our operating strategy – based on disciplined underwriting and diversification – has successfully differentiated Catlin from many of its peers''.
In its 2014 financial results announcement, Catlin also announced that gross premiums written as at 31 January 2015 had increased by 10 per cent. compared with the corresponding period of 2014.
Since 10 February 2015, Catlin's trading has progressed in line with expectations.
XL announced its 2014 fourth quarter and year-end financial results on 2 February 2015. Those results included:
(1) On 1 May 2014, XL's wholly-owned subsidiary XL Insurance (Bermuda) Ltd (''XLIB''), entered into a sale and purchase agreement with GreyCastle Holdings Ltd. (''GreyCastle'') providing for the sale of 100% of the common shares of XLIB's whollyowned subsidiary, XL Life Reinsurance (SAC) Ltd (''XLLR''), for US\$570 million in cash. This transaction was completed on 30 May, 2014. As a result of the transaction, XL ceded the majority of its life reinsurance business to XLLR via 100% quota share reinsurance (the ''Life Retrocession Arrangements''). The designated investments that support the Life Retrocession Arrangements, which are written on a funds withheld basis (''Life Funds Withheld Assets''), are included within ''Total investments available for sale'' and ''Fixed maturities, trading at fair value'' on XL's balance sheet. Investment results for these assets – including interest income, unrealized gains and losses, and gains and losses from sales – are passed directly to the reinsurer pursuant to a contractual arrangement which is accounted for as a derivative. Net income attributable to ordinary shareholders excluding the impact of the Life Retrocession Arrangements is a non-GAAP financial measure.
Arrangements(2), XL's net income is impacted by the gains or losses on the Life Funds Withheld Assets(3), with an equal and opposite accounting adjustment in XL's comprehensive income so that there is no effect on XL's book value);
Chief Executive Officer Mike McGavick said: ''XL delivered a very strong 2014 including continued progress in Insurance and an extraordinary year in reinsurance. Many of our results were the best we have achieved in over fifteen years, including our property and casualty combined ratio of 88.2%. Insurance results included a 2014 combined ratio of 94.4%, the best performance since 2007, and a loss ratio of 63.2%. And our reinsurance segment achieved a stellar 73.3% combined ratio, one of its best performances as well. Of course, these results were helped, in part, by one of the lowest catastrophe years we have seen in years. To build on our success, we intend to continue developing and delivering outstanding products and services to our current and new markets, continuing to move this progress forward''.
Since 31 December 2014, there have not been any material developments that would negatively impact the Company's operations or financial position.
XL has high regard for the skills and experience of the existing management and employees of the Catlin Group. XL has confirmed to the Catlin Board that employees' existing employment rights, including pension rights, will be honoured.
XL believes that the combined business will provide enhanced opportunities for employees from both organisations. XL intends to utilise the following key principles:
At the most senior levels, key elements of the post-completion organisation and joint integration planning approach have been agreed. Mike McGavick will be Chief Executive Officer of XL. Stephen Catlin will join the board of directors of XL as Executive Deputy Chairman. Peter Porrino will continue as Chief Financial Officer. Greg Hendrick will assume the role of Chief Executive of Reinsurance, assuming responsibility for the combined reinsurance business and leading all alternative capital strategies. Paul Brand, Catlin's Chief Underwriting Officer, will have the position of Chair – Insurance Leadership Team, Chief Underwriting Officer – Insurance, and will have responsibility for capital allocation and purchasing outward reinsurance for the group. Kelly Lyles, currently XL's Head of Professional Insurance will have the position of Deputy Chair – Insurance Leadership Team and Chief Regional Officer – Insurance. Together, Mr. Brand and Ms. Lyles will lead all aspects of Insurance for the combined company and both will report to Mike McGavick. Benjamin Meuli, Catlin's Chief Financial Officer, will assume the role of Chief Investment Officer, with responsibility for determining investment strategy and managing the enterprise investment portfolio. Paul Jardine, Catlin's Chief Operating Officer, will assume the role of Chief Experience Officer, with responsibility for communications and marketing, global claims and distribution strategy. An additional Catlin director who meets applicable independence qualifications and other criteria is also expected to join the board of directors of XL.
To realise the potential benefits of integrating Catlin and XL, XL will consider and evaluate, as part of its overall strategy for the Enlarged XL Group, how best to draw upon the talents of the broader Catlin and XL organisations. It is expected that headcount reductions will be required, although XL has not yet developed specific plans as to how or where such headcount reductions will be implemented. In addition, XL anticipates there will be some consolidation of office locations given the overlapping footprints of Catlin and XL. For the benefit of the combined business, in some instances the Catlin office is likely to be maintained whereas in others the XL office will be maintained. XL and Catlin have established an integration planning team to create an organisation that draws upon the talent of both XL's and Catlin's business and functional teams. The team is led for XL by Myron Hendry, XL's Chief Platform Officer, and for Catlin by Adrian Spieler, Catlin's Chief Administrative Officer, with support from the extended leadership teams on both sides.
(2) As above.
(3) As above.
Recognising their long-term commitment to the combined business and to promote the ongoing success of the Enlarged Group and the successful integration of Catlin and XL:
Stephen Catlin, Paul Brand, Benjamin Meuli and Paul Jardine, in common with other participants in the Catlin Group Limited Performance Share Plan 2004 and the Catlin Group Limited Performance Share Plan 2013, are expected to be granted replacement awards by XL to replace the awards under the 2004 PSP and 2013 PSP that lapse on completion of the Offer. The new awards are expected to be in varying forms and their value is intended to be commensurate with the projected value of the awards lapsing. Stephen Catlin, Paul Brand, Benjamin Meuli and Paul Jardine will also participate in the XL Group plc Executive Severance Plan.
Each of J.P. Morgan Cazenove and Evercore has confirmed to the Board of Catlin that they consider these arrangements with Stephen Catlin and Paul Brand and, subject to agreement of their final terms as set out above, the offers to Benjamin Meuli and Paul Jardine to be fair and reasonable.
XL is in the early stages of discussions with other Catlin executives regarding the terms and conditions of their potential employment within the Enlarged Group. However, no such terms have yet been agreed.
The Catlin Group operates pension schemes in over 15 countries, the principal schemes being the Catlin Group Holdings Ltd Group Personal Pension Plan (UK), the Catlin Inc 401k Profit Sharing Plan (US), the Nonqualified Deferred Compensation Plan of Catlin, Inc. (US), the Capital Accumulator Pension Plan (Bermuda), the Mandatory Provident Fund (Hong Kong and Malaysia), the Central Provident Fund (Singapore), the Unterstintzungskasse (Germany), the AHV Pensionskasse (Switzerland) and the Defined Contribution Pension Plan (Canada). These provide benefits on a defined contribution basis.
The Fenchurch Pension Scheme, which is a defined benefit scheme for which the Catlin Group assumed liabilities in connection with the acquisition of Wellington Underwriting plc in 2006, was closed to new members in 1993. Its membership consists of only pensioners and deferred members. Projected benefit obligations as at 31 December 2014 were \$29 million and fair value of plan assets was \$34 million.
A summary of the effect of the Offer on the Catlin Share Schemes can be found below. Further details of the effect of the Offer on the Catlin Share Schemes will be set out in separate letters to be sent to participants shortly after the date of this Scheme Document.
All awards granted under both the 2004 PSP and the 2013 PSP will vest, and all awards granted in the form of options will be exercised, on the date of the Court Hearing as described below. Any awards granted prior to 2015 and which vest on the date of the Court Hearing will vest on the basis that 100% of the performance conditions have been fulfilled. Any awards granted during 2015 will vest on the basis that 50% of performance conditions have been fulfilled. All awards regardless of the year of grant will also be pro-rated for time based on the proportion of the performance period that has elapsed on the date of the Court Hearing. Awards will be settled either by transfer of Catlin Shares or a cash payment equal to the market value of the Catlin Shares that would otherwise have been received (a ''cash equivalent'').
XL intends to grant replacement awards to participants in the 2004 PSP and 2013 PSP who remain employed in the Enlarged XL Group, to replace the awards under those plans that lapse on completion of the Offer. The new awards are expected to be in varying forms and their value is intended to be commensurate with the projected value of the awards lapsing.
All awards under the ISP will vest, and all awards granted in the form of options will be exercised, on the date of the Court Hearing as described below. All awards will be pro-rated for time based on the proportion of the performance period that has elapsed on the date of the Court Hearing. Awards will be settled either by transfer of Catlin Shares or a payment of a cash equivalent.
XL intends to grant replacement awards to participants in the ISP who remain employed in the Enlarged XL Group, to replace the awards under those plans that lapse on completion of the Offer. The new awards are expected to be in varying forms and their value is intended to be commensurate with the projected value of the awards lapsing.
All awards under the DBSP will vest, and all awards granted in the form of options will be exercised on the date of the Court Hearing. Awards will be settled either by the transfer of Catlin Shares or a payment of a cash equivalent.
Holders of options under the Sharesave will be able to exercise their options on the date of the Court Hearing to the extent of their savings under the relevant savings contract. It is then intended to terminate the Sharesave with effect from the Effective Date. As individuals will not be able to continue saving, XL has also agreed that any participating employees who hold options under the Sharesave as it applies in the UK and who remain in employment six months after the Effective Date will receive a cash payment from XL. The amount to be paid to such participant will be equal to the additional gain that the participant would have made had he continued saving at the rate of his current committed savings for those six months, based on the difference in the applicable option price and the most recent Catlin Share price at the Effective Date.
It is intended that Catlin will nominate the date of the Court Hearing as the purchase date and participants will be able to purchase Catlin Shares with their aggregate monthly contributions as at that date. It is then intended to terminate the ESPP on or by the Effective Date.
XL will adopt all one-off retention or buy-out share awards. These will be settled on the dates set out in the individuals' retention and buy-out share award letters, by an award of equivalent value.
Catlin Shares held in the Catlin Group Limited Employee Benefit Trust will be used to satisfy awards which vest and/or are exercised under the Catlin Share Schemes.
The Offer (and accordingly the Scheme) is subject to the Conditions and to the further terms set out in full in Part Three of this Scheme Document. The Conditions (some of which may be waived by XL) include:
Once the Scheme has been approved at the Court Meeting and the special resolution has been passed at the Special General Meeting, and the other Conditions have been satisfied (or, where applicable, waived by XL) the Scheme must be sanctioned by the Court. Catlin will apply for the Court to sanction the Scheme only when all other Conditions have been satisfied (or, where applicable, waived), other than those Conditions that can only be satisfied immediately before, at, or after the Court Hearing. All Catlin Shareholders are entitled to attend the Court Hearing in person or through representation to support or oppose the sanction of the Scheme.
The Scheme can only become effective if all Conditions to the Scheme, including the shareholder approvals and the sanction of the Court, have been satisfied and obtained (or, where applicable, waived by XL). The Scheme will become effective upon a copy of the court order sanctioning the Scheme being delivered to the Registrar of Companies. Once the Scheme becomes effective, it will be binding on all Scheme Shareholders, whether or not they attended or voted at the Court Meeting or Special General Meeting (and if they attended, whether or not they voted in favour).
It is important that, for the Court Meeting, as many votes as possible are cast so that the Court may be satisfied that there is a fair representation of the opinion of Scheme Shareholders. You are therefore strongly urged to complete, sign and return your Forms of Proxy (if you hold Catlin Shares in certificated form) or Forms of Direction (if you hold Catlin Shares in uncertificated form), as soon as possible. Alternatively, holders of Catlin Shares in uncertificated form may submit voting instructions electronically through CREST.
Details of the actions to be taken by Catlin Shareholders in order to vote on the Offer and to make elections under the Mix and Match Facility are set out in the section headed ''ACTIONS TO BE TAKEN'' starting on page 9 of this Scheme Document.
Holders of Catlin ADRs who wish to vote at the Court Meeting or Special General Meeting, or to make elections under the Mix and Match Facility, may contact BNY Mellon (the ADR depositary) in order to withdraw the Catlin Shares underlying the Catlin ADRs in sufficient time to be entered on Catlin's register of members by the Voting Record Time. In order to do so, holders of Catlin ADRs will need to surrender the American Depositary Shares (ADSs) evidencing the Catlin Shares in respect of which they wish to vote and/or to make an election under the Mix and Match Facility to BNY Mellon, as well as pay any fees, taxes or governmental charges in connection with such withdrawal, and otherwise comply with the terms and conditions of the deposit agreement governing the ADSs. Holders of Catlin ADRs must allow sufficient time for the cancellation of their ADSs and delivery of the underlying Catlin Shares, with valid delivery instructions.
If you have any questions relating to the surrender of Catlin ADRs and delivery of Catlin Shares, please call The Bank of New York Mellon at +1 212 815 2721 between 9.00 a.m. and 5.00 p.m. (New York time), or +353 1900 3465 between 9.00 a.m. and 5.00 p.m. (Dublin time) Monday to Friday (excluding public holidays in the US or Ireland) or email [email protected]. Please note that operators cannot provide advice on the merits of the Scheme or the Offer or give financial, tax, investment or legal advice.
Overseas Shareholders should refer to Part Six of this Scheme Document, which contains important information relevant to such holders.
Your attention is drawn to Part Seven of this Scheme Document, which sets out certain matters relating to the taxation treatment of Scheme Shareholders, in respect of the Scheme, in Bermuda, the UK, the US and the Republic of Ireland. Although this Scheme Document contains certain taxrelated information, if you are in any doubt about your own tax position or you are subject to taxation in any jurisdiction other than Bermuda, the UK, the US or the Republic of Ireland, you should consult an appropriately qualified independent professional adviser immediately.
Scheme Shareholders should consider fully the risk factors associated with the Enlarged XL Group, the New XL Shares and the Offer. Your attention is drawn to the ''Risk Factors'' section of XL's Irish Prospectus, which contains further information on the Enlarged XL Group and the New XL Shares. XL's Irish Prospectus is also available on XL's website at www.xlgroup.com and on Catlin's website at www.catlin.com (in each case subject to certain access restrictions), until the Effective Date.
The Catlin Directors, who have been so advised by J.P. Morgan Cazenove and Evercore, consider the terms of the Offer to be fair and reasonable. In providing their advice to the Catlin Directors, J.P. Morgan Cazenove and Evercore have taken into account the commercial assessments of the Catlin Directors.
Barclays has also provided financial advice to the Catlin Directors in relation to the Offer.
The Catlin Directors believe that the terms of the Offer (including the Scheme) are in the best interests of Catlin Shareholders as a whole and unanimously recommend that Catlin Shareholders vote in favour of the Scheme at the Court Meeting and in favour of the special resolution to be proposed at the Special General Meeting. In addition, the Catlin Directors have irrevocably undertaken in favour of XL to vote or procure votes in favour of such resolutions, in respect of 8,423,502 Catlin Shares, in aggregate, representing approximately 2.29 per cent. of the issued share capital of Catlin on 31 March 2015 (being the latest practicable date before the date of this Scheme Document).
Yours faithfully,
John Barton Chairman Catlin Group Limited
(In compliance with section 100 of the Companies Act 1981)
J.P. Morgan Limited Registered office: 25 Bank Street London E14 5JP Incorporated in England and Wales with registered number 248609
Evercore Partners International LLP Registered office: 15 Stanhope Gate London W1K 1LN Registered in England with registered number OC357957
2 April 2015
To Catlin Shareholders and, for information only, to holders of options or awards under the Catlin Share Schemes
Dear Catlin Shareholder,
On 9 January 2015, the Boards of Catlin and XL announced that they had agreed the terms of a recommended offer by XL for Catlin.
The Catlin Directors have been advised by J.P. Morgan Cazenove and Evercore in connection with the Offer. We have been authorised by the Catlin Directors to write to you to explain the terms of the Offer and the Scheme and to provide you with other relevant information.
Your attention is drawn to the letter from the Chairman of Catlin set out in Part One of this Scheme Document, which forms part of this explanatory statement. The letter contains, among other things, the background to and the reasons for the unanimous recommendation by the Catlin Directors that Catlin Shareholders vote in favour of the Scheme at the Court Meeting and in favour of the special resolution to be proposed at the Special General Meeting.
Your attention is drawn to XL's Irish Prospectus, which contains further information on the Enlarged XL Group and the New XL Shares. This Scheme Document should be read in conjunction with XL's Irish Prospectus, which is available on XL's website at www.xlgroup.com and on Catlin's website at www.catlin.com (in each case subject to certain access restrictions), until the Effective Date. XL's Irish Prospectus has been prepared and published by XL in accordance with applicable law and regulation in the Republic of Ireland and constitutes an approved prospectus in the United Kingdom for the purpose of section 85 of the Financial Services and Markets Act 2000.
The Scheme is set out in full in Part Four of this Scheme Document. Your attention is drawn to Part Eight of this Scheme Document which contains certain additional information and to Part Six of this Scheme Document which contains certain important information relevant to Overseas Shareholders. These form part of this explanatory statement.
If you wish to vote in favour of the Offer, please take the actions described in the section headed ''ACTIONS TO BE TAKEN'' starting on page 9 of this Scheme Document.
Under the terms of the Offer and the Scheme, which is subject to the Conditions and to the further terms set out in full in Part Three of this Scheme Document, Scheme Shareholders will receive:
On 10 February 2015, the Catlin Board declared the 2014 Final Dividend of 22 pence per Catlin Share, which was paid on 19 March 2015 to holders of Catlin Shares of record on 20 February 2015. In addition, following completion of the disposal of Catlin's investment in Box Innovation Group Limited (trading as ''insurethebox'') (''ITB'') as announced on 31 March 2015, the Catlin Board has declared the ITB Special Dividend of 11.7 pence per Catlin Share, payable on 24 April 2015 to holders of Catlin Shares of record on 10 April 2015 (the ''ITB Special Dividend'').
The Offer is to be implemented by way of a two-step, integrated process comprising a courtsanctioned scheme of arrangement under section 99 of the Companies Act, followed immediately by the merger of Catlin with and into XL Sub (such that XL Sub is the surviving company) under section 104H of the Companies Act. XL Sub is a wholly owned subsidiary of XL Group incorporated in Bermuda for the purpose of completing the Offer.
Under the terms of the Scheme, Catlin Shareholders (except certain Overseas Shareholders) are also being offered the opportunity, under the Mix and Match Facility, to elect to vary the proportions of cash consideration and New XL Shares they receive in respect of their holdings of Scheme Shares, subject to off-setting elections made by other Scheme Shareholders and so that the total cash consideration to be paid and the total number of New XL Shares to be issued by XL pursuant to the Scheme, is not varied.
Elections under the Mix and Match Facility may be made on the following basis:
| for every 388 pence in cash | 0.15635 New XL Share |
|---|---|
| OR | |
| for every 0.130 New XL Shares | 322.61 pence in cash |
The basis for making elections under the Mix and Match Facility has been determined with reference to the Closing Price per XL Share of US\$36.80 and the exchange rate of US\$1.4829:£1 on 31 March 2015 (being the latest practicable date before the date of this Scheme Document).
Elections may only be made in respect of whole numbers of Scheme Shares. Subject to that, a Scheme Shareholder may make an election in respect of part of its holding of Scheme Shares, or different Elections in respect of different parts of its holding of Scheme Shares.
Irrespective of the number of Scheme Shareholders who elect for additional cash or additional New XL Shares under the Mix and Match Facility, the total cash consideration to be paid and the total number of New XL Shares to be issued by XL pursuant to the Scheme, will not be varied. Accordingly, to the extent that elections cannot be satisfied in full because there are insufficient offsetting elections, they will be scaled down on a pro rata basis. Therefore, Scheme Shareholders who elect to receive additional cash or additional New XL Shares under the Mix and Match Facility will not know the exact amount of additional cash or number of additional New XL Shares they are entitled to receive, until settlement of the consideration under the Offer. An announcement will be made through a Regulatory Information Service after the Scheme becomes effective, concerning the extent to which elections under the Mix and Match Facility have been satisfied.
The Mix and Match Facility is not extended to Overseas Shareholders with a registered address in a Restricted Jurisdiction, or whom Catlin or XL reasonably believes to be resident or incorporated in, or a citizen of, a Restricted Jurisdiction.
Further information about the Mix and Match Facility is provided in Part Nine of this Scheme Document.
The Offer (and, accordingly, the Scheme) is subject to the Conditions and to the further terms set out in full in Part Three of this Scheme Document. The Conditions (some of which may be waived by XL) include:
All Catlin Shareholders are entitled to attend the Court Hearing in person or through representation to support or oppose the sanction of the Scheme.
The Scheme can only become effective if all Conditions to the Scheme, including the shareholder approvals and the sanction of the Court, have been satisfied and obtained (unless, where applicable, the relevant Condition is capable of being waived and is waived). The Scheme will become effective upon a copy of the court order sanctioning the Scheme being delivered to the Registrar of Companies. Once the Scheme becomes effective, it will be binding on all Scheme Shareholders, whether or not they attended or voted at the Court Meeting or Special General Meeting (and if they attended, whether or not they voted in favour).
The Scheme is set out in full in Part Four of this Scheme Document. The material provisions of the Scheme are summarised below.
The Scheme involves the reclassification of the Scheme Shares, so that each Scheme Share is reclassified into:
The A Shares, B Shares, C Shares and D Shares resulting from such reclassification will rank equally as if they were the same class of shares in all respects, save that in accordance with and subject to the provisions of the Scheme and the Bye-Laws (as amended pursuant to the Scheme):
The table below shows the possible outcomes for a Scheme Shareholder who holds one Scheme Share and, pursuant to the Mix and Match Facility, validly elects to receive all cash, all New XL Shares or does not make (or it is deemed not to have made) any valid election under the Mix and Match Facility:
| Election | Cash | New XL Shares |
|---|---|---|
| 710.61 | ||
| Cash Election | pence | — |
| Share Election | — | 0.28635 |
| No Election | 388.0 pence | 0.1300 |
The Scheme amends the Bye-Laws to set out the rights of the A Shares, B Shares, C Shares and D Shares.
Contingent and immediately following upon the reclassification of the Scheme Shares, the share capital of Catlin will be reduced by the cancellation of all the A Shares, B Shares, C Shares and D Shares. Simultaneously and contingent upon this cancellation taking effect, the resulting reserve arising in Catlin's books of account will be capitalised and applied in paying up in full and at par such number of new common shares of 1 cent each in the share capital of Catlin as have an aggregate par value equal to the aggregate par value of the cancelled A Shares, B Shares, C Shares and D Shares. Such new common shares will be allotted and issued by Catlin to XL or its nominee, credited as fully paid. As a result, Catlin will become a direct, wholly-owned subsidiary of XL.
In consideration for the cancellation of all of their A Shares, B Shares, C Shares and D Shares, and the issue of the corresponding number of new common shares to XL or its nominee, Scheme Shareholders will be entitled to receive the relevant amount of cash or number of New XL Shares set out above at sub-paragraphs (i)-(iv) of paragraph 2.4.1 above.
Fractions of New XL Shares will not be allotted and the entitlement of Scheme Shareholders will be rounded down to the nearest whole number of New XL Shares. All fractions of New XL Shares to which Scheme Shareholders would otherwise have been entitled will be aggregated, rounded down to the nearest whole number of New XL Shares, allotted and issued to a person appointed by XL, and sold in the market following the Effective Date and the net proceeds of such sale (after the deduction of all expenses and commissions, including any amounts in respect of value added tax payable thereon) will be converted to sterling and be paid by XL to the person(s) entitled thereto in due proportions, rounded down to the nearest whole penny. Fractions of a penny will not be paid and any fractional entitlement to cash will be rounded down to the nearest whole penny.
The Scheme provides that notwithstanding the reclassification of the Scheme Shares into A Shares, B Shares, C Shares and D Shares, and the subsequent cancellation and extinguishment of the A Shares, B Shares, C Shares and D Shares, Scheme Shareholders will retain any right they may have with respect to the ITB Special Dividend.
The Scheme provides that each mandate relating to the payment of dividends on any Scheme Shares, as well as any communication preferences and all other instructions given (or deemed to have been given) to Catlin by Scheme Shareholders in certificated form in force at the Scheme Record Time relating to holdings of Scheme Shares shall, unless and until revoked or amended by the Scheme Shareholder concerned and unless inconsistent with any mandates and instructions to XL in respect of existing holdings of XL Shares, be deemed from the Effective Date to be valid and effective mandates and instructions to XL in relation to the New XL Shares issued to such Scheme Shareholder in certificated form, and who receive New XL Shares through the Computershare nominee service (terms and conditions are set out in Appendix 2 of this Scheme Document).
The Scheme is governed by the laws of Bermuda and is subject to the exclusive jurisdiction of the Courts of Bermuda. The Scheme will become effective when a copy of the court order sanctioning the Scheme is delivered to the Registrar of Companies in Bermuda for registration. Unless the Scheme has become effective on or before 9 October 2015, or such later date, if any, as Catlin and XL may agree and the Court may allow, the Scheme will never become effective.
As part of the special resolution to be proposed at the Special General Meeting, it is proposed to amend Catlin's Bye-Laws to ensure that any Catlin Shares allotted under the Catlin Share Schemes or otherwise (other than to any member of the XL Group or their respective nominees) between the date of the Special General Meeting and the Scheme Record Time will be subject to the Scheme. It is also proposed to amend Catlin's Bye-Laws so that any Catlin Shares allotted to any person (other than to any member of the XL Group or their respective nominees) at or after the Scheme Record Time will be acquired by XL on the same terms as under the Scheme (but, for the avoidance of doubt, without any ability for the holder to make an election under the Mix and Match Facility). This will avoid any person being left with Catlin Shares after dealings in such shares have ceased on the London Stock Exchange (which is expected to occur at the close of business on the business day before the date of the Court Hearing).
Immediately after the Scheme becomes effective, Catlin will merge with and into XL Sub (such that XL Sub is the surviving company). The Catlin Board and the board of directors of XL have approved the merger and Catlin, XL and XL Sub have entered into the Merger Agreement. XL, as sole shareholder of XL Sub, has approved the merger and the Merger Agreement and, immediately following the Scheme becoming effective, XL, as sole shareholder of Catlin, will approve the merger and the Merger Agreement.
XL and Catlin have entered into four agreements regulating their conduct in relation to the Offer. Summaries of these agreements are set out in paragraph 13 of Part Eight of this Scheme Document. Copies of the agreements have been published on Catlin's website at www.catlin.com (in each case subject to certain access restrictions).
The following table shows, for illustrative purposes only, and on the bases and assumptions set out in the notes below, the financial effects of the Offer on capital value and income for a holder of 1,000 Catlin Shares if the Scheme becomes effective. Column (A) compares the market value of XL Shares on 16 December 2014 (being the last dealing day before the commencement of the offer period) with the market values of Catlin Shares on the same date. Column (B) compares the market value of XL Shares on 31 March 2015 (the latest practicable date before the date of this Scheme Document) with the market value of Catlin Shares on the same date. It assumes that no election is made under the Mix and Match Facility.
| (A) | (B) | |
|---|---|---|
| Increase in capital value under the Offer | ||
| Market value of 130 XL Shares(1) | £2,889 | £3,226 |
| Cash payment | £3,880 | £3,880 |
| Cash payment (2014 Final Dividend) | £220 | £220 |
| Total value of consideration in respect of 1,000 Catlin Shares | £6,989 | £7,326 |
| Less: Market value of 1,000 Catlin Shares(2) | £5,820 | £7,095 |
| Increase in capital value | £1,169 | £231 |
| Percentage difference | 20.1% | 3.3% |
| Increase in gross income under the terms of the Offer | ||
| Gross annual dividend income from 130 XL Shares(3) | £56 | £56 |
| Gross income from reinvestment of cash payment(4) | £73 | £65 |
| Total gross income under the terms of the offer for 1,000 Catlin Shares | £129 | £121 |
| Gross dividend income from 1,000 Catlin Shares(5) | £325 | £325 |
| Increase in gross income | £(196) | £(204) |
| Percentage difference | (60.3)% | (62.9)% |
Notes:
No account has been taken of any liability to taxation of a Catlin Shareholder or a XL Shareholder and no account has been taken of any fractional entitlements to XL Shares.
The Scheme requires the approval of Scheme Shareholders at the Court Meeting and the passing of the special resolution by Catlin Shareholders at the separate Special General Meeting, both of which will be held on 21 April 2015 at 5th Floor, Washington House, 16 Church Street, Hamilton HM11, Bermuda. The Court Meeting will start at 11.00 a.m. (Bermuda time) on that date and the Special General Meeting at 11.15 a.m. (Bermuda time) on that date (or as soon thereafter as the Court Meeting has concluded or been adjourned).
Notices of both the Court Meeting and the Special General Meeting are set out at the end of this Scheme Document. Entitlement to attend and vote at these meetings, and the number of votes which may be cast thereat, will be determined by reference to the register of members of Catlin at the Voting Record Time.
If the Scheme becomes effective, it will be binding on all Scheme Shareholders, whether or not they attended or voted at the Court Meeting or the Special General Meeting (and, if they voted, whether they voted for or against the Scheme and the special resolution).
Neither XL nor any member of the XL Group currently holds any interest in Catlin Shares. Any Catlin Shares in which XL or any member of the XL Group may acquire an interest prior to the Court Meeting or the Special General Meeting are not Scheme Shares and, therefore, no member of the XL Group (or their nominees) is entitled to vote at the Court Meeting in respect of the Catlin Shares held or acquired by it and will not exercise (or cause or permit to be exercised) the voting rights attaching to these Catlin Shares at the Special General Meeting. Any such member of the XL Group which acquires Catlin Shares will undertake to be bound by the Scheme.
The Court Meeting has been convened for 11.00 a.m. (Bermuda time) on 21 April 2015 to enable the Scheme Shareholders who are registered as members of Catlin at the Voting Record Time to consider and, if thought fit, approve the Scheme. At the Court Meeting, voting will be by poll and each member present in person or by proxy will be entitled to one vote for each Scheme Share held at the Voting Record Time. The approval required at the Court Meeting is a majority in number representing not less than three-fourths of the voting rights of the holders of the Scheme Shares present and voting at the Court Meeting (either in person or by proxy).
As at 31 March 2015 (being the latest practicable date before the date of this Scheme Document), the Depositary is the registered holder of 364,027,736 Common Shares constituting 98.89 per cent. of Catlin's issued share capital. The Depositary will vote the Catlin Shares held by it, both at the Court Meeting and the Special General Meeting, solely in accordance with the instructions received by it from registered holders of depositary interests representing Catlin Shares. Provided that a request for appointment is received in sufficient time, the Depositary will also permit registered holders of depositary interests to attend and vote at the Court Meeting and Special General Meeting, by appointing such registered holders of Depositary Interests as its corporate representative in relation to the relevant underlying Catlin Shares. In determining whether the Scheme has been approved by a majority in number of the Scheme Shareholders present and voting at the Court Meeting in person or by proxy, it is expected that the Court will count votes cast for and against the Scheme by the same Scheme Shareholder (including the Depositary in its capacity as Scheme Shareholder) but in respect of different Scheme Shares comprised in its holding, as if they had been cast by separate Scheme Shareholders (that is, one vote for and one vote against the Scheme). The Chairman of the Court Meeting will also report to the Court the number of the holders of Depositary Interests instructing votes to be cast for and against the Scheme.
It is important that, for the Court Meeting, as many votes as possible are cast so that the Court may be satisfied that there is a fair representation of the opinion of Scheme Shareholders. You are therefore strongly urged to complete, sign and return your Forms of Proxy (if you hold Catlin Shares in certificated form) or Forms of Direction (if you hold Catlin Shares in uncertificated form), as soon as possible. Alternatively, holders of Catlin Shares in uncertificated form may submit voting instructions electronically through CREST.
The Special General Meeting has been convened for 11.15 a.m. (Bermuda time) on 21 April 2015 (or as soon thereafter as the Court Meeting has concluded or been adjourned) to consider and, if thought fit, pass a special resolution to:
At the Special General Meeting, voting will be by way of a poll and each member present in person or by proxy will be entitled to one vote for each Catlin Share held at the Voting Record Time. To be passed, the special resolution requires a vote in favour by not less than three-quarters of the votes cast in person or by proxy at the Special General Meeting.
The names of the Catlin Directors and details of their interests in Catlin Shares and XL Shares are set out in Part Eight of this Scheme Document.
In common with the other participants in the Catlin Share Schemes, and as described in paragraph 13 of Part One of this Scheme Document, the Catlin Directors will be able to exercise their options and receive shares under their awards.
The Catlin Directors may be subject to certain restrictions under US federal securities laws on the resale of New XL Shares received pursuant to the Scheme by reason of their being ''affiliates'' of Catlin.
On the Effective Date, Stephen Catlin will join the board of directors of XL as Executive Deputy Chairman. An additional Catlin director who meets applicable independence qualifications and other criteria is also expected to join the board of directors of XL.
Save as set out above, the effect of the Scheme on the interests of the Catlin Directors does not differ from its effect on the like interests of any other Catlin Shareholder.
The last day of dealings in, and registration of transfers of, Catlin Shares will be the business day immediately prior to the date of the Court Hearing, following which Catlin Shares will be suspended from the Official List and from the London Stock Exchange's main market for listed securities.
Prior to the Effective Date, it is intended that applications will be made to the London Stock Exchange for Catlin Shares to cease to be admitted to trading on its main market for listed securities, and to the UKLA for the listing of Catlin Shares on the Official List to be cancelled. It is expected that the cancellation of admission and listing of the Catlin Shares will take effect from 8.00 a.m. (London time) on the business day following the Effective Date.
On the Effective Date, share certificates in respect of Scheme Shares held in certificated form will cease to be valid documents of title and should be destroyed or, at the request of Catlin, delivered up to Catlin, or to any person appointed by Catlin to receive the same.
The New XL Shares to be issued pursuant to the Scheme will be issued credited as fully paid. The New XL Shares will rank pari passu in all respects with the existing XL Shares in issue on the Effective Date, save that they will not participate in any dividend payable by XL with reference to a record date prior to the Effective Date.
Applications will be made for all the New XL Shares to be admitted to trading on the New York Stock Exchange and the Bermuda Stock Exchange. It is expected that, subject to the Scheme becoming effective, the listing of the New XL Shares will become effective and that dealings will commence at 8.00 a.m. (New York time) on the business day (in New York) following the Effective Date. The New XL Shares will not be admitted to the Official List in the United Kingdom or to trading on any stock exchange in the United Kingdom or any other stock exchange save as stated.
Subject to the Scheme becoming effective (and except as provided in Part Six of this Scheme Document in relation to certain Overseas Shareholders), settlement of the consideration to which any Scheme Shareholder is entitled under the Scheme will be effected in the following manner:
In respect of each holding of Scheme Shares in certificated form, cheques in respect of cash entitlements (including in respect of the net proceeds of the sale of any fractional entitlements to New XL Shares) will be dispatched by or on behalf of XL to registered holders as at the Scheme Record Time within 14 days of the Effective Date. Such cheques will be payable in sterling only, drawn in a UK clearing bank, and dispatched at the holder's risk.
As the New XL Shares will have a listing on the New York Stock Exchange and the Bermuda Stock Exchange, holders of Scheme Shares in certificated form may find that holding and trading the New XL Shares directly involves a US market practices and formalities that may be unfamiliar to such holders. In addition, dealing with a transfer agent (the equivalent of a registrar in Ireland and the UK) in a different jurisdiction and time zone may also prove inconvenient in certain circumstances. In light of the foregoing, XL will arrange for a nominee of Computershare Investor Services PLC (''Computershare'') to act in the United Kingdom as nominee and trustee for such holders.
Under the nominee arrangement, depositary interests representing the New XL Shares to which a holder of Scheme Shares in certificated form becomes entitled under the Scheme will be credited to an account of a nominee of Computershare, as nominee and trustee for and on behalf of such holders. The holder will receive a statement of entitlement from Computershare detailing their holding of New XL Shares and explaining how they may deal in their New XL Shares through this nominee arrangement. This nominee arrangement will benefit holders of Scheme Shares in certificated form by eliminating the risk that share certificates in respect of their New XL Shares are lost, stolen, damaged or destroyed, and by facilitating dealings in New XL Shares. Holders of Scheme Shares in certificated form may, however, opt out of this nominee arrangement. Information about the terms and conditions of this nominee arrangement are set out in Appendix 2 of this Scheme Document, and will be available on XL's website www.xlgroup.com (subject to certain access restrictions), at least until the Effective Date.
The nominee arrangement described above will not apply to holders of Scheme Shares in certificated form that have validly opted out, or that are ineligible to participate because they are resident in a jurisdiction in which Computershare cannot lawfully offer or operate (or does not have the requisite permit or licence to offer or operate), such nominee arrangement, or for any other reason. The New XL Shares to which such holders become entitled will be allotted and issued to them directly through the Direct Registration System or directly by XL. The holder will receive a statement of entitlement from XL's transfer agent, detailing their holding of New XL Shares and explaining how they may deal in their New XL Shares through the Direct Registration System or, as the case may be, through the XL statutory share register. Note that to the extent New XL Shares are held in the Direct Registration System, then by virtue of the terms of the Offer, upon any future transfer of such XL Shares, the transferor of such shares shall be deemed to have irrevocably appointed the Secretary or Assistant Secretary of XL (or any duly authorised delegate or attorney of the Secretary or Assistant Secretary) as its agent to execute, complete and deliver an instrument of transfer in the name of and on behalf of such transferor. Your attention is also drawn to the description of Irish stamp duty for shares held outside of DTC in Section 4.1.2 of Part Seven of this Scheme Document. New XL Shares held through the Direct Registration System are shares held outside of DTC.
The terms and conditions applicable to the nominee arrangement described above are set out in Appendix 2 to this Scheme Document. Holders of Scheme Shares in certificated form who wish to opt out of the nominee arrangement should contact Computershare on +44 (0) 870 703 0008 (Monday to Friday, 9.00 a.m. to 5.00 p.m., London time, excluding UK public holidays).
In respect of each holding of depositary interests representing Scheme Shares, cash entitlements (including in respect of the net proceeds of the sale of any fractional entitlements to New XL Shares) will be credited to the CREST accounts of the registered holders of such Depositary Interests as at the Scheme Record Time, within 14 days of the Effective Date. Depositary interests representing the New XL Shares to which such holders are entitled will be credited to the CREST accounts of the holders of such Depositary Interests on the dealing day following the Effective Date and in any event within 14 days of the Effective Date.
Your attention is drawn to Part Seven of this Scheme Document, which sets out certain matters relating to the taxation treatment of Scheme Shareholders in respect of the Scheme in Bermuda, the UK, the US and the Republic of Ireland. Although this Scheme Document contains certain taxrelated information, if you are in any doubt about your own tax position or you are subject to taxation in any jurisdiction other than Bermuda, the UK, the US or the Republic of Ireland, you should consult an appropriately qualified independent professional adviser immediately.
The proposals being made to the holders of options and awards under the Catlin Share Schemes are summarised in paragraph 13 of Part One of this Scheme Document.
Overseas Shareholders should refer to Part Six of this Scheme Document, which contains important information relevant to such holders.
The actions to be taken by Catlin Shareholders in order to vote on the Offer and to make elections under the Mix and Match Facility are set out in the section headed ''ACTIONS TO BE TAKEN'' starting on page 9 of this Scheme Document.
The terms of the Scheme are set out in full in Part Four of this Scheme Document. Further information regarding Catlin and XL is set out in Part Eight of this Scheme Document and in XL's Irish Prospectus which is available on XL's website at www.xlgroup.com and on Catlin's website at www.catlin.com (in each case subject to certain access restrictions), until the Effective Date. Documents available for inspection are listed in paragraph 22 of Part Eight of this Scheme Document.
Yours faithfully, for and on behalf of
Conor Hillery Managing Director
J.P. Morgan Limited Evercore International Partners LLP Andrew Sibbald Managing Director
The Scheme is subject to the satisfaction (or, where applicable, waiver in accordance with Part B below) of the following Conditions:
(A) The Offer and the Scheme are conditional upon:
provided that, Condition A(i), Condition A(ii) and Condition A(iii) may not be invoked or waived after the latest date specified in each such Condition.
In addition, the Offer and the Scheme are conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme effective will not be taken unless the following Conditions have been satisfied or, where relevant, waived in accordance with Part B below:
(C) the PRA having given notice in writing under section 189(4)(a) of the FSMA (or a decision notice under section 189(7) of the FSMA) (in terms which do not impose any conditions, obligations or restrictions on the Enlarged XL Group which are material in the context of the Wider Catlin Group or the Wider XL Group, as the case may be, or in the context of the Offer, whether under the existing insurance regulatory regime in the UK or under the Solvency II regime, including in each case in respect of regulatory capital) of its approval (or being treated as having given its approval by virtue of section 189(6) of the FSMA) in respect of any offer of or increase in control (as defined in sections 181 and 182 of the FSMA) over any member of the Wider Catlin Group which is a PRA authorised person, which in either case would take place as a result of the Offer;
(D) Lloyd's having given its consent in writing under paragraph 12 of the Lloyd's Membership Byelaw or paragraph 43 of the Lloyd's Underwriting Byelaw (as the case may be), (in terms which do not impose any conditions, obligations or restrictions on the Enlarged XL Group which are material in the context of the Wider Catlin Group or the Wider XL Group, as the case may be, or in the context of the Offer), in respect of any change in the controller of any member of the Wider Catlin Group which is a corporate member or a managing agent of Lloyd's which would take place as a result of the Offer;
(E) (i) the Insurance Division of the Bermuda Monetary Authority having confirmed in writing that it has no objection in accordance with the Bermuda Insurance Act (A) to any change in the shareholder controller of any member of the Catlin Group, which is a registered person under the Bermuda Insurance Act, or (B) to any change to any member of the Catlin Group, which is a registered person under the Bermuda Insurance Act, each as result of the Offer, (ii) the Investment Division of the Bermuda Monetary Authority confirming in writing that it has no objection in accordance with the Bermuda Investment Business Act 2003 to any change in the majority shareholder controller of any member of the Catlin Group which is an investment provider licensed under the Bermuda Investment Business Act 2003, and (iii) the Exchange Control Division of the Bermuda Monetary Authority confirming in writing that it has no objection in accordance with the Exchange Control Act 1972 of Bermuda to any issue or transfer of shares in the surviving company in connection with the Offer, provided that the terms of any such non-objection shall not impose any conditions, obligations or restrictions on the Enlarged XL Group which are material in the context of the Wider Catlin Group or the Wider XL Group, as the case may be, or in the context of the Offer;
(F) FINMA not having initiated any examination within four weeks following the notification of the change in the qualified participant of Catlin Re Switzerland Ltd. arising from the Offer, or in the event FINMA does initiate such examination, FINMA having then approved the Offer, provided that the terms of such an approval shall not impose any conditions, obligations or restrictions on the Enlarged XL Group which are material in the context of the Wider Catlin Group or the Wider XL Group, as the case may be, or in the context of the Offer;
(K) each regulatory or governmental authority (other than any anti-trust authority) which regulates or licenses any member of the Wider Catlin Group or any other body corporate in which any member of the Wider Catlin Group has an interest in shares, and whose prior approval, consent or non-objection to any change in control or offer of or increase in control in respect of that or any other member of the Wider Catlin Group is required, or any regulatory or governmental authority whose prior approval, consent or non-objection to the Offer is otherwise required, or from whom one or more licences or permissions are required in order to complete the Offer, having given its approval, non-objection or consent in writing thereto and, as the case may be, having granted such licences and permissions (in each case where required and in terms which do not impose any conditions, obligations or restrictions on the Enlarged XL Group which are material in the context of the Wider Catlin Group or the Wider XL Group, as the case may be, or in the context of the Offer);
(M) all necessary notifications and filings having been made and all applicable waiting periods (including any extensions thereof) under the US Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended) and the rules and regulations made thereunder having expired or been terminated in each case in respect of the Offer and the offer or the proposed offer of any shares or other securities in, or control of, Catlin by any member of the Wider XL Group;
(N) all necessary notifications and filings having been made and all clearance decisions having been received or waiting periods (including any extensions thereof) under the applicable Turkish antitrust laws having expired or been terminated in each case in respect of the Offer and the offer or the proposed offer of any shares or other securities in, or control of, Catlin by any member of the Wider XL Group;
(P) no anti-trust regulator or other Third Party, in each case in any jurisdiction where XL and Catlin (in both cases acting reasonably) agree that an anti-trust filing should be made (including the following jurisdictions in which XL and Catlin have so agreed: EU, the US and Turkey), having decided, threatened or given notice of its decision to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or withdrawal of a clearance decision, or having required any action or step to be taken or otherwise having done anything or having enacted, made or proposed any statute, regulation, decision, order or change to published practice (and in each case, not having withdrawn the same), and there not continuing to be outstanding any statute, regulation, decision or order which would or might be expected to (in any case to an extent or in a manner which is material in the context of the Wider Catlin Group or the Wider XL Group, as the case may be, or in the context of the Offer):
(i) make the Offer, its implementation or the offer or proposed offer of any shares or other securities in, or control or management of, any member of the Wider Catlin Group by any member of the Wider XL Group, void, illegal and/or unenforceable under the laws of any relevant jurisdiction, or otherwise directly or indirectly prevent, prohibit, or restrain, restrict, delay or otherwise interfere with the implementation of, or impose additional conditions or obligations with respect to, or otherwise impede, challenge, interfere, hinder the Offer or its implementation or require amendment to the terms of the Offer or the offer or proposed offer of any shares or other securities in, or control or management of, any member of the Wider Catlin Group by any member of the Wider XL Group, or otherwise challenge or interfere therewith;
Group, as the case may be, or in the context of the Offer, whether under the existing insurance regulatory regime, including in respect of regulatory capital, or under the Solvency II regime; or
(xi) otherwise materially adversely affect all or any of the business, assets, liabilities, profits, financial or trading position, operational performance or prospects of any member of the Wider Catlin Group or any member of the Wider XL Group;
and all applicable waiting and other time periods (including any extensions thereof) during which any such anti-trust regulator or other Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or withdrawal of a clearance decision or take any other step under the laws of any jurisdiction in respect of the Offer or the offer or proposed offer of any Catlin Shares or other securities in, or control or management of, Catlin or otherwise intervene having expired, lapsed or been terminated;
(S) all notifications, filings or applications, other than any anti-trust notifications, filings or applications, which are necessary or are reasonably considered appropriate or desirable by XL having been made in connection with the Offer and all necessary waiting and other time periods (including any extensions thereof) under any applicable legislation or regulations of any relevant jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory and regulatory obligations in any jurisdiction having been complied with in each case in respect of the Offer and all Authorisations which are necessary or reasonably considered appropriate by XL in any relevant jurisdiction for or in respect of the Offer or the offer or the proposed offer of any shares or other securities in, or control or management of, Catlin or any other member of the Wider Catlin Group by any member of the Wider XL Group having been obtained in terms and in a form reasonably satisfactory to XL from all relevant Third Parties or (without prejudice to the generality of the foregoing) from any persons or bodies with whom any member of the Wider Catlin Group or the Wider XL Group has entered into contractual arrangements and all such Authorisations necessary, appropriate or desirable to carry on the business of any member of the Wider Catlin Group in any jurisdiction having been obtained and all such Authorisations remaining in full force and effect at the time at which the Offer becomes effective and there being no notice or intimation of any intention to revoke, suspend, restrict, impede, modify or not to renew such Authorisations in each such case to an extent or in a manner which is material in the context of the Wider Catlin Group or the Wider XL Group, as the case may be, or in the context of the Offer;
(U) no resolution of Catlin Shareholders in relation to any offer or disposal of assets or shares (or the equivalent thereof) in any undertaking or undertakings (or in relation to any merger, consolidation, demerger, reconstruction, amalgamation or scheme) being passed at a meeting of Catlin Shareholders other than in relation to the implementation of the Offer and Catlin not having taken any action that requires or would require approval of Catlin Shareholders in general meeting pursuant to Rule 21.1 of the Code if the Code applied to Catlin and the Offer;
(vii) any liability of any such member to make any severance, termination, bonus or other payment to any of its directors or other officers;
(viii) any requirement on any such member to acquire, subscribe, pay up or repay any shares or other securities;
and no event having occurred which, under any provision of any agreement, arrangement, lease, licence, franchise, permit or other instrument to which any member of the Wider Catlin Group is a party or by or to which any such member or any of its assets are or may be bound, entitled or subject, would or might be expected to result in any of the events or circumstances as are referred to in sub-paragraphs (i) to (x) of this Condition;
indebtedness in an amount in the aggregate exceeding US\$10,000,000 or become, or agreed to become, subject to any liability (actual or contingent) to an extent which is material in the context of the Wider Catlin Group or in the context of the Offer;
(d) the basis upon which the liabilities (including pensions) of such pension schemes are funded, valued or made, or agreed or consented to; or
(e) the trustees involving the appointment of a trust corporation, in a manner which, in any such case, is material in the context of the Wider Catlin Group or in the context of the Offer;
XL reserves the right (but shall be under no obligation, except as provided in the Implementation Agreement) to waive, in whole or in part, all or any of the Conditions (except the Conditions set out in paragraphs (B)(i)-(iv) and (Q) of Part A above of this Part Three, in each case, which are not waivable). Except as provided in the Implementation Agreement, XL shall be under no obligation to waive or treat as fulfilled any of the Conditions which are capable of being waived by a date earlier than the date specified in the Condition set out in paragraph (A)(i) of Part A above of this Part Three for the fulfilment thereof, notwithstanding that other Conditions may at any earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.
Pursuant to the Implementation Agreement, XL and Catlin have agreed that Rule 13 of the Code will govern the circumstances in which XL can invoke any Condition so as to cause the Offer to lapse. Under Rule 13.5 of the Code, XL may not invoke a Condition so as to cause the Offer not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the condition are of material significance to XL in the context of the Offer. The Conditions set out in paragraphs (A), (B)(i) to (iii) and (L) of Part A above of this Part Three, in each case, are not subject to this provision of the Code. In addition, pursuant to the Code Application Letter, XL and Catlin have agreed that for the purpose of Rule 13.5(a) of the Code, it would be of material significance to XL in the context of the Offer, if any of the Conditions set out in paragraphs (C) (PRA approval), (D) (Lloyd's approval), (E) (Bermuda Monetary Authority approval), (F) (FINMA approval), (G) (Delaware Department of Insurance approval), (H) (Texas Department of Insurance approval), (I) (New York Department of Financial Services approval) (if applicable) or (M) (US Hart-Scott-Rodino clearance), in each case, is not satisfied.
In the event that the Offer is implemented by way of a Takeover Offer, Catlin Shares which will be acquired under the Offer will be acquired fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights now or hereafter attaching or accruing to them, including voting rights and the right to receive and retain in full all dividends and other distributions (if any), and any other return of capital (whether by way of reduction of share capital or share premium account or otherwise), declared, made or paid on or after the date of this Scheme Document except for the ITB Special Dividend.
XL may (in accordance with and subject to the terms of the Implementation Agreement) implement the Offer by making, directly or indirectly through XL Sub, a Takeover Offer as an alternative to the Scheme.
In such event, the Takeover Offer will be implemented on the same terms (subject to appropriate amendments), so far as applicable, as those which would apply to the Scheme. In particular, the Conditions set out in paragraphs (A) and (B) of Part A above of this Part Three, in each case, would not apply and, instead, the Takeover Offer would be subject to the following further Conditions:
For the purposes of the Conditions referred to in (i) and (ii) of this Part C:
The Offer will lapse if the United Kingdom Competition and Markets Authority launches an indepth Phase 2 investigation before the Court Meeting and the Special General Meeting. The Offer will lapse if the European Commission initiates proceedings under Article 6(1)(c) of Council Regulation (EC) No 139/2004 in respect of the Offer (or any matter arising from it) before the Court Meeting. If either of such events occurs, the Offer will not become effective and none of XL, Catlin or Catlin Shareholders will be bound by any term of the Offer.
The availability of the Offer to Catlin Shareholders who are not resident in the United Kingdom, the US, the Republic of Ireland or Bermuda may be affected by the laws of relevant jurisdictions. Therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom, the US, the Republic of Ireland and Bermuda and any Catlin Shareholders who are not resident in the United Kingdom, the US, the Republic of Ireland or Bermuda will need to inform themselves about, and observe, any applicable requirements.
If a Form of Election has been returned to Capita or if a TTE Instruction was made through CREST and the Catlin Shareholder subsequently wishes to withdraw or amend that Mix and Match election, any such withdrawal or amendment will be conditional on Capita verifying that the withdrawal request is validly made. Accordingly, Capita will, on behalf of Catlin and XL, accept or reject the withdrawal or amendment.
If any Form of Election or TTE Instruction in respect of an election under the Mix and Match Facility is either received after the Scheme Record Time (or such other time (if any) to which the right to make an election under the Mix and Match Facility may be amended) or is received before such time and date but is not valid or complete in all respects at such time or date, such election shall, for all purposes, be void (unless Catlin and XL, in their absolute discretion, elect to treat as valid, in whole or in part, any such Form of Election or TTE Instruction).
The New XL Shares will be issued credited as fully paid and will rank pari passu in all respects with the existing XL Shares, save that they will not participate in any dividend payable by XL with reference to a record date prior to the Effective Date.
SCHEME OF ARRANGEMENT (under section 99 of the Companies Act 1981)
between
(an exempted company incorporated with limited liability and registered under the laws of Bermuda with registration number 26680)
1.1 In this Scheme, unless inconsistent with the subject or context, the following expressions have the following meanings and terms defined in Part Ten of this Scheme Document shall apply throughout:
| ''B Shares'' Catlin; ''business day'' which banks are generally open for normal business in London, United Kingdom, and Hamilton, Bermuda; ''Bye-Laws'' pursuant to this Clause 4 of this Scheme); class C shares of par value of 1 ''C Shares'' /2 Catlin; ''Cash Election'' has the meaning given in Clause 5.3(C); ''Catlin'' Catlin Group Limited, an exempted company incorporated with limited liability and registered under the laws of Bermuda with registration number 26680; ''Code Committee'' the committee established pursuant to Clause 2 of Implementation Agreement; ''Code Expert'' the expert appointed pursuant to Clause 2 of the Implementation Agreement; ''Common Shares'' Catlin; ''Companies Act'' the Companies Act 1981, as amended; ''Computershare'' clause 11.2; ''Court'' the Supreme Court of Bermuda; |
''A Shares'' | class A shares of par value of 1 cent each in the share capital of Catlin; |
|---|---|---|
| class B shares of par value of 1 cent each in the share capital of | ||
| a day (other than a Saturday, Sunday, public or bank holiday) on | ||
| the bye-laws of Company, as amended from time to time (including | ||
| of a cent each in the share capital of | ||
| the | ||
| common shares of par value of 1 cent each in the share capital of | ||
| Computershare Investor Services PLC (or one of its affiliates), as nominee and trustee in respect of the arrangement referred to in |
||
| ''Court Meeting'' | the meeting of Scheme Shareholders (and any adjournment thereof) convened pursuant to an order of the Court pursuant to section 99 of the Companies Act to consider and, if thought fit, approve (with or without modification) this Scheme; |
|---|---|
| ''CREST'' | the system for the paperless settlement of trades in securities and the holding of uncertificated securities operated by Euroclear UK & Ireland Limited in accordance with the Regulations; |
| ''D Shares'' | class D ordinary shares of par value of 1 /2 of a cent each in the share capital of Catlin; |
| ''Direct Registration System'' | the system for the direct registration of ownership of uncertificated securities administered by The Depository Trust Company, a wholly-owned subsidiary of The Depository Trust and Clearing Corporation; |
| ''Effective Date'' | the date on which an office copy of the Order of the Court sanctioning this Scheme and making such facilitating orders as appropriate pursuant to section 99 of the Companies Act shall have been delivered to the Registrar for registration, at which time this Scheme shall become effective; |
| ''Election'' | an election by a Scheme Shareholder under the Mix and Match Facility; |
| ''Election Return Time'' | the time and date by which elections (including changes of election) under the Mix and Match Facility must be returned with Catlin's registrar and receiving agent, Capita Asset Services (a trading name of Capita Registrars Limited), in order to be valid, which is currently expected to be 1.00 p.m. (London time) on 28 April 2015, or such later time and date as Catlin may determine and announce through a Regulatory Information Service; |
| ''Excluded Shares'' | any Common Shares that are, as at the Scheme Record Time, either: |
| (i) registered in the name of, or beneficially owned by any member of the XL Group; or |
|
| (ii) held as treasury shares; |
|
| ''Form of Election'' | the form of election relating to the Mix and Match Facility sent to Scheme Shareholders (other than Overseas Shareholders with a registered address in a Restricted Jurisdiction, or whom Catlin or XL reasonably believes to be resident or incorporated in, or a citizen of, a Restricted Jurisdiction); |
| ''Implementation Agreement'' | the implementation agreement entered into by XL, Catlin and Green Holdings Limited (a wholly owned subsidiary of XL) on 9 January 2015; |
| ''Mix and Match Facility'' | the facility provided for pursuant to Clause 5 of this Scheme under which a Scheme Shareholder (other than an Overseas Shareholder with a registered address in a Restricted Jurisdiction, or whom Catlin or XL reasonably believes to be resident or incorporated in, or a citizen of, a Restricted Jurisdiction) may elect, subject to off setting elections by other Scheme Shareholders, to receive all cash or all New XL Shares in respect of some or all of that Scheme Shareholder's Scheme Shares; |
| ''New Common Shares'' | has the meaning given in Clause 6.2; |
| ''New XL Shares'' | the new XL Shares to be issued to the holders of B Shares and D Shares pursuant to this Scheme; |
| ''Overseas Shareholder'' | a holder of Scheme Shares with a registered address (as appearing in Catlin's register of members) in a jurisdiction outside Bermuda, the Republic of Ireland, the United Kingdom or the United States |
| of America, or whom Catlin or XL reasonably believes to be resident or incorporated in, or a citizen of, a jurisdiction outside Bermuda, the Republic of Ireland, the United Kingdom or the United States of America; |
|
|---|---|
| ''Reduction of Capital'' | has the meaning given in Clause 6.1; |
| ''Registrar'' | the Registrar of Companies of Bermuda; |
| ''Regulations'' | the Uncertificated Securities Regulations 2001 (SI 2001/3755), as amended; |
| ''Regulatory Information Service'' | a regulated information service that is approved by the United Kingdom Financial Conduct Authority as meeting the criteria for regulated information services and that is on the list of regulated information services maintained by the United Kingdom Financial Conduct Authority; |
| ''Scheme'' | this scheme of arrangement in its present form or with or subject to any modification, addition or condition approved or imposed by the Court; |
| ''Scheme Document'' | the document dated 2 April 2015 sent by Catlin to the holders of Scheme Shares, of which the Scheme forms part; |
| ''Scheme Record Time'' | 6.00 p.m. (London time) on 30 April 2015 or such later time and date as Catlin may determine and announce through a Regulatory Information Service; |
| ''Scheme Shareholders'' | registered holders of Scheme Shares (including any person entitled thereto by transmission); |
| ''Scheme Shares'' | the Common Shares: |
| (i) in issue at the date of this Scheme; |
|
| (ii) (if any) issued after the date of this Scheme and before the Voting Record Time; and |
|
| (iii) (if any) issued at or after the Voting Record Time and before the Scheme Record Time in respect of which the original or any subsequent holder thereof shall be bound by this Scheme or shall by such time have agreed in writing to be bound by this Scheme, |
|
| and (in each case) remaining in issue at the Scheme Record Time but excluding any and all Excluded Shares, and including the A Shares, B Shares, C Shares and D Shares resulting from the reclassification (or subdivision and reclassification) of such Common Shares); |
|
| ''Share Election'' | has the meaning given in Clause 5.3(C); |
| ''Voting Record Time'' | 6.00 p.m. (London time) on 17 April 2015 (or, if the Court Meeting is adjourned, 6.00 p.m. (London time) on the day that is two business days before the day of such adjourned meeting); |
| ''XL'' | XL Group plc, incorporated in the Republic of Ireland with registered number 482042; |
| ''XL Group'' | XL and its subsidiary undertakings and associated undertakings from time to time (each within the meaning of the European Communities (Companies: Group Accounts) Regulations 1992 (SI No. 201/1992) of the Republic of Ireland); and |
| ''XL Shares'' | ordinary shares of 1 cent each in the share capital of XL (ISIN: BMG196F11004). |
1.2 References to clauses are to clauses of this Scheme. References to cents are to United States cents. References to pence or pennies are to United Kingdom pence or pennies.
The purpose of this Scheme is to effect: (i) the reclassification of the Scheme Shares into A Shares, B Shares, C Shares and D Shares, in accordance with elections made by Scheme Shareholders under the Mix and Match Facility; (ii) the cancellation and extinguishing of all of the A Shares, B Shares, C Shares and D Shares; (iii) the issue and allotment of New Common Shares to XL (or its nominee); and (iv) certain related matters.
(e) common shares of 1 cent each (''Common Shares'').
60.2 The A Shares, B Shares, C Shares, D Shares and Common Shares shall rank equally as if they were the same class of shares in all respects and the rights attaching to such shares shall be identical, save that upon the scheme of arrangement dated 2 April 2015 between the Company and the Scheme Shareholders (as defined in such scheme of arrangement) (in its original form or with or subject to any modification, addition or condition approved or imposed by the Court and agreed by XL Group plc (''XL'') and the Company) (the ''Scheme'') becoming effective:
5.5 (A) To the extent that Share Elections cannot be satisfied in full having regard to the number of offsetting Cash Elections, the aggregate number of Scheme Shares in respect of which Share Elections have been made shall be scaled down (as between the relevant Scheme Shareholders, pro rata to the number of Scheme Shares in respect of which they have made Share Elections) until such Share Elections are capable of being satisfied, having regard to the number of offsetting Cash Elections.
(B) To the extent that Cash Elections cannot be satisfied in full having regard to the number of offsetting Share Elections, the aggregate number of Scheme Shares in respect of which Cash Elections have been made shall be scaled down (as between the relevant Scheme Shareholders, pro rata to the number of Scheme Shares in respect of which they have made Cash Elections) until such Cash Elections are capable of being satisfied, having regard to the number of offsetting Share Elections.
(A) equal to or greater than the aggregate number of Scheme Shares to which such Election(s) relate(s), then the validity of the Election(s) made by the Scheme Shareholder shall not be affected by any alteration in the number of Scheme Shares held by the Scheme Shareholder at any time before the Scheme Record Time; or
(B) less than the aggregate number of Scheme Shares to which such Election(s) relate, then:
the amount required to be deducted or withheld; and, second, in respect of the balance of the net proceeds of such sale (if any), to the Scheme Shareholder by sending a cheque or creating a CREST assured payment obligation in accordance with the provisions of Clause 10. In the absence of bad faith or wilful default, none of Catlin, XL or the nominee shall have any liability for any loss or damage arising as a result of the timing or terms of such sale.
Notwithstanding the reclassification (or subdivision and reclassification) of the Scheme Shares into A Shares, B Shares, C Shares and D Shares, and the subsequent cancellation and extinguishment of the A Shares, B Shares, C Shares and D Shares, Scheme Shareholders shall retain any right they may have with respect to any dividend or other distribution declared by Catlin in favour of the holders of the Common Shares with reference to a record date on or before the Effective Date.
From the Effective Date, all certificates representing Scheme Shares shall cease to have effect as documents of title to the Scheme Shares comprised therein and every holder of Scheme Shares shall be bound, at the request of Catlin, to deliver up the same to Catlin, or, as Catlin may direct, to destroy the same.
(ii) are ineligible to participate in the nominee arrangement referred to below because they are resident in a jurisdiction in which Computershare cannot lawfully offer or operate (or does not have the requisite permit or licence to offer or operate), such nominee arrangement, or for any other reason,
depositary interests representing such New XL Shares shall be credited to an account of Computershare as nominee and trustee for and on behalf of such holders (on the terms and subject to the conditions set out in Appendix 2 of the Scheme Document) and a statement of entitlement in respect of their holding of such depositary interests representing New XL Shares shall be dispatched by Computershare to such holders as soon as practicable and in any event within 14 days after the Effective Date; or
the deduction of all expenses and commissions, including any amounts in respect of value added tax payable thereon) shall be paid to such Overseas Shareholder by sending a cheque or creating an assured payment obligation in accordance with the provisions of Clause 10. To give effect to any such sale, the person so appointed shall be authorised on behalf of such overseas shareholder to execute and deliver a form of transfer and to give such instructions and to do all other things that it or he may consider necessary or expedient in connection with such sale. In the absence of bad faith or wilful default, none of Catlin, XL or the person so appointed shall have any liability for any loss or damage arising as a result of the timing or terms of such sale.
Each mandate relating to the payment of dividends on any Scheme Shares, as well as any communication preferences and all other instructions given (or deemed to have been given) to Catlin by holders of Scheme Shares in certificated form in force at the Scheme Record Time relating to such holdings of Scheme Shares shall, unless and until revoked or amended by the Scheme Shareholder concerned and unless inconsistent with any mandates and instructions to XL in respect of existing holdings of XL Shares, be deemed from the Effective Date to be valid and effective mandates and instructions to XL in relation to the New XL Shares issued to such Scheme Shareholder in respect of such holding of Scheme Shares in certificated form, and who receive New XL Shares through the nominee service referred to in Clause 11.2(A).
15.1 At and with effect from the Effective Date, the operative terms of this Scheme shall be governed by, and construed in accordance with, the laws of Bermuda and Catlin, Scheme Shareholders and XL hereby agree that the Courts of Bermuda shall have jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute which arises out of or in connection with the terms of this Scheme or their implementation or out of any action taken or omitted to be taken under this Scheme or in connection with the administration of this Scheme and for such purposes, the Scheme Shareholders and XL irrevocably submit to the jurisdiction of the Courts of Bermuda, provided, however, that nothing in this clause shall affect the validity of other provisions determining governing law and jurisdiction as between Catlin and the Scheme Shareholders, whether contained in any contract or otherwise.
15.2 The terms of this Scheme and the obligations imposed on Catlin hereunder shall take effect subject to any prohibition or condition imposed by any applicable law.
Dated 2 April 2015
The following information is incorporated by reference into this Scheme Document and is available on Catlin's website at www.catlin.com. A Catlin Shareholder may request a copy of such information in hard copy form. Hard copies may be requested by contacting the Catlin Group Limited Shareholder Helpline on 0333 300 1573 from within the UK or on + 44 333 300 1573 if calling from outside the UK.
| Information incorporated by reference into this Scheme Document |
Reference document | Page number in reference document |
|---|---|---|
| For the year ended 31 December 2014(1) | ||
| Independent Auditor's report | Catlin's Annual Report 2014 | 87 |
| Consolidated balance sheets | Catlin's Annual Report 2014 | 88 |
| Consolidated income statements | Catlin's Annual Report 2014 | 89 |
| Consolidated statements of comprehensive income Consolidated statements of changes in stockholders' |
Catlin's Annual Report 2014 | 90 |
| equity | Catlin's Annual Report 2014 | 91 |
| Consolidated statements of cash flows | Catlin's Annual Report 2014 | 92 |
| Notes to the consolidated financial statements For the year ended 31 December 2013(2) |
Catlin's Annual Report 2014 | 93 |
| Independent Auditor's report | Catlin's Annual Report 2013 | 77 |
| Consolidated balance sheets | Catlin's Annual Report 2013 | 78 |
| Consolidated income statements | Catlin's Annual Report 2013 | 79 |
| Consolidated statements of comprehensive income Consolidated statements of changes in stockholders' |
Catlin's Annual Report 2013 | 80 |
| equity | Catlin's Annual Report 2013 | 81 |
| Consolidated statements of cash flows | Catlin's Annual Report 2013 | 82 |
| Notes to the consolidated financial statements For the year ended 31 December 2012(3) |
Catlin's Annual Report 2013 | 83 |
| Report of the Independent Auditors | Catlin's Annual Report 2012 | 79 |
| Consolidated balance sheets | Catlin's Annual Report 2012 | 80 |
| Consolidated income statements | Catlin's Annual Report 2012 | 81 |
| Consolidated statements of comprehensive income Consolidated statements of changes in stockholders' |
Catlin's Annual Report 2012 | 82 |
| equity | Catlin's Annual Report 2012 | 83 |
| Consolidated statements of cash flows | Catlin's Annual Report 2012 | 84 |
| Notes to the consolidated financial statements | Catlin's Annual Report 2012 | 85 |
Notes:
(1) http://www.catlin.com/~/media/downloads/investors/reports/2014/2014_catlin_group_limited_annual_report_and_accounts.ashx
(2) http://www.catlin.com/~/media/downloads/investors/reports/2013/catlinannualreport2013.ashx
(3) http://www.catlin.com/~/media/downloads/investors/reports/2012/2012%20annual%20report.ashx
The following information is incorporated by reference into this Scheme Document and is available on XL's website at www.xlgroup.com. A Catlin Shareholder may request a copy of such information in hard copy form (hard copies will not be provided unless requested). Hard copies may be requested by contacting Scott Hopkins of Skadden, Arps, Slate, Meagher & Flom, tel: +44 20 7519 7000.
XL recast its consolidated financial statements for the year ended 31 December 2013 to reflect changes in XL's reportable segments as a result of the sale of 100% of the common shares of XL's wholly owned subsidiary, XLLR, to GreyCastle Holdings Ltd. Due to this recasting, the documents above contain, together, the audited and consolidated financial information for the XL Group for the financial years ended 31 December 2012, 31 December 2013 and 31 December 2014, together with the audit report in respect of each year.
| Information incorporated by reference into this Scheme Document |
Reference document | Page number in reference document |
|---|---|---|
| For the financial year ended 31 December 2014(1) | ||
| Report of Independent Registered Public Account Firm | XL's 10K 2014 | 214 |
| Consolidated Balance Sheets as at 31 December 2014 Consolidated Statements of Income for the year ended |
XL's 10K 2014 | 121 |
| 31 December 2014 Consolidated Statements of Shareholders' Equity for |
XL's 10K 2014 | 122 |
| the year ended 31 December 2014 Consolidated Statements of Cash Flows for the year |
XL's 10K 2014 | 124 |
| ended 31 December 2014 | XL's 10K 2014 | 125 |
| Notes to the consolidated financial statements For the year ended 31 December 2013(2) |
XL's 10K 2014 | 127 |
| Report of Independent Registered Public Account Firm | XL's Form 8-K | Part II, page 84 |
| Consolidated Balance Sheets as at 31 December 2013 Consolidated Statements of Income for the year ended |
XL's Form 8-K | Part II, page 2 |
| 31 December 2013 Consolidated Statements of Shareholders' Equity for |
XL's Form 8-K | Part II, page 3 |
| the year ended 31 December 2013 Consolidated Statements of Cash Flows for the year |
XL's Form 8-K | Part II, page 5 |
| ended 31 December 2013 | XL's Form 8-K | Part II, page 6 |
| Notes to the consolidated financial statements | XL's Form 8-K | Part II, page 8 |
Notes:
(1) http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=73041&fid=9951260
(2) http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=73041&fid=9728900
This Scheme Document has been prepared to comply with Bermuda and English law and with the Listing Rules and the information disclosed may not be the same as that which would have been disclosed if this Scheme Document had been prepared in accordance with the laws of jurisdictions other than the UK and Bermuda.
It is the responsibility of any person into whose possession this Scheme Document comes to satisfy themselves as to the full observance of the laws of any relevant jurisdiction in connection with the Offer and the Scheme, including the obtaining of any governmental, exchange control or other consents which may be required and/or compliance with other necessary formalities which are required to be observed and the payment of any issue, transfer or other taxes or levies due in such jurisdiction.
This Scheme Document does not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for shares in any jurisdiction in which such offer or solicitation is unlawful.
Overseas Shareholders should consult their own legal and tax advisers with respect to the legal and tax consequences of the Scheme.
In any case where an Overseas Shareholder has a registered address, or is incorporated or resident in, a Restricted Jurisdiction or where XL or Catlin is advised that granting of the right to make an election under the Mix and Match Facility or the issue of New XL Shares to an Overseas Shareholder would or may infringe the laws of any jurisdiction outside Bermuda, the UK, the US and the Republic of Ireland or would or may require XL or Catlin to obtain or comply with any governmental or other consent or any registration, filing or other formality (including ongoing requirements) which XL or Catlin is unable to obtain or to comply with, or which XL or Catlin regards as unduly onerous to obtain or comply with, XL may, in its sole discretion, determine that:
Overseas Shareholders with a registered address in a Restricted Jurisdiction will not be sent XL's Irish Prospectus or Form of Election and will not be entitled to participate in the Mix and Match Facility.
The New XL Shares to be issued to Scheme Shareholders under the Scheme will be issued in reliance upon the exemption from the registration requirements of the US Securities Act provided by section 3(a)(10) thereof and, as a consequence, will not be registered thereunder or under the securities laws of any state or other jurisdiction of the US. Neither the SEC nor any state securities commission has approved or disapproved the XL Shares or passed upon the accuracy or adequacy of this Scheme Document, XL's Irish Prospectus or any of the accompanying documents. Any representation to the contrary is a criminal offence in the US.
For the purpose of qualifying for the exemption from the registration requirements of the US Securities Act (as described above), Catlin will advise the Court that its approval of the Scheme will be relied upon by XL as an approval of the Scheme following a hearing on its fairness to Scheme Shareholders, at which hearing all such holders are entitled to attend in person or through representation to support or oppose the approval of the Scheme and with respect to which notification has been given to all such holders.
Scheme Shareholders who are or will be ''affiliates'' (as such term is defined in Rule 144 under the US Securities Act) of XL during the 90 days prior to the Effective Date, or of XL after the Effective Date, will be subject to certain US transfer restrictions relating to XL Shares received pursuant to the Scheme. Under US securities laws, a holder of Scheme Shares who is deemed to be an affiliate of XL before completion of the Scheme, or of XL after completion of the Scheme, may not resell New XL Shares received pursuant to the Scheme without registration under the US Securities Act, except pursuant to (i) the applicable resale provisions of Rule 144 promulgated under the US Securities Act, or (ii) another applicable exemption from the registration requirements of the US Securities Act, or (iii) in a transaction not subject to such requirements. Whether a person is an affiliate of a company for such purposes depends upon the circumstances, but affiliates of a company can include certain officers and directors and significant shareholders. The Catlin Directors and the XL Directors are for those purposes affiliates of Catlin and XL respectively prior to the Effective Date, and may become affiliates of XL after the Effective Date, and may not sell or otherwise dispose of any New XL Shares received by them pursuant to the Scheme, except as set out above.
XL and Catlin are incorporated under the laws of the Republic of Ireland and Bermuda, respectively. In addition, some of their respective officers and directors reside outside the US, and all or much of their assets are or may be located in jurisdictions outside the US. Therefore, investors may have difficulty effecting service of process within the US upon those persons or recovering against XL, Catlin or their respective officers or directors on judgments of US courts, including judgments based upon the civil liability provisions of the US federal securities laws. It may not be possible to sue XL or Catlin or their respective officers or directors in a non-US court for violations of the US securities laws. There is also doubt as to enforceability in the Republic of Ireland and in Bermuda, in original actions or in actions for enforcement, of the judgments of US courts, based on the civil liability provisions of US federal securities laws. In particular, there is no treaty between the Republic of Ireland and the US providing for the reciprocal recognition and enforcement of foreign judgments, and there is no treaty in force between the US and Bermuda providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters.
The Scheme will not result in any profits or corporate, withholding, capital gains, capital transfer, estate duty, stamp duty or inheritance tax consequences under Bermuda law to Catlin or XL or their respective shareholders. Neither will the Scheme result in there being any income or other tax of Bermuda imposed by withholding or otherwise on any dividend or other distribution to be paid to Catlin Shareholders or Scheme Shareholders.
The comments set out below summarise certain limited aspects of the UK taxation treatment of Scheme Shareholders under the Scheme and of Catlin Shareholders in respect of the ITB Special Dividend only (unless the context otherwise requires) and do not purport to be a complete analysis of all tax considerations relating to the Scheme or the ITB Special Dividend. They are based on current UK legislation and what is understood to be current HMRC practice, both of which are subject to change, possibly with retrospective effect.
The comments are intended as a general guide and apply only to Scheme Shareholders or Catlin Shareholders (as appropriate) who are resident in the UK for UK tax purposes, who hold Scheme Shares or Catlin Shares (as appropriate) as an investment (other than under a self-invested personal pension plan, an Individual Savings Account or a New Individual Savings Account) and who are the absolute beneficial owners of their Scheme Shares or Catlin Shares (as appropriate). These comments do not deal with certain types of shareholders (such as charities, persons holding or acquiring shares in the course of trade or persons who have or could be treated for tax purposes as having acquired their Scheme Shares or Catlin Shares (as appropriate) by reason of their employment), collective investment schemes and insurance companies. Scheme Shareholders and Catlin Shareholders (as appropriate) who are in any doubt about their taxation position, or who are resident or otherwise subject to taxation in a jurisdiction outside the UK, should consult an appropriate independent professional tax adviser immediately.
The reclassification of the share capital of Catlin, whereby the Scheme Shares will be reclassified into A Shares, B Shares, C Shares and D Shares, should be regarded as a reorganisation of Catlin's share capital. Accordingly, Scheme Shareholders who are resident in the UK should not be treated as having disposed of their Scheme Shares and no liability to UK tax on chargeable gains should arise in respect of this reclassification. The A Shares, B Shares, C Shares, and D Shares should be treated, for the purposes of UK taxation of chargeable gains, as the same asset as the original Scheme Shares, acquired for the same amount and at the same time as the original Scheme Shares were acquired.
The allowable cost to the Scheme Shareholder of acquiring his relevant Scheme Shares will be apportioned between the A Shares, B Shares, C Shares or D Shares (as the case may be) received upon such reclassification, by reference to the respective market values of A Shares, B Shares, C Shares or D Shares (as the case may be) at the Effective Date.
Subject to the following paragraphs, for CGT purposes, the cancellation of B Shares and D Shares and the allotment and issue of New XL Shares to Scheme Shareholders in respect thereof should be treated as a reorganisation. Accordingly, Scheme Shareholders should qualify for ''United Kingdom rollover relief'' to the extent that they received New XL Shares in consideration for the cancellation of their B Shares and/or D Shares pursuant to the Scheme. To the extent that holders of B Shares and/or D Shares qualify for ''United Kingdom rollover relief'', they should not be treated as having made a disposal of their B Shares and/or D Shares for CGT purposes as a result of the cancellation, and the New XL Shares issued to them should be treated as the same asset, and as having been acquired at the same time and for the same consideration, as the cancelled B Shares and/ or D Shares (as appropriate).
Scheme Shareholders who, alone or together with persons connected with them, hold more than five per cent. of, or of any class of, Scheme Shares or debentures of XL will be eligible for the above treatment provided that the Scheme is effected for bona fide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is an avoidance of liability to capital gains tax or corporation tax. Scheme Shareholders are advised that HMRC has provided a clearance under section 138 of the Taxation of Chargeable Gains Act 1992 which confirms that HMRC is satisfied that the Scheme will be effected for bona fide commercial reasons and will not form part of any such scheme or arrangements.
To the extent that a Scheme Shareholder receives cash under the terms of the Scheme in respect of his A Shares and C Shares, this should, except to the extent referred to in the next paragraph, be treated as part disposal of such A Shares and C Shares which may, depending on the Scheme Shareholder's individual circumstances, give rise to a CGT liability. Any chargeable gain on a part disposal of a holding of A Shares and C Shares should be computed on the basis of an apportionment of the allowable cost of the holding by reference to the market value of the holding at the time of disposal.
If a Scheme Shareholder receives New XL Shares as well as cash consideration and the amount of cash received is small in comparison with the value of his Scheme Shares, the Scheme Shareholder may not be treated as having disposed of the Scheme Shares in respect of which the cash was received. Instead the cash should be treated as a deduction from the base cost of his Scheme Shares rather than as a part disposal.
Under current HMRC practice, any cash payment of £3,000 or less or which is 5 per cent. or less of the market value of a Scheme Shareholder's holding of Scheme Shares should generally be treated as small for these purposes.
A subsequent disposal of all or any New XL Shares may result in a CGT liability depending on individual circumstances.
A UK resident individual Catlin Shareholder who receives the ITB Special Dividend from Catlin will be entitled to a tax credit which may be set off against the Catlin Shareholder's total income tax liability. The tax credit will be equal to 10 per cent. of the aggregate of the ITB Special Dividend and the tax credit (the ''gross dividend''), which is also equal to one ninth of the cash received. Such an individual Catlin Shareholder who is liable to income tax at the basic rate will be subject to tax on the ITB Special Dividend at the rate of 10 per cent. of the gross dividend, so that the tax credit will satisfy in full such Catlin Shareholder's liability to income tax on the ITB Special Dividend.
In the case of an individual Catlin Shareholder who is liable to income tax at the higher rate, the tax credit will be set against but not fully match the Catlin Shareholder's tax liability on the gross dividend and such Catlin Shareholder will have to account for additional income tax equal to 22.5 per cent. of the gross dividend (which is also equal to 25 per cent. of the cash received) to the extent that the gross dividend when treated as the top slice of the Catlin Shareholder's income falls above the threshold for higher rate income tax.
In the case of an individual Catlin Shareholder who is subject to income tax at the additional rate, the tax credit will also be set against but not fully match the Catlin Shareholder's liability on the gross dividend and such Catlin Shareholder will have to account for additional income tax equal to 27.5 per cent. of the gross dividend (which is also equal to approximately 30.56 per cent. of the cash received) to the extent that the gross dividend when treated as the top slice of the Catlin Shareholder's income falls above the threshold for additional rate income tax.
A UK resident individual Catlin Shareholder who is not liable to income tax in respect of the gross dividend and other UK resident taxpayers who are not liable to UK tax on dividends will not be entitled to claim repayment of the tax credit attaching to the ITB Special Dividend paid by Catlin.
Catlin Shareholders who are within the charge to corporation tax will be subject to corporation tax on the ITB Special Dividend paid by Catlin, unless (subject to special rules for such Catlin Shareholders that are small companies) the ITB Special Dividend falls within an exempt class and certain other conditions are met. Each Catlin Shareholder's position will depend on its own individual circumstances, although it would normally be expected that the ITB Special Dividend paid by Catlin would fall within an exempt class. Such Catlin Shareholders will not be able to claim repayment of tax credits attaching to the ITB Special Dividend. New XL Shareholders will need to ensure that they satisfy the requirements of an exempt class before treating any dividend as exempt, and seek appropriate professional advice where necessary.
The UK tax position of Scheme Shareholders in respect of dividends paid by XL should be similar to that which would have applied had they continued to hold and receive dividends on Catlin Shares.
No UK stamp duty or SDRT should generally be payable by Scheme Shareholders on the cancellation of their Scheme Shares or the issue of New XL Shares under the Scheme.
No UK stamp duty should be payable in respect of any transfer of New XL Shares provided that any instrument of transfer is not executed in the UK and does not relate to any property situate, or to any matter or thing done, or to be done, in the UK.
No SDRT should be payable in respect of agreement to transfer New XL Shares or depositary interests representing New XL Shares, provided that the New XL Shares are not registered in any register maintained in the UK by or on behalf of XL and in respect of any depositary interests representing New XL Shares, provided further that XL is not centrally managed and controlled in the U.K. and that the New XL Shares are listed on a recognised stock exchange (within the meaning given by section 1137(1) of the Corporation Tax Act 2010).
Subject to the paragraph below (dealing with temporary non-residents), Scheme Shareholders who are not resident in the UK for UK tax purposes will not generally be subject to UK tax on chargeable gains upon transfer of their Scheme Shares in return for cash, unless they carry on a trade, profession or vocation in the UK through a branch or agency or (in the case of a company) permanent establishment and the Scheme Shares disposed of are used or held for the purposes of that branch, agency or permanent establishment.
A Scheme Shareholder who is an individual and who is temporarily non-resident for tax purposes in the UK may, in certain circumstances, be subject to UK taxation.
The following discussion summarises certain material US federal income tax consequences of the closing of the Scheme of Arrangement pursuant to the Offer and the merger of XL Sub and Catlin pursuant to section 104H of the Companies Act and the Merger Agreement, to be effected immediately following the Scheme becoming effective (the ''Merger'', and, together with the closing of the Scheme of Arrangement, the ''Transaction'') to US holders (as defined below) and of the ownership and disposition of XL Shares received by such holders upon the consummation of the Transaction. The discussion is based on and subject to the Internal Revenue Code of 1986, as amended (the ''IRS Code''), the Treasury Regulations promulgated thereunder, administrative rulings and court decisions in effect on the date hereof, all of which are subject to change, possibly with retroactive effect, and to differing interpretations. No legal opinion from US legal counsel or ruling from the US Internal Revenue Service (the ''IRS'') has been requested, or is expected to be obtained, regarding the US federal income tax consequences described herein. This discussion is not binding on the IRS or any court, and there can be no assurance that the IRS will not take a contrary position or that any contrary position taken by the IRS will not be sustained by a court. The discussion also assumes that the Transaction is carried out as described in this Scheme Document and that the Transaction is not integrated with any other transaction for US federal income tax purposes (including the dividends to be paid by Catlin). The discussion assumes that US holders hold their Catlin Shares, and will hold their XL Shares, as ''capital assets'' within the meaning of Section 1221 of the IRS Code (generally, property held for investment).
The discussion does not constitute tax advice and does not purport to address all aspects of US federal income taxation that may be relevant to particular shareholders in light of their personal circumstances, including any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010, or to shareholders subject to special treatment under the IRS Code, including:
* traders in securities who elect to apply a mark-to-market method of accounting;
* broker-dealers;
This discussion does not address any non-income tax considerations or any foreign, state or local tax consequences. For purposes of this discussion, a US holder means a beneficial owner of Catlin Shares at the time of the Transaction or, as the context may require, a beneficial owner of XL Shares received as a result of the Transaction, that is:
If a partnership, including for this purpose any entity or arrangement that is treated as a partnership or other ''pass-through'' entity for US federal income tax purposes, holds Catlin Shares at the time of the Transaction or XL Shares after the Transaction, the tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partnership. A holder that is a partnership and the partners (or other owners) in such partnership should consult their tax advisers about the US federal income tax consequences of the Transaction and the ownership and disposition of XL Shares.
THIS SUMMARY IS PROVIDED FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED AS, LEGAL OR TAX ADVICE TO ANY HOLDER OF CATLIN OR XL SHARES. CATLIN SHAREHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISERS REGARDING THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE TRANSACTION AND OF THE OWNERSHIP AND DISPOSITION OF XL SHARES AFTER THE TRANSACTION (INCLUDING THE APPLICATION AND EFFECT OF US FEDERAL, STATE, LOCAL OR NON-US AND OTHER TAX LAWS AND ANY APPLICABLE INFORMATION REPORTING OBLIGATIONS).
The US federal income tax consequences to a US holder with respect to the Transaction depend in part on whether the Scheme of Arrangement and the Merger are characterised as a single, integrated transaction or as separate transactions for US federal income tax purposes, and whether the Transaction otherwise qualifies as a reorganization for US federal income tax purposes. To qualify as a reorganization for US federal income tax purposes, the Transaction must satisfy certain statutory and non-statutory requirements. Qualification will depend on many factors for which no covenant or representation has been provided by XL or Catlin, including the mix of consideration to be paid and its value on the relevant testing date and the continuity of Catlin's business after the Effective Date. There can be no assurance that these requirements will be met and that the Transaction will in fact qualify as a reorganization. Following the closing, XL intends to make available to its shareholders information regarding the qualification of the Transaction as a reorganization within the meaning of Section 368(a) of the IRS Code for US federal income tax purposes. For purposes of the following summary it is assumed, except as otherwise noted, that the Scheme of Arrangement and the Merger will be characterised as a single, integrated transaction that qualifies as a reorganization for US federal income tax purposes.
Assuming the Scheme of Arrangement and the Merger are treated as part of an integrated transaction, and that Transaction otherwise qualifies as a reorganization within the meaning of Section 368(a) of the IRS Code for US federal income tax purposes, a US holder will generally recognise gain (but not loss) in an amount equal to the lesser of (i) the fair market value of cash consideration received in the Scheme of Arrangement, and (ii) the excess, if any, of (a) the sum of the fair market value of cash consideration and fair market value of the XL Shares received by such US holder (including the fair market value of any fractional share deemed received), over (b) the US holder's tax basis in the Catlin Shares exchanged therefore. For this purpose, US holders must calculate gain (or disallowed loss) separately for each block of Catlin Shares exchanged (that is, Catlin Shares acquired at the same cost in a single transaction). Cash consideration received in lieu of a fractional share of XL is not taken into account in making these computations of gain recognised in the Scheme of Arrangement. Rather, such cash consideration received in lieu of a fractional share is treated in the manner described below.
Subject to the PFIC rules and the potential application of Section 1248 of the IRS Code, discussed below, any gain recognised in the Transaction generally will be treated as capital gain, unless the receipt of property by a US holder has the effect of a distribution of a dividend for US federal income tax purposes (as discussed below). Any such capital gain will be long-term capital gain if the US holder has held the Catlin Shares for more than one year at the time of such exchange. Long-term capital gain of non-corporate shareholders is generally subject to tax at preferential rates. If the receipt of cash has the effect of the distribution of a dividend, the gain will be treated as dividend income to the extent of the US holder's rateable share of Catlin's accumulated earnings and profits as calculated for US federal income tax purposes. Any gain of a US holder which is treated as dividend income will generally be subject to US federal income tax as ordinary income. A corporate US holder will not be entitled to a dividends received deduction for any gain which is treated as dividend income.
The aggregate tax basis of the XL Shares received by a US holder in the Transaction (including the basis in any fractional share of XL Shares deemed received) will be the same as the aggregate tax basis of the US holder's Catlin Shares exchanged in the Scheme of Arrangement, decreased by the amount of cash consideration received (excluding any cash consideration received in lieu of a fractional share) and increased by the amount of gain recognised in the Transaction (excluding any gain recognised with respect to cash consideration received in lieu of a fractional share). The holding period of the XL Shares received by a US holder pursuant to the Transaction will include the holding period of the Catlin Shares exchanged in the Scheme of Arrangement. If US holders acquired different blocks of Catlin Shares at different times or at different prices, such US holders' tax basis and holding period in their XL Shares may be determined with reference to each block of Catlin Shares exchanged.
In general, the determination as to whether gain recognised by a US holder has the effect of a distribution of a dividend depends upon whether, and to what extent, the Transaction reduces the US holder's deemed percentage share ownership in XL. For purposes of this determination, a US holder will be treated as if it first exchanged all of its Catlin Shares solely for XL Shares (instead of the combination of XL Shares and cash consideration actually received), and then a portion of the XL Shares so received were immediately redeemed by XL for the cash (excluding any cash received in lieu of a fractional XL Share) that the US holder actually received in the Scheme of Arrangement. Subject to the PFIC rules and the potential application of Section 1248 of the IRS Code, discussed below, the gain recognised will be treated as capital gain if the deemed redemption is ''substantially disproportionate'' or ''not essentially equivalent to a dividend'' with respect to the US holder.
In general, the deemed redemption will be ''substantially disproportionate'' with respect to a US holder if such US holder experiences more than a 20 per cent. reduction in its interest in XL as a result of the deemed redemption. In order for the deemed redemption to be ''not essentially equivalent to a dividend'', the deemed redemption must result in a ''meaningful reduction'' in such US holder's deemed percentage share ownership of XL Shares. The IRS has indicated that a minority shareholder in a publicly traded corporation whose relative stock interest is minimal and who exercises no control with respect to corporate affairs will experience a ''meaningful reduction'' if that shareholder experiences any reduction in its percentage stock ownership in connection with a transaction such as the Transaction. In applying the foregoing tests, a US holder will, under the constructive ownership rules, be deemed to own shares that are owned by certain related persons or entities or with respect to which the US holder owns options, in addition to the shares actually owned by that US holder. Because the application of these tests may be complex, US holders should consult their own tax advisers regarding the possibility that all or a portion of any cash received in exchange for Catlin Shares will be treated as a dividend.
Cash consideration received in lieu of a fractional share of XL Shares will generally be treated as received in redemption of such fractional share interest, and a US holder will recognise gain or loss measured by the difference between the amount of cash consideration received and the portion of the basis of the XL Shares allocable to such fractional interest. Subject to the PFIC rules and Section 1248 of the IRS Code, discussed below, such gain or loss generally will constitute capital gain or loss and will be long-term capital gain or loss if the US holder's holding period in the Catlin Shares exchanged was more than one year as of the date of the exchange.
A US holder that receives non-US currency in exchange for Catlin Shares in the Transaction generally will realise an amount equal to the US dollar value of such non-US currency translated at the spot rate of exchange on the ''settlement date'' of the Transaction if (i) such US holder is a cash basis or electing accrual basis taxpayer and the Catlin Share is treated as being ''traded on an established securities market''; or (ii) such settlement date is also the closing date of the Transaction. Such US holder generally will have a basis in such non-US currency equal to the US dollar value of such non-US currency on the settlement date. Any gain or loss on a conversion or other disposition of such non-US currency by such US holder generally will be treated as ordinary income or loss from sources within the US. Each US holder should consult its own tax adviser regarding the US federal income tax consequences of receiving non-US currency from the disposition of a Catlin Share in cases not described in the first sentence of this paragraph.
If the Transaction fails to qualify as a reorganization, a US holder, or if a US holder receives solely cash in the Transaction, such US holder, would generally recognise gain or loss equal to the difference, if any, between (i) the sum of the fair market value of the XL Shares received in the Transaction and any cash consideration received and (ii) such shareholder's adjusted tax basis in the Catlin Shares surrendered in exchange therefor. Subject to the PFIC rules and Section 1248 of the IRS Code, discussed below, such recognised gain or loss would generally constitute capital gain or loss, and would constitute long-term capital gain or loss if the Catlin Shareholder's holding period for the Catlin Shares exchanged is greater than one year as of the date of the exchange.
As discussed below under ''—Related person insurance income—Dispositions of Shares and IRS Code Section 1248'', Section 1248 of the IRS Code may apply to recharacterise gain from the sale or exchange of shares as a dividend to the extent of a CFC's earnings and profits (determined under US federal income tax principles). For the reasons discussed below, Section 1248 of the IRS Code should not apply to dispositions of Catlin Shares because Catlin is not directly engaged in the insurance business and, under proposed Treasury Regulations, Sections 953 and 1248 appear to be applicable only in the case of shares of corporations that are directly engaged in the insurance business. There can be no assurance, however, that the IRS will interpret the proposed Treasury Regulations in this manner or that the proposed Treasury Regulations will not be amended or promulgated in final form so as to provide that Section 1248 will apply to the disposition of Catlin Shares in the Transaction. US holders should consult their own tax advisers regarding the effects of these rules on a disposition of shares in the Transaction.
A US holder may be subject to adverse US federal income tax rules in respect of a disposition of Catlin Shares, including a disposition in a transaction that would otherwise qualify as a reorganization, if Catlin were classified as a PFIC for any taxable year during which such US holder has held Catlin Shares and does not have a valid pedigreed ''qualified electing fund'' election in effect. For a more detailed discussion of the PFIC rules, see below under ''—Passive Foreign Investment Companies—''. Catlin does not believe it was a PFIC for US federal income tax purposes in 2014. However, the PFIC determination is factual in nature, depends on the application of complex US federal income tax rules, which are subject to differing interpretations, and generally cannot be performed until the close of the taxable year in question. Accordingly, Catlin can provide no assurance that it will not be a PFIC for 2015 or for any prior taxable year. If Catlin were classified as a PFIC in any year during which a US holder was a shareholder, Catlin generally would continue to be treated as a PFIC for that US holder in all succeeding years, regardless of whether Catlin continued to meet the test for PFIC status. US holders should consult their own tax advisers regarding the classification of Catlin as a PFIC, the effect of the PFIC rules to such holder, and the availability and effect of any election that may be available under the PFIC rules.
If Catlin were treated as a PFIC with respect to any US holder as of the date of the Transaction but XL were not treated as a PFIC for the current taxable year, the disposition of Catlin Shares in the Transaction may constitute a fully taxable transaction for US federal income tax purposes for such US holder. As discussed in greater detail below, XL does not believe that it is a PFIC and currently does not expect to become a PFIC in future years.
Payments of cash and other property payments received by a non-corporate US holder may be subject to US information reporting requirements and may be subject to backup withholding unless such holder provides proof of an applicable exemption or furnishes its taxpayer identification number and otherwise complies with all applicable requirements of the backup withholding rules. Backup withholding is not an additional tax. The amount of any backup withholding will be allowed as a credit against the US holder's US federal income tax liability and may entitle the US holder to a refund, provided that certain required information is timely furnished to the IRS.
Subject to the discussion below under ''—Special rules—US CFC provisions'', ''—Special rules related person insurance income'' and ''—Special rules—PFIC provisions'', US holders will be required to include in gross income the gross amount of any distribution received on the XL Shares to the extent that the distribution is paid out of XL's current or accumulated earnings and profits as determined for US federal income tax purposes, which we refer to as a dividend. With respect to non-corporate US holders, certain dividends received from a qualified foreign corporation may be subject to reduced rates of taxation. A qualified foreign corporation includes a foreign corporation that is eligible for the benefits of a comprehensive income tax treaty with the US which the US Treasury Department determines to be satisfactory for these purposes and which includes an exchange of information provision. The US Treasury Department has determined that the US-Ireland tax treaty meets these requirements. XL believes that it is currently eligible for the benefits of the US-Ireland tax treaty. There can be no assurance that XL will be eligible for the benefits of the US-Ireland tax treaty in later years. In addition, a foreign corporation is also treated as a qualified foreign corporation with respect to dividends paid by that corporation on shares that are readily tradable on an established securities market in the US. US Treasury Department guidance indicates that the XL Shares, which are currently listed on the New York Stock Exchange, are considered readily tradable on an established securities market in the US. There can be no assurance that the XL Shares will be considered readily tradable on an established securities market in later years. The reduced rate will not be available in all situations, and US holders should consult their own tax adviser regarding the application of the relevant rules to their particular circumstances.
With respect to corporate US holders, dividends from XL will not be eligible for the dividends received deduction that is otherwise generally available upon the receipt of dividends distributed by US corporations.
Distributions in excess of the current and accumulated earnings and profits of XL will be applied first to reduce the US holder's tax basis in its XL Shares, and thereafter will constitute gain from the sale or exchange of such shares, which will be taxed as described below under ''—Sale, exchange or other taxable disposition'' Special rules not here described may apply to US holders that do not have a uniform tax basis and holding period in all of their XL Shares, and any such US holders are urged to consult their own tax adviser with regard to such rules.
If US holders own at least 50 per cent. of XL's shares, dividends paid by XL could be treated, for purposes of determining the foreign tax credit limitation, as partly US source. Any amounts required to be included in a US holder's gross income under the CFC rules or the RPII rules, as described below under ''—Special rules—US CFC provisions'' and ''—Special rules—related person insurance income'', and any amounts treated as dividends under Section 1248 of the IRS Code, could also be partly US source income. Treatment of the dividends as US source income in whole or in part may limit a US holder's ability to claim a foreign tax credit for any Irish withholding taxes payable in respect of the dividends. Because the calculation of a taxpayer's foreign tax credit limitation is complex and is dependent on the particular taxpayer's circumstances, US holders should consult their own tax advisers with respect to these matters.
Subject to the discussion below under ''—Special rules—US CFC provisions'', ''—Special rules related person insurance Income'' and ''—Special rules—PFIC provisions'' US holders generally will recognise capital gain or loss for US federal income tax purposes on the sale, exchange or other taxable disposition of XL Shares in an amount equal to the difference between the amount realised from such sale, exchange or other taxable disposition and the US holder's tax basis in such shares. Generally, capital gains of non-corporate US holders (including individuals) currently are eligible for preferential US federal income tax rates applicable to long-term capital gains if such holder has held the relevant property for more than one year as of the date of the sale, exchange or other taxable disposition. The deductibility of capital losses is subject to limitations. Any gain or loss recognised by a US holder on the sale or exchange of XL Shares will generally be treated as US source gain or loss.
For US tax purposes, any Irish stamp duty imposed on a US holder, as described below under the headings ''—Republic of Ireland—Stamp duty'' will not be creditable against US federal income taxes. US holders should consult their tax advisers regarding the treatment of these Irish taxes.
In general, a foreign corporation is considered a CFC if 10 per cent. US Shareholders (as defined below) own (directly, indirectly through non-US entities or by application of the constructive ownership rules of Section 958(b) of the IRS Code (i.e. ''constructively'')) more than 50 per cent. of the total combined voting power of all classes of voting stock of such foreign corporation, or more than 50 per cent. of the total value of all stock of such corporation. A ''10 per cent. US Shareholder'' is a US person (as defined in Section 957(c) of the IRS Code (a ''US Person'')) who owns (directly, indirectly through non-US entities or constructively) at least 10 per cent. of the total combined voting power of all classes of stock entitled to vote of the foreign corporation. Each 10 per cent. US Shareholder of a foreign corporation that is a CFC for an uninterrupted period of 30 days or more during a taxable year and owns shares in that CFC directly or indirectly through foreign entities on the last day of the foreign corporation's taxable year on which it is a CFC must include in its gross income for US federal income tax purposes its pro rata share (based on its actual direct and indirect, through foreign entities, ownership) of the CFC's ''subpart F income'', even if the subpart F income is not distributed. Subpart F income generally includes, among other things, investment income such as dividends, interest and capital gains, and income from insuring risks located outside the insurer's country of incorporation.
For purposes of taking into account insurance income, a CFC also includes a foreign corporation in which more than 25 per cent. of the total combined voting power of all classes of stock (or more than 25 per cent. of the total value of the stock) is owned by 10 per cent. US Shareholders on any day during the taxable year of such corporation, if certain premium tests are met. It is expected that all of the income of XL's insurance and reinsurance subsidiaries in Bermuda, and a portion of the income of XL's other non-US insurance and reinsurance subsidiaries, would be considered subpart F income if such subsidiaries were to be considered CFCs. In addition, a non-US insurance subsidiary of XL may be considered a CFC under the RPII rules discussed below.
Due to the current dispersion of XL share ownership among holders and the provisions in its articles of association that impose limitations on the concentration of voting power of its voting shares, XL believes that no US Person that owns shares in XL directly, indirectly through foreign entities or constructively should be subject to treatment as a 10 per cent. US Shareholder of a CFC. There can be no assurance, however, that the IRS will not challenge the effectiveness of these provisions for purposes of preventing CFC and 10 per cent. US Shareholder status and that a court will not sustain such challenge, in which case a US holder's investment could be materially adversely affected if such US holder is considered to own 10 per cent. or more of XL Shares.
(a) Generally. The US CFC rules described above also apply (with certain modifications) to certain insurance companies that earn related person insurance income, which we refer to as ''RPII.'' For purposes of applying the CFC rules to foreign corporations that earn RPII, a foreign corporation will be treated as a CFC if RPII Shareholders (as defined below) collectively own (directly, indirectly through foreign entities or by application of the constructive ownership rules) 25 per cent. or more of the stock of the corporation by vote or value. The term ''RPII Shareholder'' means any US Person (as defined in Section 957(c) of the IRS Code) who owns, directly or indirectly through foreign entities, any amount (rather than stock possessing 10 per cent. or more of the total combined voting power) of the foreign corporation's stock.
RPII is defined as any ''insurance income'' attributable to policies of insurance or reinsurance with respect to which the person (directly or indirectly) insured is a ''RPII Shareholder'' of the foreign corporation or a ''related person'' to such RPII Shareholder. In general, and subject to certain limitations, ''insurance income'' is income (including premium and investment income) attributable to the issuing of any insurance or reinsurance contract which would be taxed under the provisions of the IRS Code relating to insurance companies if the income were the income of a domestic insurance company.
For purposes of the RPII rules, ''related person'' means someone who controls or is controlled by the RPII Shareholder or someone who is controlled by the same person or persons that control the RPII Shareholder. ''Control'' is measured by either more than 50 per cent. in value or more than 50 per cent. in voting power of stock, applying constructive ownership principles. In the case of a partnership, trust or estate, control means the ownership, directly or indirectly, of more than 50 per cent. (by value) of the beneficial interests in such partnership, estate or trust.
If none of the exceptions described below applies, each US Person that is a US holder (and therefore, indirectly owns shares in XL's non-US insurance subsidiaries) on the last day of the tax year in which a non-US subsidiary is an RPII CFC would be required to include in its gross income for US federal income tax purposes its share of RPII of that non-US subsidiary for the US Person's taxable year that includes the end of that non-US subsidiary's taxable year. This inclusion generally would be determined as if such RPII were distributed proportionately only to such US Persons holding shares at that date. The inclusion would be limited to the current-year earnings and profits of that non-US subsidiary reduced by the shareholder's pro rata share, if any, of certain prior-year deficits in earnings and profits. Even if one or more of the exceptions to the RPII rules applies, the general CFC rules described earlier may still apply to require 10 per cent. US Shareholders to include in income their pro rata share of RPII, among other things.
(b) RPII Exceptions. The special RPII rules described above will not apply to a non-US subsidiary if (1) direct or indirect insureds and persons related to such insureds, whether or not US Persons, own, at all times during that non-US subsidiary's taxable year directly or indirectly, less than 20 per cent. of the voting power and less than 20 per cent. of the value of the stock of that non-US subsidiary (the ''20 per cent. Ownership Exception''), (2) RPII, determined on a gross basis, is less than 20 per cent. of that non-US subsidiary's gross insurance income for the taxable year (the ''20 per cent. Gross Income Exception''), (3) that non-US subsidiary elects to be taxed on its RPII as if the RPII were effectively connected with the conduct of a US trade or business and to waive all treaty benefits with respect to RPII and meets certain other requirements or (4) that non-US subsidiary elects to be treated as a US corporation for US tax purposes. XL does not anticipate that any of its non-US insurance subsidiaries will have RPII that equals or exceeds 20 per cent. of such subsidiary's gross insurance income. Because some of the factors that determine the extent of RPII in any period may be beyond XL's control, there can be no assurance that RPII of any of its insurance subsidiaries will not equal or exceed 20 per cent. of its gross insurance income in any taxable year. In addition, it may be difficult for XL to determine whether it is 20 per cent. or more owned (by either voting power or value), directly or indirectly (under complex attribution rules), by insured or reinsured persons or persons related to insured or reinsured persons.
subsidiary that is a CFC or that would be taxed as an insurance company if it were a domestic corporation. Section 1248 of the IRS Code should not apply to dispositions of XL Shares because (1) assuming this restriction is enforced, XL's articles of association prevent shareholders from owning, directly, indirectly or constructively, 10 per cent. or more of the voting power of the XL Shares, and (2) XL is not directly engaged in the insurance business and, under proposed Treasury Regulations, Sections 953 and 1248 appear to be applicable only in the case of shares of corporations that are directly engaged in the insurance business. There can be no assurance, however, that the IRS will interpret the proposed Treasury Regulations in this manner or that the proposed Treasury Regulations will not be amended or promulgated in final form so as to provide that Section 1248 will apply to dispositions of XL Shares. US holders should consult their tax advisers regarding the effects of these rules on a disposition of shares.
The treatment of US holders could be materially different from that described above if, at any relevant time, XL were a PFIC.
For US tax purposes, a foreign corporation will generally be classified as a PFIC for any taxable year if either (1) 75 per cent. or more of its gross income is ''passive income'' (as defined for US federal income tax purposes) or (2) the average percentage of assets held by such corporation which produce passive income or which are held for the production of passive income is at least 50 per cent. For purposes of applying the tests in the preceding sentence, a look-through rule applies and the foreign corporation is deemed to own its proportionate share of the assets, and to receive directly the proportionate share of the income, of any other corporation of which the foreign corporation owns, directly or indirectly, at least 25 per cent. by value of the stock. In addition, the PFIC statutory provisions also contain an express exception for income derived in the active conduct of an insurance business by a corporation that is predominantly engaged in an insurance business. This exception is intended to ensure that income derived by a bona fide insurance company is not treated as passive income, except to the extent such income is attributable to financial reserves in excess of the reasonable needs of the insurance business.
XL believes that it is not a PFIC and currently does not expect to become a PFIC in future years. The tests for determining PFIC status are applied annually and it is difficult to accurately predict future income and assets relevant to this determination. In addition, there are currently no Treasury Regulations regarding the application of the PFIC provisions to an insurance company and Treasury Regulations or pronouncements interpreting or clarifying these rules may be forthcoming. Accordingly, no assurance can be given that the IRS would not challenge this position or that a court would not sustain such challenge.
If XL were to be characterised as a PFIC, a US holder would be subject to a penalty tax resulting from sale at a gain of the XL Shares, or resulting from receipt of an ''excess distribution'' with respect to the XL Shares, unless such shareholder elected to be taxed annually on the XL Shares regardless of whether dividends were distributed or shares were sold. US holders should consult their own tax advisers with respect to their ability to make any such elections and the tax consequences of making any such elections. In general, a shareholder receives an ''excess distribution'' if the amount of the distribution is more than 125 per cent. of the average distribution with respect to the stock during the three preceding taxable years (or shorter period during which the taxpayer held the stock). In general, the penalty tax is equivalent to an interest charge on taxes that are deemed due during the period the shareholder owned the shares, computed by assuming that the excess distribution or gain (in the case of a sale) with respect to the shares was taxed in equal portions at the highest applicable tax rate throughout the shareholder's period of ownership. The interest charge is equal to the applicable rate imposed on underpayments of US federal income tax for such period. In addition to the penalty tax, if XL were determined to be a PFIC, any gain on the disposition of XL Shares would be treated as ordinary income (and hence would not be entitled to the preferential tax rates for long-term capital gains recognised by individuals and other non-corporate US holders). Furthermore, any dividends paid by XL would not constitute qualified dividends (and hence would not be entitled to the preferential tax rates for qualified dividends received by individuals and other non-corporate US holders) if XL is treated as a PFIC in the year in which such dividend is paid or in the prior taxable year.
US holders should consult their own tax adviser about the PFIC rules, including the availability of certain elections.
Certain US holders are required to report information relating to an interest in the XL Shares, subject to certain exceptions (including an exception for XL Shares held in accounts maintained by certain financial institutions), by attaching a completed IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold an interest in XL Shares. US holders are urged to consult their own tax advisers regarding information reporting requirements relating to their ownership of XL Shares.
Except in the case of corporations or other exempt holders, dividends paid by XL to a US holder may be subject to US information reporting requirements and may be subject to backup withholding unless such holder provides proof of an applicable exemption or furnishes its taxpayer identification number and otherwise complies with all applicable requirements of the backup withholding rules. Backup withholding is not an additional tax. The amount of any backup withholding will be allowed as a credit against the US holder's US federal income tax liability and may entitle the US holder to a refund, provided that certain required information is timely furnished to the IRS.
The following is a summary of the material Irish tax consequences of the stamp duty and dividend withholding tax consequences of the ownership of XL Shares. The summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to each of the Scheme Shareholders. The summary is based upon Irish tax laws and the practice of the Irish Revenue Commissioners in effect on the date of this Scheme Document and correspondence with the Irish Revenue Commissioners. Changes in law and/or administrative practice may result in alteration of the tax considerations described below, possibly with retrospective effect.
The summary does not constitute tax advice and is intended only as a general guide. The summary is not exhaustive and Scheme Shareholders should consult their tax advisers about the Irish tax consequences (and tax consequences under the laws of other relevant jurisdictions) of the acquisition, ownership and disposal of XL Shares.
The rate of Irish stamp duty (where applicable) on transfers of shares of Irish incorporated companies is 1 per cent. of the price paid or the market value of the shares acquired, whichever is greater. Where Irish stamp duty arises it is generally a liability of the transferee.
Irish stamp duty may, depending on the manner in which the shares are held, be payable in respect of transfers of XL Shares.
A transfer of XL Shares effected by means of the transfer of book-entry interests in DTC will not be subject to Irish stamp duty. On the basis that XL Shares are held and transferred through DTC, most transfers of XL Shares will be exempt from Irish stamp duty.
A transfer of XL Shares where any party to the transfer holds such shares outside of DTC may be subject to Irish stamp duty. XL Shareholders wishing to transfer their shares into (or out of) DTC may do so without giving rise to Irish stamp duty, provided that:
It is too early at present to determine whether a price differential may develop in the market for XL Shares between those shares which may be traded without giving rise to Irish stamp duty and those which may not. Scheme Shareholders who hold their XL Shares outside of DTC after the Effective Date and who wish future transfers of such shares to be exempt from Irish stamp duty, may arrange for the transfer of their XL Shares into DTC (whilst providing at the same time that (i) there is no change in the ultimate beneficial ownership of such shares and (ii) the transfer into DTC is not effected in contemplation of a subsequent sale of such shares) as soon as possible after the Effective Date.
After the Effective Date, the New XL Shares may be held and settled in the form of DDIs representing XL Shares that have been deposited with DTC and recorded in book entry form by DTC. In connection with this, XL is seeking confirmation from the Irish Revenue Commissioners that, among other things, a transfer of DDIs representing book-entry interests in XL Shares held through DTC will not be subject to Irish stamp duty. No assurance can be given that the Irish Revenue Commissioners will give this confirmation or as to the timing of any confirmation. In the event that the confirmation sought from the Irish Revenue Commissioners is not given, any Irish stamp duty cost incurred when creating DDIs in connection with completion of the Offer will be borne by XL but any Irish stamp duty arising on a subsequent transfer or cancellation of a DDI will be a liability for the relevant transferee of the DDI. Therefore to avoid risk of Irish stamp duty on the transfer of interests in XL Shares, holders of interests in XL Shares may wish to consider making the necessary arrangements so as to be able to transfer those interests in book entry form through DTC. Where a person holding DDIs representing interests in XL Shares makes arrangements for the transfer/cancellation of those DDIs so as to be able to transfer the interests in XL Shares in book entry form through DTC, such transfer/cancellation shall not be subject to Irish stamp duty provided that:
Distributions made by XL will, in the absence of one of many exemptions, be subject to DWT currently at a rate of 20 per cent. For DWT purposes, a distribution includes any distribution that may be made by XL to its shareholders, including cash dividends, non-cash dividends and additional stock taken in lieu of a cash dividend. Where an exemption does not apply in respect of a distribution made to a particular shareholder, XL is responsible for withholding DWT prior to making such distribution.
Irish domestic law provides that a non-Irish resident shareholder is not subject to DWT on dividends received from XL if such shareholder is beneficially entitled to the dividend and is:
and provided, in all cases noted above (but subject to ''Shares held by US resident shareholders'' below), XL or, in respect of shares held through DTC, any qualifying intermediary appointed by XL, has received from the shareholder, where required, the relevant Irish Revenue Commissioners' DWT Forms (the ''DWT Forms'') prior to the payment of the dividend. In practice, in order to ensure sufficient time to process the receipt of relevant DWT Forms, the shareholder where required should furnish the relevant DWT Form to:
Links to the various DWT Forms are available at http://www.revenue.ie/en/tax/dwt/forms/ index.html.
For non-Irish resident shareholders that cannot avail themselves of one of Ireland's domestic law exemptions from DWT, it may be possible for such shareholders to rely on the provisions of a double tax treaty to which Ireland is party to reduce the rate of DWT.
Dividends paid in respect of XL Shares that are owned by a US resident and held through DTC will not be subject to DWT provided the address of the beneficial owner of such shares in the records of the broker holding such shares is in the US (and such broker has further transmitted the relevant information to a qualifying intermediary appointed by XL). It is strongly recommended that such shareholders, including Catlin Shareholders who are US residents and who receive XL Shares pursuant to the Scheme, ensure that their information is properly recorded by their brokers (so that such brokers can further transmit the relevant information to a qualifying intermediary appointed by XL).
Dividends paid in respect of XL Shares that are owned by residents of the US and held outside of DTC will not be subject to DWT if such shareholders satisfy the conditions of one of the exemptions referred to above under the heading ''General exemptions'', including the requirements to furnish completed DWT Forms and that such forms remain valid. Such shareholders must provide the appropriate DWT Forms to XL's transfer agent at least seven business days before the record date for the first dividend payment to which they are entitled. It is strongly recommended that such shareholders complete the appropriate DWT Forms and provide them to XL's transfer agent as soon as possible after acquiring their shares.
If any shareholder that is resident in the US receives a dividend from which DWT has been withheld, the shareholder should generally be entitled to apply for a refund of such DWT from the Irish Revenue Commissioners, provided the shareholder is beneficially entitled to the dividend.
Shareholders who are residents of Relevant Territories, other than the US, must satisfy the conditions of one of the exemptions referred to above under the heading ''—General exemptions'', including the requirement to furnish valid DWT Forms, in order to receive dividends without being subject to DWT.
If such shareholders hold their shares through DTC, they must provide the appropriate DWT Forms to their brokers (so that such brokers can further transmit the relevant information to a qualifying intermediary appointed by XL) before the record date for the dividend (or such later date before the dividend payment date as may be notified to the shareholder by the broker). If such shareholders hold their shares outside of DTC, they must provide the appropriate DWT Forms to XL's transfer agent at least seven business days before the record date for the dividend. It is strongly recommended that such shareholders including Catlin Shareholders who are residents of Relevant Territories other than the US and who receive XL Shares pursuant to the transaction complete the appropriate DWT Forms and provide them to their brokers or XL's transfer agent, as the case may be, as soon as possible after receiving their shares.
If any shareholder who is resident in a Relevant Territory receives a dividend from which DWT has been withheld, the shareholder may be entitled to a refund of DWT from the Irish Revenue Commissioners provided the shareholder is beneficially entitled to the dividend.
Most Irish tax resident or ordinarily resident shareholders (other than Irish resident companies that have completed the appropriate DWT Forms) will be subject to DWT in respect of dividends paid on their XL Shares.
Shareholders that are residents of Ireland, but are entitled to receive dividends without DWT, must complete the appropriate DWT Forms and provide them to their brokers (so that such brokers can further transmit the relevant information to a qualifying intermediary appointed by XL) before the record date for the dividend (in the case of shares held through DTC), or to XL's transfer agent at least seven business days before the record date for the dividend (in the case of shares held outside of DTC).
XL Shareholders who do not fall within any of the categories specifically referred to above may nonetheless fall within other exemptions from DWT. If any shareholders are exempt from DWT, but receive dividends subject to DWT, such shareholders may apply for refunds of such DWT from the Irish Revenue Commissioners.
XL has in place an agreement with an entity that is recognised by the Irish Revenue Commissioners as a ''qualifying intermediary'', which provides for certain arrangements relating to distributions in respect of shares of XL that are held through DTC, which are referred to as the ''Deposited Securities.'' The agreement provides that the qualifying intermediary shall distribute or otherwise make available to Cede & Co., as nominee for DTC, any cash dividend or other cash distribution with respect to the Deposited Securities after XL delivers or causes to be delivered to the qualifying intermediary the cash to be distributed.
XL will rely on information received directly or indirectly from its qualifying intermediary, brokers and its transfer agent in determining where shareholders reside, whether they have provided the required US information and whether they have provided the required DWT Forms. Shareholders that are required to file DWT Forms in order to receive dividends free of DWT should note that such forms are generally valid, subject to a change in circumstances, until 31 December of the fifth year after the year in which such forms were completed.
Irish CAT comprises principally gift tax and inheritance tax. XL shares are regarded as property situated in Ireland for CAT purposes because the register of XL is required to be held in Ireland. As a consequence, CAT applies to a gift or inheritance of XL Shares irrespective of the place of residence, ordinary residence or domicile of the parties. The person who receives the gift or inheritance has primary liability for CAT.
CAT is currently levied at a rate of 33 per cent. above certain tax-free thresholds. The appropriate tax-free threshold is dependent upon (i) the relationship between the donor and the donee and (ii) the aggregation of the values of previous gifts and inheritances received by the donee from persons within the same group threshold.
Gifts and inheritances passing between spouses are exempt from CAT. Children have a tax-free threshold of A225,000 in respect of taxable gifts or inheritances received from their parents. Also, transfers of XL shares within a wholly owned corporate group are generally exempt from CAT. Holders of XL Shares should consult their own tax advisers as to whether CAT is creditable or deductible in computing any domestic tax liabilities.
There is also a ''small gift exemption'' from CAT whereby the first A3,000 of the taxable value of all taxable gifts taken by a donee from any one donor, in each calendar year, is exempt from CAT and is also excluded from any future aggregation. This exemption does not apply to an inheritance.
THE IRISH TAX CONSIDERATIONS SUMMARISED ABOVE ARE FOR GENERAL INFORMATION ONLY. CATLIN SHAREHOLDERS SHOULD CONSULT WITH THEIR TAX ADVISERS REGARDING THE TAX CONSEQUENCES OF THE TRANSACTION AND OF THE ACQUISITION, OWNERSHIP AND DISPOSAL OF XL SHARES.
The Catlin Directors and their respective positions are:
| John Barton | Chairman |
|---|---|
| Stephen Catlin | Chief Executive Officer and Deputy Chairman |
| Benjamin Meuli | Chief Financial Officer |
| Nicholas Lyons | Senior Independent Director |
| Robert Gowdy | Non-Executive Director |
| Fiona Luck | Non-Executive Director |
| Claus-Michael Dill | Non-Executive Director |
| Beatrice Hollond | Non-Executive Director |
The registered office for Catlin is Canon's Court, 22 Victoria Street, Hamilton HM12, Bermuda. The business address of each of the Catlin Directors is 5th Floor, Washington House, 16 Church Street, Hamilton HM1, Bermuda.
The company secretary of Catlin is Daniel Primer.
The XL Directors and their respective positions are:
| Michael S. McGavick | Chief Executive Officer |
|---|---|
| Ramani Ayer | Non-Executive Director |
| Dale R. Comey | Non-Executive Director |
| Robert R. Glauber | Non-Executive Chairman and Director |
| Edward J. ''Ned'' Kelly, III | Non-Executive Director |
| Suzanne B. Labarge | Non-Executive Director |
| Joseph Mauriello | Non-Executive Director |
| Eugene M. McQuade | Non-Executive Director |
| Clayton S. Rose | Non-Executive Director |
| Anne Stevens | Non-Executive Director |
| John M. Vereker | Non-Executive Director |
The business address of each of the XL Directors is XL House, 8 St. Stephen's Green, Dublin 2, Ireland.
The Corporate Secretary of XL is Kirstin Gould.
XL is a public company with its registered office at XL House, 8 St. Stephen's Green, Dublin 2, Ireland.
For the purposes of this paragraph 3 and paragraphs 4 to 7:
4.1 As at 31 March 2015 (the latest practicable date before the date of this Scheme Document), the Catlin Directors held the following interests in, or rights to subscribe in respect of, relevant Catlin securities:
| Name | Number of Catlin Shares |
Nature of Interest |
|---|---|---|
| John Barton | 50,000(1) | Beneficial |
| Stephen Catlin | 7,096,696(2) | Beneficial |
| Benjamin Meuli | 1,257,456(3) | Beneficial |
| Nicholas Lyons | — | N/A |
| Robert Gowdy | 29,350(4) | Beneficial |
| Fiona Luck | 5,000 | Beneficial |
| Claus-Michael Dill | — | N/A |
| Beatrice Hollond | — | N/A |
Notes:
trustee and a beneficiary
(1) 20,000 of which are held by director's spouse
(2) 685,000 of which are held by the Trustees of the Catlin Settlement Trust and 6,775 of which are held by director's spouse
(3) Includes 15,000 Catlin Shares which are held by the Mrs JIS Meuli Settlement Trust of which Benjamin Meuli is both a
(4) Held jointly with spouse
4.3.1 The Catlin Group Limited Performance Share Plan 2004 (''2004 PSP'') and the Catlin Group Limited Performance Share Plan 2013 (''2013 PSP'') (together the ''Performance Share Plans'')
| Name | Date of Award | Number of Catlin Shares |
Vesting Date |
|---|---|---|---|
| Stephen Catlin | 9 February 2012 | 148,329 | 9 February 2016 |
| 8 February 2013 | 131,178 | 18 February 2016 | |
| 8 February 2013 | 131,177 | 18 February 2017 | |
| 10 February 2014 | 188,438 | 24 February 2017 | |
| 10 February 2014 | 188,437 | 24 February 2018 | |
| 10 February 2015 | 150,107 | 24 February 2018 | |
| 10 February 2015 | 150,106 | 24 February 2019 | |
| Benjamin Meuli | 9 February 2012 | 142,093 | 9 February 2016 |
| 8 February 2013 | 127,298 | 18 February 2016 | |
| 8 February 2013 | 127,298 | 18 February 2017 | |
| 10 February 2014 | 117,208 | 24 February 2017 | |
| 10 February 2014 | 117,208 | 24 February 2018 | |
| 10 February 2015 | 97,616 | 24 February 2018 | |
| 10 February 2015 | 97,615 | 24 February 2019 |
4.3.2 Catlin Group Limited 2014 Deferred Bonus Share Plan (''DBSP'')
| Number of | |||
|---|---|---|---|
| Name | Date of Award | Catlin Shares |
Vesting Date |
| Stephen Catlin | 1 March 2014 | 29,389 | 1 March 2017 |
| 1 March 2014 | 29,389 | 1 March 2018 | |
| 1 March 2014 | 29,388 | 1 March 2019 |
4.3.3 Catlin Group Limited Savings-Related Share Option Scheme (''SAYE'')
| Number of | |||
|---|---|---|---|
| Name | Date of Award | Catlin Shares |
Vesting Date |
| Benjamin Meuli | 6 September 2012 | 361 | 1 November 2015 |
| 11 September 2014 | 4,026 | 1 November 2017 |
4.4 As at 31 March 2015 (the latest practicable date before the date of this Scheme Document), persons acting in concert with Catlin held the following interests in, or rights to subscribe in respect of, relevant Catlin securities:
| Name | Number of Catlin Shares |
Nature of Interest |
|---|---|---|
| Catlin Group Employee Benefit Trust | 1,958,806 | Beneficial |
| Wellington Underwriting plc Employee Benefit Trust | 8,911 | Beneficial |
5.1 Between the commencement of the offer period and 31 March 2015 (being the latest practicable date before the date of this Scheme Document), the following Catlin Directors (including members of their immediate families, close relatives and related trusts) have dealt in relevant Catlin securities:
| Name | Transaction Type | Number of Catlin Shares |
Date | Price per unit |
|---|---|---|---|---|
| Performance Share Plans | ||||
| Stephen Catlin | Exercise of nil cost options |
221, 696 | 10 February 2015 | Nil |
| Stephen Catlin | Dividend equivalents | 53,667 | 10 February 2015 | Nil |
| Stephen Catlin | Award of options over shares |
300,213 | 10 February 2015 | Nil |
| Benjamin Meuli | Award of options over shares |
195,231 | 10 February 2015 | Nil |
| Benjamin Meuli | Exercise of nil cost options |
204,898 | 13 February 2015 | Nil |
| Benjamin Meuli | Dividend equivalents | 49,180 | 13 February 2015 | Nil |
5.2 Between the commencement of the offer period and 31 March 2015 (being the latest practicable date before the date of this Scheme Document), the following persons acting in concert with Catlin have dealt in relevant Catlin securities:
| Name | Date | Transaction Type |
Number of Catlin Shares |
Price |
|---|---|---|---|---|
| Catlin Group Limited | 17-31 December 2014 | Sale(1) | 185,934 | — |
| Employee Benefit Trust | 1-31 January 2015 | Sale(1) | 179,958 | — |
| 1-28 February 2015 | Sale(1) | 1,081,236 | — | |
| Sale(1) | 324,906 | — |
Note:
6.1 As at 31 March 2015 (being the latest practicable date before the date of this Scheme Document), the XL Directors held the following interests in, or rights to subscribe in respect of, relevant XL securities:
| Name | Number of XL Shares |
Nature of Interest |
|---|---|---|
| Ramani Ayer | 21,520(1) | Beneficial |
| Dale R. Comey | 75,866(2) | Beneficial |
| Robert R. Glauber | 71,732(3) | Beneficial |
| Suzanne B. Labarge | 18,223(4) | Beneficial |
| Edward J. ''Ned'' Kelly, III | 2,352(5) | Beneficial |
| Joseph Mauriello | 69,380(6) | Beneficial |
| Michael S. McGavick | 2,240,070(7) | Beneficial |
| Eugene M. McQuade | 69,380(8) | Beneficial |
| Clayton S. Rose | 30,670(9) | Beneficial |
| Anne Stevens | 3,207 | Beneficial |
| John M. Vereker | 61,909(10) | Beneficial |
Notes:
(2) Includes 13,624 retainer share units, deferred share units, deferred restricted shares and accrued dividends issuable upon retirement or separation from the XL Board. Also includes 20,000 shares issuable upon exercise of vested stock options.
(1) These 'sales' represent transfers of Catlin Shares to settle options and awards under Catlin Share Schemes and dividend equivalent entitlements.
(1) Includes 5,000 shares issuable upon exercise of vested stock options.
As at 31 March 2015 (being the latest practicable date before the date of this Scheme Document), Fiona Luck, a Catlin Director, held 48,500 XL Shares, and rights to subscribe in respect of 75,000 XL Shares at US\$36.90 per share.
6.2 As at 31 March 2015 (being the latest practicable date before the date of this Scheme Document), persons acting in concert with XL held the following interests in, or rights to subscribe in respect of, relevant XL securities:
| Name | Transaction type | Number of XL Shares |
Nature of interest |
|---|---|---|---|
| Morgan Stanley Capital (Luxembourg) S.A. |
4,839 | Beneficial | |
| Morgan Stanley Equity Services Inc | 11,486 | Beneficial | |
| Goldman, Sachs & Co. | Ordinary Equity | 258,737 | Beneficial |
| Outstanding Call Options | 8,500 | Beneficial | |
| Outstanding Put Options | (18,000) | Beneficial | |
| CFDs | 235,420 | Beneficial | |
| Equity Swap Ordinary | 14,855 | Beneficial |
6.3 As at 31 March 2015 (being the latest practicable date before the date of this Scheme Document), persons acting in concert with Catlin held the following interests in, or rights to subscribe in respect of, relevant XL securities:
| Name | Number of XL Shares |
Nature of interest |
|---|---|---|
| JP Morgan Securities LLC | 352,095 | Beneficial, long |
| JP Morgan Securities LLC | 172,315 | Beneficial, short |
7.1 During the disclosure period, the following XL Directors (including members of their immediate families, close relatives and related trusts) have dealt in relevant XL securities:
Price
| Name | Transaction Type | Number of XL Shares |
Date | per unit (US\$) |
|---|---|---|---|---|
| Ramani Ayer | Annual Share Grant | 4,716 | 6 May 2014 | Nil |
| Ramani Ayer | Shares Sold for Taxes(3) Dividend Equivalents |
1,509 | 6 May 2014 | 31.81 |
| Dale R. Comey | Issued(1) Dividend Equivalents |
58.24 | 31 December 2013 | 31.84 |
| Dale R. Comey | Issued(1) | 68.11 | 31 March 2013 | 31.25 |
| Dale R. Comey | Annual Share Grant Dividend Equivalents |
4,716 | 6 May 2014 | Nil |
| Dale R. Comey | Issued(1) Dividend Equivalents |
65.37 | 30 June 2014 | 32.73 |
| Dale R. Comey | Issued(1) Dividend Equivalents |
64.82 | 30 September 2014 | 33.17 |
| Dale R. Comey | Issued(1) | 62.85 | 31 December 2014 | 34.37 |
| Name | Transaction Type | Number of XL Shares |
Date | Price per unit (US\$) |
|---|---|---|---|---|
| Dividend Equivalents | ||||
| Dale R. Comey | Issued Dividend Equivalents |
58.98 | 31 March 2015 | 36.80 |
| Robert T. Glauber | Issued(1) Dividend Equivalents |
19.96 | 31 December 2013 | 31.84 |
| Robert T. Glauber | Issued(1) | 23.34 | 31 March 2014 | 31.25 |
| Robert T. Glauber | Annual Share Grant | 4,716 | 6 May 2014 | Nil |
| Robert T. Glauber | Shares Sold for Taxes(3) Dividend Equivalents |
1,509 | 6 May 2014 | 31.81 |
| Robert T. Glauber | Issued(1) Dividend Equivalents |
22.41 | 30 June 2014 | 32.73 |
| Robert T. Glauber | Issued(1) Dividend Equivalents |
22.21 | 30 September 2014 | 33.17 |
| Robert T. Glauber | Issued(1) Dividend Equivalents |
21.54 | 31 December 2014 | 34.37 |
| Robert T. Glauber | Issued | 20.21 | 31 March 2015 | 36.80 |
| Edward J. Kelly | Annual Share Grant | 3,460 | 1 August 2014 | Nil |
| Edward J. Kelly | Shares Sold for Taxes(3) | 1,108 | 1 August 2014 | 32.52 |
| Edward J. Kelly | Stock Options Granted(4) | 5,000 | 1 August 2014 | 23.52 |
| Suzanne B. Labarge | Annual Share Grant | 4,716 | 6 May 2014 | Nil |
| Suzanne B. Labarge | Shares Sold for Taxes(3) Dividend Equivalents |
2,264 | 6 May 2014 | 31.81 |
| Joseph Mauriello | Issued(1) Dividend Equivalents |
30.99 | 31 December 2013 | 31.84 |
| Joseph Mauriello | Issued(1) | 36.24 | 31 March 2014 | 31.25 |
| Joseph Mauriello | Annual Share Grant Dividend Equivalents |
4,716 | 6 May 2014 | Nil |
| Joseph Mauriello | Issued(1) Dividend Equivalents |
34.79 | 30 June 2014 | 32.73 |
| Joseph Mauriello | Issued(1) Dividend Equivalents |
34.5 | 30 September 2014 | 33.17 |
| Joseph Mauriello | Issued(1) Dividend Equivalents |
33.45 | 31 December 2014 | 34.37 |
| Joseph Mauriello | Issued 2011 Performance Unit |
31.39 | 31 March 2015 | 36.80 |
| Michael S. McGavick | Award Distribution(2) | 40,856 | 28 February 2014 | Nil |
| Michael S. McGavick | Shares Sold for Taxes(3) | 15,125 | 28 February 2014 | 30.40 |
| Michael S. McGavick | Stock Options Granted(4) 2012 Performance Unit |
363,373 | 28 February 2014 | 30.40 |
| Michael S. McGavick | Award Distribution(5) | 80,058 | 28 February 2014 | Nil |
| Michael S. McGavick | Shares Sold for Taxes(3) | 35,116 | 28 February 2014 | 36.20 |
| Michael S. McGavick | Stock Options Granted(4) Dividend Equivalents |
551,751 | 28 February 2014 | 36.20 |
| Eugene M. McQuade | Issued(1) Dividend Equivalents |
37.41 | 31 December 2013 | 31.84 |
| Eugene M. McQuade | Issued(1) | 43.75 | 31 March 2014 | 31.25 |
| Eugene M. McQuade | Annual Share Grant | 4,716 | 6 May 2014 | Nil |
| Eugene M. McQuade | Shares Sold for Taxes(3) Dividend Equivalents |
1,509 | 6 May 2014 | 31.81 |
| Eugene M. McQuade | Issued(1) Dividend Equivalents |
42 | 30 June 2014 | 32.73 |
| Eugene M. McQuade | Issued(1) Dividend Equivalents |
41.64 | 30 September 2014 | 33.17 |
| Eugene M. McQuade | Issued(1) Dividend Equivalents |
40.38 | 31 December 2014 | 34.37 |
| Eugene M. McQuade | Issued | 37.89 | 31 March 2015 | 36.80 |
| Name | Transaction Type | Number of XL Shares |
Date | Price per unit (US\$) |
|---|---|---|---|---|
| Clayton S. Rose | Annual Share Grant | 4,716 | 6 May 2014 | Nil |
| Clayton S. Rose | Shares Sold for Taxes(3) | 1,509 | 6 May 2014 | 31.81 |
| Anne Stevens | Annual Share Grant | 4,716 | 6 May 2014 | Nil |
| Anne Stevens | Shares Sold for Taxes(3) | 1,509 | 6 May 2014 | 31.81 |
| Anne Stevens | Stock Options Granted(4) Dividend Equivalents |
5,000 | 6 May 2014 | 31.81 |
| John M. Vereker | Issued(1) | 10.25 | 31 December 2013 | 31.84 |
| John M. Vereker | Dividend Reinvestment Dividend Equivalents |
178 | 3 January 2014 | 31.28 |
| John M. Vereker | Issued(1) | 11.99 | 31 March 2014 | 31.25 |
| John M. Vereker | Dividend Reinvestment | 206.99 | 2 April 2014 | 30.95 |
| John M. Vereker | Annual Share Grant Dividend Equivalents |
4,716 | 6 May 2014 | Nil |
| John M. Vereker | Issued(1) | 11.5 | 30 June 2014 | 32.73 |
| John M. Vereker | Dividend Reinvestment Dividend Equivalents |
217.74 | 2 July 2014 | 33.04 |
| John M. Vereker | Issued(1) | 11.41 | 30 September 2014 | 33.17 |
| John M. Vereker | Dividend Reinvestment Dividend Equivalents |
218.33 | 2 October 2014 | 33.11 |
| John M. Vereker | Issued(1) | 11.06 | 31 December 2014 | 34.37 |
| John M. Vereker | Dividend Reinvestment | 213.43 | 5 January 2015 | 34.16 |
| John M. Vereker | Shares Sold Dividend Equivalents |
3,600 | 10 February 2015 | 35.72 |
| John M. Vereker | Issued | 10.38 | 31 March 2015 | 36.80 |
Notes:
(1) Represents quarterly dividend equivalents accrued on deferred share units pursuant to the Directors' Stock & Option Plan
(2) Represents settlement of long-term incentive award performance units for the 2011-2013 performance cycle.
(3) Shares disposed of represent withhold to satisfy tax obligations on stock award.
(4) Stock options have a ten year term and vest in three equal annual instalments commencing on the first anniversary of the grant date.
(5) Represents settlement of long-term incentive award performance units for the 2012-2014 performance cycle.
7.2 Between the commencement of the offer period and 31 March 2015 (being the latest practicable date before the date of this Scheme Document), the following persons acting in concert with Catlin have dealt in relevant XL securities:
| Name | Date | Transaction Type |
Number of XL Shares |
High price (\$) |
Low price (\$) |
|---|---|---|---|---|---|
| JP Morgan Securities LLC |
17 December 2014 – 16 January 2015 |
Purchase | 340,710 | 36.25 | 33.14 |
| Sale | 655,097 | 36.10 | 33.00 | ||
| 17 January – 16 February 2015 |
Purchase | 455,871 | 36.02 | 34.45 | |
| Sale | 322,395 | 36.01 | 34.46 | ||
| 17 February – 16 March 2015 |
Purchase | 153,252 | 36.84 | 34.86 | |
| Sale | 178,932 | 36.85 | 35.11 | ||
| 17 – 31 March 2015 | Purchase Sale |
217,034 232,581 |
37.33 37.33 |
36.80 36.65 |
7.3 During the disclosure period the following persons acting in concert with XL have dealt in relevant XL Securities:
| Detail on XL Securities | Price per unit (US\$) | |||||
|---|---|---|---|---|---|---|
| Name | Date | Transaction Type |
Type | Number | High | Low |
| Goldman, Sachs & Co. | 17/12/2013 – 16/03/2014 | Purchase | Ordinary Equity |
5,618,850 | 33.00 | 21.00 |
| Goldman, Sachs & Co. | 17/12/2013 – 16/03/2014 | Sale | Ordinary Equity |
5,566,115 | 31.99 | 26.00 |
| Goldman Sachs Financial Markets, L.P. |
17/12/2013 – 16/03/2014 | Purchase | Ordinary Equity |
15 | 31.67 | 29.12 |
| Goldman Sachs Financial Markets, L.P. |
17/12/2013 – 16/03/2014 | Sale | Ordinary Equity |
2,058 | 31.89 | 29.30 |
| Goldman, Sachs & Co. | 17/12/2013 – 16/03/2014 | Purchase | Call Options | 40,800 | 33.00 | 24.00 |
| Goldman, Sachs & Co. | 17/12/2013 – 16/03/2014 | Sale | Call Options | 41,700 | 39.00 | 26.00 |
| Goldman, Sachs & Co. | 17/12/2013 – 16/03/2014 | Purchase | Put Options | 21,900 | 31.00 | 24.00 |
| Goldman, Sachs & Co. | 17/12/2013 – 16/03/2014 | Sale | Put Options | 61,300 | 32.00 | 25.00 |
| Goldman, Sachs & Co. | 17/12/2013 – 16/03/2014 | Purchase | CFDs | 316,313 | 30.74 | 28.61 |
| Goldman, Sachs & Co. | 17/12/2013 – 16/03/2014 | Sale | CFDs | 314,637 | 30.74 | 28.61 |
| Goldman, Sachs & Co. | 17/12/2013 – 16/03/2014 | Purchase | Equity Swap | 51,188 | 31.84 | 30.70 |
| Goldman, Sachs & Co. | 17/12/2013 – 16/03/2014 | Sale | Equity Swap | 249,411 | 31.84 | 31.10 |
| Goldman Sachs Financial Markets, L.P. |
17/12/2013 – 16/03/2014 | Purchase | Equity Swap | 2,760 | 31.10 | 31.10 |
| Goldman Sachs Financial Markets, L.P. |
17/12/2013 – 16/03/2014 | Sale | Equity Swap | 1,380 | 31.34 | 31.34 |
| Goldman Sachs Financial Markets, L.P. |
17/12/2013 – 16/03/2014 | Purchase | Loan | 4,206 | — | — |
| Goldman Sachs Financial Markets, L.P. |
17/12/2013 – 16/03/2014 | Sale | Loan | 2,808 | — | — |
| Goldman, Sachs & Co. | 17/03/2014 – 16/06/2014 | Purchase | Ordinary Equity |
5,344,099 | 33.37 | 23.00 |
| Goldman, Sachs & Co. | 17/03/2014 – 16/06/2014 | Sale | Ordinary Equity |
5,667,534 | 33.39 | 30.00 |
| Goldman Sachs Financial Markets, L.P. |
17/03/2014 – 16/06/2014 | Purchase | Ordinary Equity |
15 | 31.21 | 31.21 |
| Goldman, Sachs & Co. | 17/03/2014 – 16/06/2014 | Purchase | Call Options | 19,500 | 35.00 | 23.00 |
| Goldman, Sachs & Co. | 17/03/2014 – 16/06/2014 | Sale | Call Options | 24,600 | 35.00 | 29.00 |
| Goldman, Sachs & Co. | 17/03/2014 – 16/06/2014 | Purchase | Put Options | 7,200 | 32.00 | 24.00 |
| Goldman, Sachs & Co. | 17/03/2014 – 16/06/2014 | Sale | Put Options | 24,200 | 32.00 | 27.00 |
| Goldman, Sachs & Co. | 17/03/2014 – 16/06/2014 | Purchase | CFDs | 202,466 | 32.81 | 30.23 |
| Goldman, Sachs & Co. | 17/03/2014 – 16/06/2014 | Sale | CFDs | 251,062 | 32.54 | 30.23 |
| Goldman, Sachs & Co. | 17/03/2014 – 16/06/2014 | Purchase | Equity Swap | 50,886 | 32.88 | 31.83 |
| Goldman, Sachs & Co. Goldman, Sachs & Co. |
17/03/2014 – 16/06/2014 17/06/2014 – 16/09/2014 |
Sale Purchase |
Equity Swap Ordinary |
51,526 4,475,388 |
32.88 35.00 |
32.60 25.00 |
| Equity | ||||||
| Goldman, Sachs & Co. | 17/06/2014 – 16/09/2014 | Sale | Ordinary Equity |
4,729,691 | 37.00 | 30.00 |
| Goldman Sachs Financial Markets, L.P. |
17/06/2014 – 16/09/2014 | Purchase | Ordinary Equity |
2 | 33.28 | 33.28 |
| Goldman, Sachs & Co. | 17/06/2014 – 16/09/2014 | Purchase | Call Options | 42,600 | 37.00 | 25.00 |
| Goldman, Sachs & Co. | 17/06/2014 – 16/09/2014 | Sale | Call Options | 25,700 | 36.00 | 32.00 |
| Goldman, Sachs & Co. | 17/06/2014 – 16/09/2014 | Purchase | Put Options | 24,200 | 37.00 | 26.00 |
| Goldman, Sachs & Co. | 17/06/2014 – 16/09/2014 | Sale | Put Options | 24,600 | 34.00 | 26.00 |
| Goldman, Sachs & Co. | 17/06/2014 – 16/09/2014 | Purchase | CFDs | 262,492 | 34.26 | 33.54 |
| Goldman, Sachs & Co. | 17/06/2014 – 16/09/2014 | Sale | CFDs | 30,000 | 33.54 | 33.54 |
| Goldman, Sachs & Co. | 17/06/2014 – 16/09/2014 | Purchase | Equity Swap | 47,100 | 34.26 | 32.88 |
| Goldman, Sachs & Co. | 17/06/2014 – 16/09/2014 | Sale | Equity Swap | 201,690 | 33.93 | 32.60 |
| Goldman Sachs Financial Markets, L.P. |
17/06/2014 – 16/09/2014 | Sale | Loan | 2 | — | — |
| Goldman, Sachs & Co. | 17/09/2014 – 16/10/2014 | Purchase | Ordinary Equity |
1,933,759 | 34.20 | 30.83 |
| Goldman, Sachs & Co. | 17/09/2014 – 16/10/2014 | Sale | Ordinary Equity |
1,786,881 | 35.00 | 30.87 |
| Goldman, Sachs & Co. | 17/09/2014 – 16/10/2014 | Purchase | Call Options | 9,800 | 36.00 | 28.00 |
| Goldman, Sachs & Co. | 17/09/2014 – 16/10/2014 | Sale | Call Options | 1,000 | 34.00 | 30.00 |
| Goldman, Sachs & Co. | 17/09/2014 – 16/10/2014 | Purchase | Put Options | 1,800 | 35.00 | 33.00 |
| Goldman, Sachs & Co. | 17/09/2014 – 16/10/2014 | Sale | Put Options | 2,000 | 36.00 | 32.00 |
| Goldman, Sachs & Co. | 17/09/2014 – 16/10/2014 | Sale | CFDs | 6,550 | 32.14 | 31.17 |
| Name Date Type Type Number High Low Goldman, Sachs & Co. 17/10/2014 – 16/11/2014 Purchase Ordinary 1,630,124 34.72 28.00 Equity Goldman, Sachs & Co. 17/10/2014 – 16/11/2014 Sale Ordinary 1,514,748 34.74 32.03 Equity Goldman, Sachs & Co. 17/10/2014 – 16/11/2014 Purchase Call Options 1,600 35.00 32.00 Goldman, Sachs & Co. 17/10/2014 – 16/11/2014 Sale Call Options 1,300 36.00 33.00 Goldman, Sachs & Co. 17/10/2014 – 16/11/2014 Purchase Put Options 6,700 37.00 26.00 Goldman, Sachs & Co. 17/10/2014 – 16/11/2014 Sale Put Options 3,100 34.00 32.00 Goldman, Sachs & Co. 17/10/2014 – 16/11/2014 Sale CFDs 3,580 34.59 32.39 Goldman, Sachs & Co. 17/10/2014 – 16/11/2014 Purchase Equity Swap 168,692 32.75 32.75 Goldman, Sachs & Co. 17/10/2014 – 16/11/2014 Sale Equity Swap 173,392 33.69 32.73 Goldman, Sachs & Co. 17/11/2014 – 16/12/2014 Purchase Ordinary 1,392,200 36.34 28.00 Equity Goldman, Sachs & Co. 17/11/2014 – 16/12/2014 Sale Ordinary 1,542,209 37.00 33.00 Equity Goldman, Sachs & Co. 17/11/2014 – 16/12/2014 Purchase Call Options 11,300 38.00 33.00 Goldman, Sachs & Co. 17/11/2014 – 16/12/2014 Sale Call Options 15,900 36.00 33.00 Goldman, Sachs & Co. 17/11/2014 – 16/12/2014 Purchase Put Options 2,800 35.00 34.00 Goldman, Sachs & Co. 17/11/2014 – 16/12/2014 Sale Put Options 10,800 36.00 30.00 Goldman, Sachs & Co. 17/11/2014 – 16/12/2014 Purchase CFDs 77,243 36.18 34.62 Goldman, Sachs & Co. 17/11/2014 – 16/12/2014 Sale CFDs 111,030 35.54 34.70 Goldman, Sachs & Co. 17/12/2014 – 27/03/2015 Purchase Ordinary 8,555,342 37.22 28.00 Equity Goldman, Sachs & Co. 17/12/2014 – 27/03/2015 Sale Ordinary 8,371,087 39.00 32.89 Equity Goldman Sachs Financial 17/12/2014 – 27/03/2015 Sale Ordinary 2 34.84 34.71 Markets, L.P. Equity Goldman, Sachs & Co. 17/12/2014 – 27/03/2015 Purchase Call Options 35,000 39.00 28.00 Goldman, Sachs & Co. 17/12/2014 – 27/03/2015 Sale Call Options 19,000 38.00 30.00 Goldman, Sachs & Co. 17/12/2014 – 27/03/2015 Purchase Put Options 28,100 40.00 30.00 Goldman, Sachs & Co. 17/12/2014 – 27/03/2015 Sale Put Options 4,100 42.00 33.00 Goldman, Sachs & Co. 17/12/2014 – 27/03/2015 Purchase CFDs 712,593 37.13 33.14 Goldman, Sachs & Co. 17/12/2014 – 27/03/2015 Sale CFDs 868,352 37.10 34.75 Goldman, Sachs & Co. 17/12/2014 – 27/03/2015 Purchase Equity Swap 265,071 34.85 33.90 Goldman, Sachs & Co. 17/12/2014 – 27/03/2015 Sale Equity Swap 187,764 35.76 34.26 Goldman Sachs Financial 17/12/2014 – 27/03/2015 Purchase Loan 2 — — |
Transaction | Detail on XL Securities | Price per unit (US\$) | |||
|---|---|---|---|---|---|---|
| Markets, L.P. |
| Number of | Price per unit (US\$) | ||||
|---|---|---|---|---|---|
| Name | Date | Transaction Type | XL Shares(1) | High | Low |
| Morgan Stanley Capital (Luxembourg) S.A. |
17 Dec 2014 – 31 Mar 2015 | Trades on Behalf of Non-Exempt Entities |
1,158 | 35.96 | 34.15 |
| Morgan Stanley Equity Services Inc |
17 Dec 2014 – 31 Mar 2015 | Trades on Behalf of Non-Exempt Entities |
4 | 34.37 | 33.86 |
| Morgan Stanley Capital (Luxembourg) S.A. |
17 Nov 2014 – 17 Dec 2014 | Trades on Behalf of Non-Exempt Entities |
1,158 | 35.82 | 34.47 |
| Morgan Stanley Equity Services Inc |
17 Nov 2014 – 17 Dec 2014 | Trades on Behalf of Non-Exempt Entities |
11,492 | 35.56 | 35.33 |
| Morgan Stanley Capital (Luxembourg) S.A. |
17 Oct 2014 – 17 Nov 2014 | Trades on Behalf of Non-Exempt Entities |
579 | 34.79 | 34.53 |
| Morgan Stanley Equity Services Inc |
17 Oct 2014 – 17 Nov 2014 | Trades on Behalf of Non-Exempt Entities |
— | — | — |
| Morgan Stanley Capital (Luxembourg) S.A. |
17 Sep 2014 – 17 Oct 2014 | Trades on Behalf of Non-Exempt Entities |
386 | 33.47 | 33.45 |
| Morgan Stanley Equity Services Inc |
17 Sep 2014 – 17 Oct 2014 | Trades on Behalf of Non-Exempt Entities |
11,940 | 33.51 | 32.26 |
| Morgan Stanley Capital (Luxembourg) S.A. |
17 Jun 2014 – 17 Sep 2014 | Trades on Behalf of Non-Exempt Entities |
— | — | — |
| Morgan Stanley Equity Services Inc |
17 Jun 2014 – 17 Sep 2014 | Trades on Behalf of Non-Exempt Entities |
23,820 | 34.00 | 32.94 |
| Morgan Stanley Capital (Luxembourg) S.A. |
17 Mar 2014 – 17 Jun 2014 | Trades on Behalf of Non-Exempt Entities |
965 | 32.45 | 31.42 |
| Morgan Stanley Equity Services Inc |
17 Mar 2014 – 17 Jun 2014 | Trades on Behalf of Non-Exempt Entities |
1,991 | 32.24 | 30.46 |
| Morgan Stanley Capital (Luxembourg) S.A. |
17 Dec 2014 – 17 Mar 2014 | Trades on Behalf of Non-Exempt Entities |
12,159 | 31.78 | 28.89 |
| Morgan Stanley Equity Services Inc |
17 Dec 2014 – 17 Mar 2014 | Trades on Behalf of Non-Exempt Entities |
2,890 | 31.40 | 28.25 |
(1) Note: purchases and sales have been aggregated (not netted off) – the figures shown therefore represent absolute volumes traded.
(E) neither XL, nor any person acting in concert with XL, has borrowed or lent any relevant Catlin securities or relevant XL securities, save for any borrowed shares which have been either on-lent or sold.
8.2 Save as disclosed in paragraphs 4 to 7 above as at 31 March 2015 (being the latest practicable date before the date of this Scheme Document):
The details of the service contracts of the Catlin Directors are:
| Director | Date of Contract |
Notice Period (from Catlin) |
Notice Period (from Director) |
Current annual base salary (US\$) |
Single figure of total remuneration received in 2014 (US\$) |
|---|---|---|---|---|---|
| Stephen Catlin | 5 April 2006 | 12 months | 12 months | 1,097,460(1) | 7,840,916(1) |
| Benjamin Meuli | 30 June 2009 | 12 months | 12 months | 972,734(2) | 5,208,507(2) |
Notes:
(1) Based on an exchange rate of £1:US\$1.56 on 31 December 2014
(2) Based on an exchange rate of CHF1.00645:£1 on 31 December 2014
In addition to the current annual base salary set out above, Stephen Catlin and Benjamin Meuli are also eligible for:
| Director | Date of Appointment (current role) |
Notice Period (from Catlin) |
Notice Period (from Director) |
Current fees (£) |
Unexpired Term (approx)(2) |
|---|---|---|---|---|---|
| John Barton(1) | 11 May 2012 | 3 months | 3 months | 235,000 | 5 months |
| Robert Gowdy | 30 June 2009 | 3 months | 3 months | 80,250 | 5 months |
| Fiona Luck | 3 August 2012 | 3 months | 3 months | 95,250 | 5 months |
| Nicholas Lyons | 6 August 2008 | 3 months | 3 months | 112,750 | 5 months |
| Claus-Michael Dill | 13 May 2014 | 3 months | 3 months | 70,250 | 5 months |
| Beatrice Hollond | 13 May 2014 | 3 months | 3 months | 70,250 | 5 months |
Notes:
(1) John Barton was appointed as a director on 1 December 2011 and appointed as Chairman on 11 May 2012.
(2) All directors are subject to re-election at Catlin's Annual General Meeting to be held in August 2015.
The emoluments of the XL Directors are subject to the terms set by the compensation committee of XL that may, in the ordinary course of events, take into account the successful completion of the Offer and the size of the Enlarged XL Group. However, save as stated, the emoluments of the XL Directors will not be affected by the Offer or any other associated transaction.
| Date | Catlin Share (pence) |
XL Share (pence) |
XL Share (USD) |
|---|---|---|---|
| 2 October 2014 | 515 | 2,057(1) | 33.21 |
| 3 November 2014 | 527 | 2,118(2) | 33.86 |
| 2 December 2014 | 552 | 2,263(3) | 35.39 |
| 2 January 2015 | 664 | 2,243(4) | 34.45 |
| 2 February 2015 | 703 | 2,343(5) | 35.21 |
| 2 March 2015 | 691 | 2,379(6) | 36.54 |
| 16 December 2014 | 582 | 2,222(7) | 35.01 |
| 8 January 2015 | 661 | 2,348(8) | 35.42 |
| 31 March 2015 | 710 | 2,482(9) | 36.80 |
(1) Based on an exchange rate of US\$1.6147: £1 on 2 October 2014
(2) Based on an exchange rate of US\$1.5986: £1 on 3 November 2014
(3) Based on an exchange rate of US\$1.5640: £1 on 2 December 2014
(4) Based on an exchange rate of US\$1.5359: £1 on 2 January 2015
(5) Based on an exchange rate of US\$1.5027: £1 on 2 February 2015
(6) Based on an exchange rate of US\$1.5359: £1 on 2 March 2015
(7) Based on an exchange rate of US\$1.5754:£1 on 16 December 2014
(8) Based on an exchange rate of US\$1.5084:£1 on 8 January 2015
(9) Based on an exchange rate of US\$1.4829:£1 on 31 March 2015
Save as disclosed below and as disclosed in paragraph 13 in relation to the Confidentiality Agreement, the Implementation Agreement, the Merger Agreement and the Code Application Letter, and in paragraph 16 in relation to the Bridge Facility, no member of the XL Group has, during the period beginning on 17 December 2012 (being the date two years before the commencement of the offer period) and ending on 31 March 2015 (being the latest practicable date before the date of this Scheme Document), entered into any material contract otherwise than in the ordinary course of business.
On 15 December 2014, XL Re Ltd (''XL Re''), an indirect wholly-owned subsidiary of XL, and other shareholders of ARX entered into a Stock Purchase Agreement with Progressive to sell all of its shares in ARX to Progressive. XL Re's shares in ARX represented approximately 40.0% of ARX's outstanding capital stock on a fully diluted basis at the time of the announcement. At 31 December 2014, XL recorded XL Re's shares in ARX as US\$204.4 million, included within Investments in Affiliates.
The transaction closed on 1 April 2015. XL Re received proceeds of approximately US\$560 million related to the sale.
In November 2013 XL (i) entered into two new credit agreements (together, the ''Syndicated Credit Agreements''), which provided for an aggregate amount of outstanding letters of credit and revolving credit loans of up to US\$2 billion, subject to certain options to increase the size of the facilities, and (ii) terminated the secured credit agreements dated 25 March 2011 and 9 December 2011, and the unsecured credit agreement dated 9 December 2011, which had provided for an aggregate amount of outstanding letters of credit and revolving credit loans up to US\$3 billion. The Syndicated Credit Agreements consist of (i) a secured credit agreement, which provides for the issuance of up to US\$1 billion of letters of credit and (ii) an unsecured credit agreement, which provides for the issuance of up to US\$1 billion of letters of credit and revolving credit loans. XL has the option to increase the maximum amount of letters of credit available by an additional US\$500 million across the facilities under the Syndicated Credit Agreements.
The commitments under the Syndicated Credit Agreements expire on, and such credit facilities are available until, the earlier of (i) 22 November 2018 and (ii) the date of termination in whole of the commitments upon an optional termination or reduction of the commitments by the account parties or upon the occurrence of certain events of default. The availability of letters of credit under the secured portion of the Syndicated Credit Agreements is subject to a borrowing base requirement, determined on the basis of specified percentages of the face value of eligible categories of assets varying by type of collateral. In the event that such credit support is insufficient, XL could be required to provide alternative security to cedants. This could take the form of insurance trusts supported by XL's investment portfolio or funds withheld (amounts retained by ceding companies to collateralise loss or premium reserves) using XL's cash resources or combinations thereof. The face amount of letters of credit required is driven by, among other things, loss development of existing reserves, the payment pattern of such reserves, the expansion of business written by XL and the loss experience of such business.
On 7 May 2013, XL-Cayman entered into the May 2013 Credit Agreement with Citicorp USA, Inc., as administrative agent and issuing lender, and the lenders party thereto, and a continuing agreement for standby letters of credit with Citibank. On 13 May 2013 and 15 May 2013, XL-Cayman entered into a credit agreement first amendment and credit agreement second amendment, respectively, to such credit agreement.
On 6 August 2013, XL-Cayman entered into the August 2013 Credit Agreement with Citicorp USA, Inc., as administrative agent and issuing lender, and the lenders party thereto and a continuing agreement for standby letters of credit with Citibank. On 12 September 2013, XL-Cayman entered into a credit agreement first amendment to such credit agreement.
Additionally, on 4 November 2013, XL-Cayman entered into the November 2013 Credit Agreement with Citicorp USA, Inc., as administrative agent and issuing lender, and the lenders party thereto and a continuing agreement for standby letters of credit with Citibank.
Collectively, the 2013 Citi Agreements and the continuing agreements for standby letters of credit provide for issuance of letters of credit and revolving credit loans in an aggregate amount of up to US\$575 million. XL-Cayman has the option to increase the maximum amount of letters of credit and revolving credit loans available under the 2013 Citi Agreements with the lender's and issuing lender's consent.
The commitments under the 2013 Citi Agreements expire on, and such credit facilities are available until, the earlier of (i) 20 June 2015 (with respect to the May 2013 Credit Agreement), 20 September 2015 (with respect to the August 2013 Credit Agreement) and 20 December 2016 (with respect to the November 2013 Credit Agreement) and (ii) the date of termination in whole of the commitments upon an optional termination or reduction of the commitments by the account parties or upon the occurrence of certain events of default.
On 30 March 2015, XL-Cayman completed the sale of \$500 million aggregate principal amount of its 4.450% subordinated notes due 2025 (the ''2025 Subordinated Notes'') and \$500 million aggregate principal amount of its 5.500% subordinated notes due 2045 (the ''2045 Subordinated Notes'' and, together with the 2025 Subordinated Notes, the ''Subordinated Notes'') at an issue price of 99.633% and 99.115% of the principal amount thereof, respectively. The Subordinated Notes are fully and unconditionally guaranteed by XL. The Subordinated Notes were issued pursuant to an indenture, which XL-Cayman, as issuer, and XL, as guarantor, entered into with Wells Fargo Bank, National Association, as trustee, on 30 March 2015 (the ''Base Indenture''), as supplemented by the First Supplemental Indenture, which XL-Cayman and XL entered into with Wells Fargo Bank, National Association, as trustee, on 30 March 2015 (the ''First Supplemental Indenture'' and, together with the Base Indenture, the ''Indenture'').
The 2025 Subordinated Notes bear interest at a rate of 4.450% per annum, payable semiannually on 30 March and 30 September beginning on 30 September 2015. The 2045 Subordinated Notes bear interest at a rate of 5.500% per annum, payable semiannually on 30 March and 30 September beginning on 30 September 2015. If, as of any interest payment date, one or more of the mandatory deferral events prescribed in the Indenture (each, a ''Mandatory Deferral Event'') has occurred and is continuing or would occur if payment of interest accrued on a series of Subordinated Notes were made on such interest payment date, XL-Cayman or XL, as applicable, will be required to defer payment of all (and not less than all) of the interest accrued and unpaid on such series of Subordinated Notes as of such interest payment date. Any interest which is deferred will bear no interest.
The 2025 Subordinated Notes are scheduled to mature on 31 March 2025 (the ''2025 Scheduled Maturity Date'') and the 2045 Subordinated Notes are scheduled to mature on 31 March 2045 (together with the 2025 Scheduled Maturity Date, the ''Scheduled Maturity Date''). Unless previously redeemed in full prior to such time, each series of Subordinated Notes will become due and payable on the applicable Scheduled Maturity Date, and XL-Cayman will repay such series of Subordinated Notes at their principal amount, together with accrued and unpaid interest (including arrears of interest) on such series of Subordinated Notes to, but excluding, such Scheduled Maturity Date, and any additional amounts thereon; provided, that, on such date, the applicable conditions to redemption prescribed in the Indenture (the ''Conditions to Redemption'') are satisfied. If the applicable Conditions to Redemption are not satisfied on the applicable Scheduled Maturity Date, the Subordinated Notes of such series will not become due and payable on such date, interest will continue to accrue, and the Subordinated Notes of such series will become due and payable, and will be finally redeemed, on the earlier of (a) the date falling 10 business days after the applicable Conditions to Redemption are satisfied and would continue to be satisfied if the final redemption payment were made (so long as such conditions continue to be so satisfied on such 10th business day) and (b) a winding-up of XL or XL-Cayman.
Each series of Subordinated Notes will be XL-Cayman's unsecured subordinated obligations and will rank in right of payment junior to all of XL-Cayman's existing and future unsubordinated debt, and pari passu with all of XL-Cayman's future debt that by its terms ranks equally in right of payment with the Subordinated Notes upon a winding-up of XL-Cayman. The guarantees will be XL's unsecured subordinated obligations and will rank in right of payment junior to all of XL's existing and future unsubordinated obligations, and pari passu with all of XL's future obligations that by their terms rank equally in right of payment with the guarantees upon a winding-up of XL. Each series of Subordinated Notes and the guarantees will be structurally subordinated to all claims of creditors (including policyholders and trade creditors) of XL-Cayman's subsidiaries.
If XL does not complete the Offer, or the Implementation Agreement is terminated, in each case on or prior to 15 December 2015, XL-Cayman will be required to redeem all of the Subordinated Notes of each series then outstanding at a redemption price of 101% of the aggregate principal amount thereof, plus accrued and unpaid interest (including arrears of interest) to, but excluding, the earlier to occur of (i) 31 December 2015, if the Offer has not been consummated on or prior to 15 December 2015 or (ii) the 15th day following the termination of the Implementation Agreement, and any additional amounts thereon. In addition to such special mandatory redemption provision, beginning on 31 March 2020, and subject to the satisfaction of the applicable Conditions to Redemption, XL-Cayman will be entitled to redeem each series of Subordinated Notes in whole at any time, or in part from time to time, at the make-whole redemption prices prescribed in the Indenture. XL-Cayman will also be entitled to redeem each series of Subordinated Notes in the event of certain changes in applicable tax laws or applicable regulatory requirements, subject to the satisfaction of all applicable Conditions to Redemption.
The Indenture restricts the ability of XL-Cayman and XL to consolidate, merge or transfer its assets substantially in the entirety to another person. The Indenture does not contain any other restrictive covenants. An ''event of default'' with respect to each series of Subordinated Notes will occur only upon a winding-up of XL-Cayman or XL. A right of acceleration of the principal and accrued and unpaid interest on a series of Subordinated Notes only applies upon the occurrence of an event of default. Any failure to pay interest on a series of Subordinated Notes when due as a result of a Mandatory Deferral Event or any failure to pay principal of a series of Subordinated Notes when due as a result of any of the Conditions to Redemption not being satisfied shall not constitute an event of default under the Indenture or such series of Subordinated Notes.
Save as disclosed below and as disclosed in paragraph 13 in relation to the Confidentiality Agreement, the Implementation Agreement, the Merger Agreement and the Code Application Letter, no member of the Catlin Group has, during the period beginning on 17 December 2012 (being the date two years before the commencement of the offer period) and ending on 31 March 2015 (being the latest practicable date before the date of this Scheme Document), entered into any material contract otherwise than in the ordinary course of business.
On 22 December 2014, Catlin Insurance Company Limited (''CICL''), together with certain other sellers, entered into an agreement with Aioi Nissay Dowa Insurance Company of Europe Limited (as purchaser) (''Aioi'') and Aioi Nissay Dowa Insurance Co., Limited (as guarantor) for the sale of CICL's investment in Box Innovation Group Limited (trading as ''insurethebox''). As announced on 31 March 2015, CICL completed the disposal, receiving cash proceeds of approximately £85 million and the Catlin Board declared a special dividend of 11.7p per Catlin Share, payable on 24 April 2015 to shareholders of record at close of business on 10 April 2015. CICL, together with the other sellers, has given customary warranties and indemnities to Aioi. CICL's liability in respect of the warranties and indemnities given by it is limited to a proportion of its share of the purchase price and will be time-barred if no claim is brought within a certain period after the completion date.
On 16 July 2013, XL and Catlin entered into the Confidentiality Agreement pursuant to which each of XL and Catlin have agreed to keep confidential information about the other party and not to disclose to third parties (other than permitted recipients) confidential information exchanged by them unless required by law or regulation, the rules of any stock exchange or by legal process. As amended by the Implementation Agreement, these confidentiality obligations will remain in force until the earlier of (i) the completion of the Offer or (ii) 9 October 2015.
On 9 January 2015, XL, XL Sub and Catlin entered into an Implementation Agreement in relation to the Offer and other related matters. The Implementation Agreement contains certain undertakings, assurances and confirmations among the parties, including with respect to the implementation of the Offer.
As Catlin is incorporated as a Bermuda exempted company and has its registered office in Bermuda, the Code does not apply to XL, XL Sub or Catlin, or in relation to the Offer. However, in accordance with the requirements of Catlin's Bye-Laws and pursuant to the terms of the Implementation Agreement, XL, XL Sub and Catlin have agreed to implement the Offer, and to observe and comply with the provisions of the Code, as if Catlin were subject to the Code. In particular, XL has specifically undertaken that Rule 13 of the Code will govern the circumstances in which it can invoke any Condition so as to cause the Offer to lapse and Catlin has specifically undertaken that Rule 21 of the Code will apply to it in the period pending the Effective Date. XL has also agreed to certain restrictions pending the Effective Date, including as to its ability to pay dividends, alter its capital structure or amend its constitutional documents, subject to various exceptions.
Pursuant to the Implementation Agreement, XL and Catlin have agreed to appoint a committee comprised of three representatives appointed by each of them (the ''Code Committee''), which will be responsible for determining how the Code would be interpreted and applied in relation to the Offer had Catlin been subject to the Code. The Implementation Agreement also provides for referral of any matter relating to the interpretation and application of the Code to an independent expert (the ''Code Expert''), whose rulings will (absent fraud or manifest error) be final and binding on the parties.
Pursuant to the Implementation Agreement, XL and Catlin agree to co-operate and assist each other in obtaining the Clearances required to satisfy the Conditions.
The Implementation Agreement sets out the parties' agreement as to the treatment, in relation to the Offer, of participants in the Catlin Share Schemes.
The Implementation Agreement also sets out the circumstances in which XL may elect to implement the Offer by way of a Takeover Offer or Bermuda Merger. XL may elect, with the prior written consent of either (i) Catlin, or (ii) the Code Committee or the Code Expert, to implement the Offer by way of a Takeover Offer. XL may also elect, with the agreement of Catlin, to implement the Offer by way of a Bermuda Merger. In such circumstances, the Code Committee or the Code Expert will determine the timetable for the Takeover Offer or Bermuda Merger.
The Implementation Agreement is terminable:
(provided that, in the case of (i) and (ii), but without prejudice to (vi) or (vii) below, the circumstances in (i) and (ii) above shall be deemed not to have arisen by reason only of any adjournment of either or both of the Court Meeting and the Special General Meeting for a specified period of time or any delay of the Court Hearing);
(vii) the Court Hearing has not been held by the date which is 22 days after the date first fixed for the Court Hearing (which date can be determined only after the last of the Clearances has been obtained and may or may not be 29 April 2015) (or such later date as may be agreed between XL and Catlin)
(each of (i), (ii), (iii), (iv), (v), (vi) and (vii) being a ''Relevant Withdrawal Event'');
provided that for the purposes hereof, none of the following shall itself constitute a Relevant Withdrawal Event:
On 9 January 2015, XL, XL Sub and Catlin entered into the Merger Agreement, which provides that immediately following, and conditional only upon, the Scheme becoming effective, Catlin will merge with and into XL Sub pursuant to section 104H of the Companies Act, with XL Sub continuing as the surviving company. If the Implementation Agreement is terminated, or if XL publicly announces a Takeover Offer or Bermuda Merger (subject to and in accordance with the Implementation Agreement), the Merger Agreement will terminate automatically.
On 9 January 2015, XL and Catlin entered into a letter agreement pursuant to which they agreed, among other things, that, for the purpose of Rule 13.5(a) of the Code, it would be of material significance to XL in the context of the Offer, if any of the Conditions set out in paragraphs (C) (PRA approval), (D) (relating to Lloyd's approval), (E) (Bermuda Monetary Authority approval), (F) (FINMA approval), (G) (Delaware Department of Insurance approval), (H) (Texas Department of Insurance approval), (I) (New York Department of Financial Services approval) (if applicable) or (M) (US Hart-Scott-Rodino clearance) of Part A of Part Three of the Scheme Document, is not satisfied.
XL has received irrevocable undertakings from each of the Catlin Directors to vote or procure votes in favour of the Scheme at the Court Meeting and in favour of the special resolution to be proposed at the Special General Meeting (or, if the Offer is implemented by way of a Takeover Offer, to accept or procure acceptance of such offer) in respect of 8,423,502 Catlin Shares, representing, in aggregate, approximately 2.29 per cent. of the ordinary share capital of Catlin in issue on 31 March 2015 (being the latest practicable date before the date of this Scheme Document). The following persons have given irrevocable undertakings to vote or procure votes in favour of the Scheme and the associated resolutions to be proposed at the Court Meeting and Special General Meeting (or in the event that the Offer is implemented by way of a Takeover Offer, accept or procure acceptance of such Takeover Offer) in relation to the Scheme Shares:
| Name | Total number of Catlin shares in respect of which the undertaking has been given |
Percentage of issued ordinary share capital of Catlin Shares |
|---|---|---|
| John Barton | 50,000 | 0.014 |
| Stephen Catlin1 | 7,096,696 | 1.928 |
| Robert Gowdy | 29,350 | 0.008 |
| Fiona Luck | 5,000 | 0.001 |
| Benjamin Meuli | 1,242,456 | 0.338 |
| Total | 8,423,502 | 2.288 |
The Catlin Directors' irrevocable undertakings will cease to be binding in the following circumstances:
The aggregate fees and expenses XL expects to incur in connection with the Offer (excluding any applicable VAT) are:
| Category | Amount (£) (in thousands) |
|---|---|
| Financial and corporate broking advice | 20,200 |
| Legal advice3 |
7,400 |
| Accounting advice | 700 |
| Expenses related to the financing of the Offer | 40,800 |
| Other fees and expenses | 1,200 |
| Total | 70,300 |
The aggregate fees and expenses Catlin expects to incur in connection with the Offer (excluding any applicable VAT) are expected to be:
| Category | Amount (£) (in thousands) |
|---|---|
| Financial and corporate broking advice | 16,866 |
| Legal advice3 |
5,108 |
| Other professional fees and expenses | 67 |
| Other fees and expenses | 26 |
| Total | 22,067 |
Each of Morgan Stanley and Goldman Sachs International, financial advisers to XL, is satisfied that sufficient cash resources are available to XL to enable it to satisfy in full the cash consideration payable to Catlin Shareholders under the terms of the Offer.
While the cash consideration payable by XL under the terms of the Offer is anticipated to be funded by approximately US\$1.25 billion of cash on hand and through the net proceeds of the
1 Includes 685,000 Catlin Shares held by the Catlin Settlement Trust, of which Stephen Catlin is a trustee
2 Certain of the amounts shown in sections 15.1 and 15.2 were denominated in currencies other than pounds sterling and converted to pounds sterling using the applicable exchange rate as at 31 March 2015, being the latest practicable date prior to publication of this Scheme Document. In the case of amounts expressed in US\$, the relevant exchange rate as at such date was US\$1: £1.4829
3 Some of these services are charged by reference to hourly or daily rates. Amounts included above reflect time incurred up to the latest practicable date prior to the publication of this Scheme Document and an estimate of further time required
Subordinated Notes of approximately US\$980 million, XL is able to rely on commitments to provide £1,600,000,000 of loans to XLIT, a wholly-owned subsidiary of XL, as borrower under the Bridge Facility arranged by Morgan Stanley Senior Funding, Inc. and Goldman Sachs Bank USA (the ''Arrangers''), which loans would be onlent to XL to fund the cash consideration payable by XL under the terms of the Offer.
On 9 January 2015 (the ''Bridge Facility Effective Date''), in connection with the Offer, XLIT, as borrower, XL, X.L. America, Inc., XL Insurance (Bermuda) Ltd, XL Re Ltd, and XL Life Ltd, as guarantors, Morgan Stanley Senior Funding, Inc., as administrative agent, Morgan Stanley Senior Funding, Inc. and Goldman Sachs Bank USA, as lenders entered into a senior unsecured 364-Day Bridge Loan Agreement (the ''Bridge Loan Agreement''). On 30 January 2015, the Arrangers assigned a portion of their commitments under the Bridge Facility to Morgan Stanley Bank, N.A., Citibank, N.A., Deutsche Bank AG Cayman Islands Branch, HSBC Bank Bermuda Limited, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Credit Agricole Corporate and Investment Bank, The Royal Bank of Scotland plc, Lloyds Bank plc, ING Bank N.V., London Branch, Credit Suisse AG, Cayman Islands Branch and BNP Paribas who became additional lenders to the Bridge Facility pursuant to an assignment and assumption agreement of the same date.
Advances under the Bridge Loan Facility will be available on a date after the Bridge Facility Effective Date, subject to satisfaction of certain conditions set forth in the Bridge Loan Agreement (the ''Closing Date''). One of the conditions to the lenders' obligation to fund the Bridge Facility is that the Offer be consummated in all material respects pursuant to the relevant documents provided to the lenders relating to the Offer, without giving effect to any modifications, consents, amendments or waivers that would be materially adverse to the interests of the lenders or the Arrangers, unless such modifications, consents, amendments or waivers are required by the Code Committee (and, if applicable, the Code Expert) in accordance with the terms of the Implementation Agreement, or each of the Arrangers have provided their written consent thereto, and that in the case of any such modifications, consents, amendments or waivers required by the Code Committee that would be materially adverse to the interests of the lenders or the joint lead arrangers, upon the request of either Arranger, XLIT will be required to obtain written confirmation from the Code Expert that the Code Expert concurs with such requirement of the Code Committee. All principal and interest payable under the Bridge Facility will be due on the earlier of (a) the date that is 364 days after the Closing Date or (b) the date on which the maturity of the loans is accelerated in accordance with the terms thereof. The maturity of the loans may be accelerated following the occurrence and continuation of certain events of default, and will be automatically accelerated in the case of certain events of default relating to insolvency or bankruptcy of XLIT Ltd or XL.
Commitments under the Bridge Facility (or, to the extent such commitments are funded, loans outstanding under the Bridge Facility) may be voluntarily reduced (or prepaid) by XLIT without premium or penalty, other than payment of customary breakage costs. Such voluntary reductions, except in certain circumstances, will require cash equal to such reduction to be placed in an escrow account to satisfy ''funds certain'' requirements for the Offer as required by XL's financial advisers. Commitments under the Bridge Facility (or, to the extent such commitments are funded, loans outstanding under the Bridge Facility) will be subject to mandatory reduction (or, in the case of loans, mandatory prepayment), by (a) the net cash proceeds of any sale, transfer or other disposition of, or casualty or condemnation event with respect to, assets of XL and its subsidiaries (other than the sale of investments in the ordinary course) to the extent such proceeds are not reinvested, subject to certain exceptions and thresholds, (b) the net cash proceeds of the sale or issuance of debt securities or incurrence of other debt of XL or any of its subsidiaries, subject to certain exceptions and thresholds and (c) the net cash proceeds of the sale or issuance of equity securities or equitylinked securities issued by XL or any of its subsidiaries, subject to certain exceptions and thresholds. Such mandatory commitment reductions, except in certain circumstances, will require cash equal to such reduction to be placed in an escrow account to satisfy ''funds certain'' requirements for the Offer as required by XL's financial advisers.
Borrowings under the Bridge Facility will bear interest at an adjusted LIBO rate plus an applicable margin. The applicable margin ranges from 1.125 per cent. to 2.00 per cent. per annum depending on the public debt rating of XLIT then in effect, increasing by 0.25 per cent. (with respect to each level of public debt rating) every 90 days after the Closing Date. The commitments outstanding under the Bridge Facility will be subject to an unused commitment fee at a rate per annum equal to, from the Bridge Facility Effective Date through the date that is 179 days after the Bridge Facility Effective Date, 0.10 per cent., and, thereafter, 0.175 per cent., on the daily average undrawn commitments under the Bridge Facility. In addition, XLIT has agreed to pay a duration fee under the Bridge Facility on the aggregate principal amount of any loans outstanding (i) on the 90th day after the Closing Date equal to 0.50 per cent., (ii) on the 180th day after the Closing Date equal to 0.75 per cent. and (iii) on the 270th day after the Closing Date equal to 1.00 per cent.
The commitments under the Bridge Facility, unless previously terminated, will terminate on the earliest of (i) certain mandatory cancellation events, (ii) the date on which the obligations of XL to pay the cash consideration payable to Catlin Shareholders pursuant to and in accordance with the Implementation Agreement, and applicable laws and regulations have been discharged in full, (iii) if the Closing Date has not occurred by then, 11.59 p.m. (New York City time) on the later of (a) 9 October 2015 and (b) in the event that on or before 9 October 2015, the Scheme becomes effective in accordance with its terms (or, to the extent permitted by the Bridge Loan Agreement, a merger (in lieu of the Scheme) becomes effective or a Takeover Offer closes) and XLIT has submitted a borrowing request for bridge loans, then the date that is three business days following the date of such borrowing request and (iv) the earlier of the date that is 90 days following the Closing Date and the date of consummation of a second step acquisition in the event the Offer is completed pursuant to a Takeover Offer.
The Bridge Loan Agreement contains financial covenants that require XL to maintain a minimum consolidated net worth and a maximum ratio of total consolidated debt to the sum of total consolidated debt plus consolidated net worth, and that require each of XL Insurance (Bermuda) Ltd, XL Re Ltd and XL Re Europe SE to maintain a financial strength rating of no less than ''A-'' from A.M. Best. The terms of the Bridge Facility also include customary affirmative covenants, negative covenants and events of default. Subsequent to any funding of loans under the Bridge Facility, if an event of default under the Bridge Loan Agreement shall occur and be continuing, the maturity of such loans and all other obligations of XLIT under the Bridge Loan Agreement may be accelerated.
The Bridge Facility is guaranteed by XL, X.L. America, Inc., XL Insurance (Bermuda) Ltd, XL Re Ltd and XL Life Ltd.
No relevant securities of XL have been redeemed or purchased by XL during the offer period, other than 54,558 XL Shares which were withheld and subsequently cancelled by XL on account of taxes payable in respect of restricted stock awards.
Catlin currently writes insurance and reinsurance business through a small number of regulated underwriting entities (''insurance carriers''). These insurance carriers are legal entities that Catlin owns and operates. They are assigned financial strength ratings by major insurance ratings agencies and have their own financial accounts. The current financial strength ratings assigned to those entities are set out below.
18.1.1 Standard & Poor's
| Entity | Financial Strength Rating |
Issuer Credit Rating |
Debt Rating | Lloyd's Syndicate Assessment |
|---|---|---|---|---|
| Catlin Insurance Company Ltd | A/Stable | A/Stable | — | — |
| US\$600m Preferred Stock | — | — | BBB+ | — |
| Catlin Re Switzerland | A/Stable | A/Stable | — | — |
| Catlin Insurance Company (UK) Ltd . | A/Stable | A/Stable | — | — |
| Catlin Insurance Company Inc | A/Stable | A/Stable | — | — |
| Catlin Specialty Insurance Co | A/Stable | A/Stable | — | — |
| Lloyd's Market Rating | A+/Stable | A+/Stable | — | — |
| Syndicate 2003 | — | — | — | 4+ |
Following the Announcement of the Offer on 9 January 2015, Standard & Poor's affirmed the ratings of Catlin's (re)insurance carriers.
| Entity | Financial Strength Rating |
Issuer Credit Rating |
Debt Rating | Lloyd's Syndicate Assessment |
|---|---|---|---|---|
| Catlin Group Limited | — | bbb/u | — | — |
| Catlin Insurance Company Ltd | A/u | a/u | — | — |
| US\$600m Preferred Stock | — | — | bbb/u | — |
| Catlin Re Switzerland | A/u | a/u | — | — |
| Catlin Insurance Company (UK) Ltd . | A/u | a/u | — | — |
| Catlin Insurance Company Inc | A/u | a/u | — | — |
| Catlin Specialty Insurance Co | A/u | a/u | — | — |
| Catlin Indemnity Company | A/u | a/u | — | — |
| Catlin Underwriting | — | bbb/u | — | — |
| US\$27m/A7m Sub Debt | — | — | bbb-/u | — |
| Lloyd's Market Rating | A/Positive | a+/Positive | — | — |
Following the Announcement of the Offer on 9 January 2015, A.M. Best placed the ratings of Catlin's (re)insurance carriers under review with positive implications.
XL provides property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises on a worldwide basis through its subsidiaries. XL's core operating subsidiaries hold a Financial Strength Rating of 'A' from A.M. Best, 'A+' from Fitch, 'A2' from Moody's and 'A+' from S&P.
| Entity | Financial Strength Rating |
Long Term Debt Rating |
|---|---|---|
| Greenwich Insurance Company | A+/Stable | — |
| Indian Harbor Insurance Company | A+/Stable | — |
| XL Insurance America Inc | A+/Stable | — |
| XL Insurance (Bermuda) Ltd | A+/Stable | — |
| XL Insurance Company SE (UK) | A+/Stable | — |
| XL Insurance Company SE (Canada) | — | — |
| XL Insurance Company of New York, Inc. | A+/Stable | — |
| XL Insurance Switzerland Ltd | A+/Stable | — |
| XL Re Europe SE | A+/Stable | — |
| XL Re Latin America Ltd | A+/Stable | — |
| XL Re Ltd | A+/Stable | — |
| XL Re Ltd – (UK Branch) | A+/Stable | — |
| XL Reinsurance America Inc | A+/Stable | — |
| XL Select Insurance Company | A+/Stable | — |
| XL Specialty Insurance Company | A+/Stable | — |
| X.L. America, Inc. | — | A-/Stable |
| XLIT Ltd | — | A-/Stable |
| XL Group plc | — | — |
Following the Announcement of the Offer on 9 January 2015, Standard & Poor's affirmed the ratings of XL's core operating subsidiaries with a stable outlook.
| Entity | Financial Strength Rating |
Long Term Debt Rating |
|---|---|---|
| Greenwich Insurance Company | A/u | — |
| Indian Harbor Insurance Company | A/u | — |
| XL Insurance America Inc | A/u | — |
| XL Insurance (Bermuda) Ltd | A/u | — |
| XL Insurance Company SE (UK) | A/u | — |
| XL Insurance Company SE (Canada) | A/u | — |
| XL Insurance Company of New York, Inc. | A/u | — |
| XL Insurance Switzerland Ltd | A/u | — |
| XL Re Europe SE | A/u | — |
| XL Life Ltd | B++ | — |
| XL Re Latin America Ltd | A/u | — |
| XL Re Ltd | A/u | — |
| XL Re Ltd – (UK Branch) | — | — |
| XL Reinsurance America Inc | A/u | — |
| XL Select Insurance Company | A/u | — |
| XL Specialty Insurance Company | A/u | — |
| X.L. America, Inc. | — | — |
| XLIT Ltd | — | bbb+/u |
| XL Group plc | — | bbb+/u |
Following the Announcement of the Offer on 9 January 2015, A.M. Best placed the rating of the above entities under review with negative implications.
| Entity | Financial Strength Rating |
Long Term Debt Rating |
|---|---|---|
| Greenwich Insurance Company | A2/Stable | — |
| Indian Harbor Insurance Company | A2/Stable | — |
| XL Insurance America Inc | — | — |
| XL Insurance (Bermuda) Ltd | A2/Stable | — |
| XL Insurance Company SE (UK) | A2/Stable | — |
| XL Insurance Company SE (Canada) | — | — |
| XL Insurance Company of New York, Inc. | A2/Stable | — |
| XL Insurance Switzerland Ltd | A2/Stable | — |
| XL Re Europe SE | — | — |
| XL Re Latin America Ltd | — | — |
| XL Re Ltd | A2/Stable | — |
| XL Re Ltd – (UK Branch) | — | — |
| XL Reinsurance America Inc | A2/Stable | — |
| XL Select Insurance Company | — | — |
| XL Specialty Insurance Company | A2/Stable | — |
| X.L. America, Inc. | — | — |
| XLIT Ltd | — | Baa2/Stable |
| XL Group plc | — | — |
Following the Announcement of the Offer on 9 January 2015, Moody's affirmed the financial strength ratings of XL's principal operating subsidiaries with a stable outlook.
| Entity | Financial Strength Rating |
Long Term Debt Rating |
|---|---|---|
| Greenwich Insurance Company | A+/Stable | — |
| Indian Harbor Insurance Company | A+/Stable | — |
| XL Insurance America Inc | A+/Stable | — |
| XL Insurance (Bermuda) Ltd | A+/Stable | — |
| XL Insurance Company SE (UK) | A+/Stable | — |
| XL Insurance Company SE (Canada) | — | — |
| XL Insurance Company of New York, Inc. | A+/Stable | — |
| XL Insurance Switzerland Ltd | A+/Stable | — |
| XL Re Europe SE | A+/Stable | — |
| XL Re Latin America Ltd | A+/Stable | — |
| XL Re Ltd | A+/Stable | — |
| XL Re Ltd – (UK Branch) | — | — |
| XL Reinsurance America Inc | A+/Stable | — |
| XL Select Insurance Company | A+/Stable | — |
| XL Specialty Insurance Company | A+/Stable | — |
| X.L. America, Inc. | — | — |
| XLIT Ltd | — | A-/Stable |
| XL Group plc | — | — |
Following the Announcement of the Offer on 9 January 2015, Fitch affirmed the financial strength ratings of XL's subsidiaries with a stable outlook.
19.1 The persons who (in addition to the XL Directors and members of the XL Group), for the purposes of the Code (as applied pursuant to the Implementation Agreement), are acting in concert with XL are:
| Name | Registered Office | Relationship |
|---|---|---|
| Morgan Stanley & Co International plc | 25 Cabot Square, Canary Wharf, London, E14 4QA |
Financial adviser |
| Goldman Sachs International | Peterborough Court, 133 Fleet Street, London EC4A 2BB |
Financial adviser |
19.2 The persons who (in addition to the Catlin Directors and members of the Catlin Group), for the purposes of the Code (as applied pursuant to the Implementation Agreement), are acting in concert with Catlin are:
| Name | Registered Office | Relationship |
|---|---|---|
| Evercore International Partners LLP | 15 Stanhope Gate, London W1K 1LN |
Financial adviser |
| J.P. Morgan Limited | 25 Bank Street, Canary Wharf E14 5JP |
Financial adviser |
| Barclays Bank PLC | 1 Churchill Place, London E14 5JP |
Financial adviser |
| Catlin Group Employee Benefit Trust | The Trustee, Catlin Group Limited Employee Benefit Trust, c/o Appleby Trust Services, Canon's Court, 22 Victoria Street, Hamilton HM12, Bermuda |
Employee Benefit Trust |
| Wellington Underwriting plc Employee Benefit Trust |
Frances House, Sir William Place, St Peter Port, Guernsey GY1 4HQ |
Employee Benefit Trust |
J.P. Morgan Cazenove has given and not withdrawn its written consent to the issue of this Scheme Document with the inclusion of references to its name in the form and context in which they are included and with the inclusion of its explanatory statement in the form and context in which it is included.
Evercore has given and not withdrawn its written consent to the issue of this Scheme Document with the inclusion of references to its name in the form and context in which they are included and with the inclusion of its explanatory statement in the form and context in which it is included.
Barclays has given and not withdrawn its written consent to the issue of this Scheme Document with the inclusion of references to its name in the form and context in which they are included.
Each of Morgan Stanley and Goldman Sachs International has given and not withdrawn its written consent to the issue of this Scheme Document with the inclusion of references to its name in the form and context in which they are included.
Copies of the following documents are available for viewing on Catlin's website at www.catlin.com (in each case subject to certain access restrictions) and also available for inspection at Catlin's office at 20 Gracechurch Street, London EC3V 0BG, and at the offices of Slaughter and May, One Bunhill Row, London EC1Y 8YY during usual business hours on Monday to Friday of each week (public holidays excepted) in each case, up to and including the Effective Date or the date the Scheme lapses or is withdrawn, whichever is earlier:
XL's Irish Prospectus will be available, subject to certain access restrictions, to view on XL's website at www.xlgroup.com. Hard copies will also be made available for inspection at the offices of Skadden, Arps, Slate, Meagher & Flom, 40 Bank Street, Canary Wharf, London, E14 5DS and at XL's office at 70 Gracechurch Street, London, EC3V 0XL, in each case during usual business hours on Monday to Friday of each week (public holidays excepted) up to and including the Effective Date or the date the Scheme lapses or is withdrawn, whichever is earlier.
23.1 The aggregate Offer value of approximately £2.79 billion is based on:
23.6 256,683,621 XL Shares were in issue on 30 March 2015 (being the latest practicable date for obtaining such information for this Scheme Document).
23.7 Unless otherwise stated, the financial information relating to Catlin is extracted or derived (without any adjustment) from the audited consolidated financial statements of Catlin for the financial year to 31 December 2014, which were prepared in accordance with accounting principles generally accepted in the US.
If you wish to receive 388 pence in cash and 0.130 New XL Shares for each Scheme Share that you hold at the Scheme Record Time, DO NOT RETURN a Form of Election or send a TTE Instruction.
* You must complete and sign a GREEN Form of Election in accordance with the instructions printed thereon and return it to Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom so as to be received by the Election Return Time, which is currently expected to be 1.00 p.m. (London time) on 28 April 2015. A reply-paid envelope (marked with a GREEN flash), for use in the UK only, is enclosed for your convenience.
* You must submit your election electronically by taking (or procuring to be taken) the actions set out below to transfer the Scheme Shares in respect of which you wish to make an election under the Mix and Match Facility to an escrow balance, using a TTE Instruction specifying Capita (in its capacity as a CREST participant under the ID RA10) as the escrow agent. Such action must be taken by the Election Return Time, which is currently expected to be 1.00 p.m. (London time) on 28 April 2015.
If you hold Catlin Shares in certificated form and Catlin Shares in uncertificated form and you wish to make an election under the Mix and Match Facility in respect of each such holding, you must make a separate election in respect of each holding.
If you need further copies of the Form of Election, please telephone the Catlin Group Limited Shareholder Helpline on 0333 300 1573 from within the UK or on + 44 333 300 1573 if calling from outside the UK. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The Catlin Group Limited Shareholder Helpline is open between 9.00 a.m. and 5.30 p.m. (London time), Monday to Friday (excluding UK public holidays). Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Scheme or the Offer, nor give any financial, legal or tax advice.
An election under the Mix and Match Facility will only be accepted under the Mix and Match Facility in respect of a whole number of Catlin Shares. Any election under the Mix and Match Facility which is made in respect of a number of Catlin Shares which is not a whole number shall be deemed to be made in respect of the nearest whole number of Catlin Shares when rounded down.
Cash Elections and Share Elections will be satisfied only to the extent that others make offsetting elections. To the extent that Share Elections or Cash Elections cannot be satisfied in full: (i) the number of Catlin Shares in respect of which a Share Election or Cash Election has been made will be scaled down pro rata in proportion to the number of Catlin Shares in respect of which the relevant election is made (or as near thereto as XL and Catlin in their absolute discretion consider practicable among electors); and (ii) the balance of the Catlin Shares the subject of such elections shall be deemed to be Catlin Shares in respect of which no election has been made.
Minor adjustments to the entitlements of Catlin Shareholders pursuant to elections made under the Mix and Match Facility may be made by Capita under instruction from Catlin on a basis that Catlin considers to be fair and reasonable to the extent necessary to satisfy all entitlements pursuant to elections under the Mix and Match Facility, as nearly as may be practicable. Such adjustments shall be final and binding on Scheme Shareholders and holders of Depositary Interests.
You should be aware that if you buy or sell Catlin Shares after having made an election under the Mix and Match Facility, the number of Catlin Shares (respectively) to which your election applies may be affected as set out below.
If a shareholder has made a valid election in respect of ALL of his Catlin Shares (respectively), then:
If a shareholder has made a valid Cash Election or Share Election in respect of a specified number of Catlin Shares, representing part but not all of his holding and at the Scheme Record Time the number of Catlin Shares held by that shareholder is:
If you are a CREST personal member, you should refer to your CREST sponsor before taking any action. Your CREST sponsor will be able to confirm details of your participant ID and the member account ID under which your Scheme Shares are held. In addition, only your CREST sponsor will be able to send the TTE Instruction to Euroclear in relation to your Scheme Shares.
You should send (or, if you are a CREST personal member, procure that your CREST sponsor sends) a TTE Instruction to Euroclear which must be properly authenticated in accordance with Euroclear's specifications and which must contain, in addition to the other information that is required for a TTE Instruction to settle in CREST, the following details:
(i) the number of Catlin Shares in respect of which you are making an election under the Mix and Match Facility (the depositary interests representing such Catlin Shares to be transferred to an escrow balance);
After submitting the TTE Instruction, you will not be able to access the Catlin Shares concerned in CREST for any transaction or for charging purposes. If the Scheme is implemented in accordance with its terms, the escrow agent will arrange for the cancellation of the Catlin Shares. You are recommended to refer to the CREST Manual published by Euroclear for further information on the CREST procedure outlined above. A TTE Instruction is revocable. Please refer to the CREST Manual for information about how to withdraw a TTE Instruction.
If you have sent a TTE Instruction to the RESTRICT member account as described above, a valid ESA instruction (a ''Restricted ESA Instruction'') will also need to be sent. Such purported election will not be treated as valid unless both the TTE Instruction and the Restricted ESA Instruction settle in CREST and XL and Catlin decide, in their absolute discretion, that such purported election should be accepted. If XL and Catlin so decide, the Receiving Agent will accept the purported election on the terms of this Scheme Document by transmitting in CREST a receiving agent accept (''AEAN'') message. Otherwise, the Receiving Agent will reject the purported election by transmitting in CREST a receiving agent reject (''AEAD'') message. Each Restricted ESA Instruction must, in order for it to be valid and settle, include the following details:
(xi) input with a standard delivery instruction priority of 80.
You should note that Euroclear does not make available special procedures in CREST for any particular corporate action. Normal system timings and limitations will therefore apply in connection with a TTE Instruction and its settlement. You should therefore ensure that all necessary action is taken by you (or by your CREST sponsor) to enable a TTE Instruction relating to your Scheme Shares to settle by the Election Return Time, which is currently expected to be 1.00 p.m. (London time) on 28 April 2015. In this connection, you are referred in particular to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
If you have returned a Form of Election and subsequently wish to withdraw or amend that election, please contact Capita in writing by the Election Return Time, which is currently expected to be 1.00 p.m. (London time) on 28 April 2015. Please clearly specify whether you would like to withdraw or amend the election that you have made and ensure that your request contains an original signature. Any written requests of this nature should be sent to Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom. It is at Capita Asset Services' absolute discretion to require the submission of a new Form of Election if an amendment is requested.
If your election was made through a TTE Instruction, you may withdraw your election through CREST by sending (or, if you are a CREST sponsored member, procuring that your CREST sponsor sends) an ESA instruction to settle in CREST by the Election Return Time, which is currently expected to be 1.00 p.m. (London time) on 28 April 2015, in relation to each election to be withdrawn. Each ESA instruction must, in order for it to be valid and to settle, include the following details:
Any such withdrawal will be conditional upon Capita verifying that the withdrawal request is validly made. Accordingly, Capita will on behalf of XL and Catlin reject or accept the withdrawal or amendment by transmitting in CREST an AEAD or AEAN message.
If any Form of Election or TTE Instruction in respect of an election under the Mix and Match Facility is either received after the Election Return Time, which is currently expected to be 1.00 p.m. (London time) on 28 April 2015, or received before such time and date but is not valid or complete in all respects at such time and date, such election shall, for all purposes, be void (unless XL and Catlin, in their absolute discretion, elect to treat as valid, in whole or in part, any such election).
Without prejudice to any other provision of this section or the Form of Election or otherwise, Catlin and XL reserve the right (subject to the terms of the Offer and the provisions of the Code) to treat as valid in whole or in part any election which is not entirely in order.
No acknowledgements of receipt of any Form of Election, TTE Instruction or other documents will be given. All communications, notices, other documents and remittances to be delivered by from or on behalf of holders of Catlin Shares (or their designated agent(s)) or as otherwise directed will be delivered by or to or sent to or from such holders of Catlin Shares or their designated agent(s)) at their own risk.
XL, Catlin and their respective agents reserve the right to notify any matter to all or any Scheme Shareholders with registered addresses outside the UK or to the nominees, trustees or custodians for such Scheme Shareholders by announcement in the UK or paid advertisement in any daily newspaper published and circulated in the UK or any part thereof, in which case such notice shall be deemed to have been sufficiently given notwithstanding any failure by any such Scheme Shareholders to receive or see such notice. All references in this Scheme Document to notice in writing, or the provision of information in writing, by or on behalf of XL, Catlin and their respective agents shall be construed accordingly. No such document shall be sent to an address outside the UK where it would or might infringe the laws of that jurisdiction or would or might require XL or Catlin to obtain any governmental or other consent or to effect any registration, filing or other formality with which, in the opinion of XL or Catlin, it would be unable to comply or which it regards as unduly onerous.
The Form of Election and all elections thereunder, all action taken or made or deemed to be taken or made pursuant to any of these terms shall be governed by and interpreted in accordance with Bermudian law.
Execution of a Form of Election or the submission of a TTE Instruction by or on behalf of a Catlin Shareholder will constitute its or his agreement that the courts of Bermuda are (subject to the paragraph below) to have non-exclusive jurisdiction to settle any dispute which may arise in connection with the creation, validity, effect, interpretation or performance of the Form of Election or the submission of a TTE Instruction, and for such purposes that he irrevocably submits to the jurisdiction of the Bermudian courts.
Execution of a Form of Election or the submission of a TTE Instruction by or on behalf of a Catlin Shareholder will constitute his agreement that the agreement in the paragraph above is included for the benefit of XL, Catlin and their respective agents and, accordingly, notwithstanding the agreement in the paragraph above, each of XL, Catlin and their respective agents shall retain the right to, and may in its absolute discretion, bring proceedings in the courts of any other country which may have jurisdiction and that the electing Scheme Shareholder irrevocably submits to the jurisdiction of the courts of any such country.
The subscription of any New XL Shares by or on behalf of a Scheme Shareholder pursuant to this Scheme will, to the extent such New XL Shares are to be held in the Direct Registration System, constitute his agreement that upon any future transfer of such New XL Shares, the transferor of such shares shall be deemed to have irrevocably appointed the Secretary or Assistant Secretary of XL (or any duly authorised delegate or attorney of the Secretary or Assistant Secretary) as its agent to execute, complete and deliver an instrument of transfer in the name of and on behalf of such transferor. If the Scheme is not implemented in accordance with its terms, any election made shall cease to be valid.
None of XL, Catlin, Capita nor any of their respective advisers or any other person accept any liability for any loss or alleged loss arising from any decision as to the treatment of elections under the Scheme on any of the bases set out in this section or otherwise in connection therewith.
As at the close of trading on the last day of dealings in Catlin Shares prior to the Effective Date, there may be unsettled, open trades for the sale and purchase of Catlin Shares within CREST. Catlin Shares that are the subject of such unsettled trades will be treated under the Scheme in the same way as any other Catlin Share registered in the name of the relevant seller under that trade. Consequently, those Catlin Shares will be reclassified and cancelled under the Scheme and the seller will receive the appropriate consideration in accordance with the terms of the Scheme and any valid election made by the seller.
Proposals in relation to participants in Catlin Share Schemes are summarised in paragraph 13 of Part One of this Scheme Document.
If you have any questions relating to the Mix and Match Facility, the completion and return of the Form of Election or if you did not receive a Form of Election (if you hold Catlin Shares in certificated form), please telephone the Catlin Group Limited Shareholder Helpline on 0333 300 1573 from within the UK or on + 44 333 300 1573 if calling from outside the UK. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The Catlin Group Limited Shareholder Helpline is open between 9.00 a.m. and 5.30 p.m. (London time), Monday to Friday (excluding UK public holidays). Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Scheme or the Offer, nor give any financial, legal or tax advice.
Certain terms are defined in the Scheme set out in Part Four of this Scheme Document and such defined terms shall apply throughout.
| ''2014 Final Dividend'' | the final dividend declared by the Catlin Board on 9 February 2015 in respect of the year ended 31 December 2014, in an amount of 22 pence per Catlin Share, and which was paid on 19 March 2015 to Catlin Shareholders of record at the close of business on 20 February 2015; |
|---|---|
| ''affiliate'' | means, in relation to any person, any other person that directly, or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the first person, where ''control'' means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies or investment decisions of a person, whether through the ownership of voting securities, by contract, as trustee, adviser, executor, or otherwise; |
| ''Announcement'' | the joint announcement by XL and Catlin dated 9 January 2015, of XL's firm intention to make the Offer; |
| ''Authorisations'' | for the purposes of the Conditions, means authorisations, orders, grants, recognitions, determinations, confirmations, consents, licences, clearances, permissions, exemptions and approvals; |
| ''Barclays'' | means Barclays Bank PLC, acting through its investment bank; |
| ''Bermuda Insurance Act'' | the Insurance Act 1978 of Bermuda and its related regulations (as amended from time to time); |
| ''Bermuda Merger'' | should the acquisition of Catlin by XL be implemented, in accordance with the Implementation Agreement, by way of a merger (in lieu of the Scheme), the merging of Catlin with and into XL Sub pursuant to section 104H of the Companies Act, such that XL Sub is the surviving company; |
| ''Bermuda Monetary Authority'' | the Bermuda Monetary Authority, established under the Bermuda Monetary Act 1969; |
| ''BNY Mellon'' | The Bank of New York Mellon Corporation a New York banking corporation and any successor thereto or replacement depositary in respect of the Catlin ADRs appointed by Catlin from time to time; |
| ''Bridge Facility'' | the bridge facility arranged by Morgan Stanley Senior Funding, Inc. and Goldman Sachs Bank USA providing for commitments to provide £1,600,000,000 of loans to XLIT Ltd, as guaranteed by XL and certain subsidiaries of XL; |
| ''business day'' | any day (other than a Saturday, Sunday, public or bank holiday) on which clearing banks in London, United Kingdom are generally open for normal business; |
| ''Bye-Laws'' | the bye-laws of Catlin, as amended from time to time (including pursuant to the special resolution to be proposed at the Special General Meeting and, if the Scheme becomes effective, pursuant to the Scheme); |
| ''Capita Asset Services'' | a trading name of Capita Registrars Limited; |
| ''Cash Election'' | in relation to a Scheme Share, an election under the Mix and Match Facility to receive 710.61 pence in cash instead of 388 pence in cash and 0.130 New XL Shares; |
| ''Catlin'' | Catlin Group Limited, incorporated in Bermuda with registered number 26680; |
| ''Catlin ADRs'' | American Depositary Receipts representing interests in Catlin Shares; |
| ''Catlin Board'' | the board of directors of Catlin from time to time; | |
|---|---|---|
| ''Catlin Director'' | a director of Catlin; | |
| ''Catlin Group'' | Catlin, its subsidiaries and subsidiary undertakings, from time to time; |
|
| ''Catlin Shares'' | the common shares of US\$0.01 each in the capital of Catlin and, where the context permits or requires, includes the uncertificated depositary interests each representing one such common share, the depositary in respect of which is Capita IRG Trustees Limited; |
|
| ''Catlin Shareholders'' | holders of Catlin Shares; | |
| ''Catlin Share Schemes'' | each of the following share incentive schemes of Catlin: | |
| (i) the Catlin Group Limited Performance Share Plan adopted in Catlin's Annual General Meeting on 9 May 2013 and amended by the Catlin Compensation Committee on 5 August 2014; |
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| (ii) the Catlin Group Limited Performance Share Plan approved by the Catlin Board on 11 March 2004, amended by the Catlin Compensation Committee on 5 December 2007, amended in Catlin's Annual General Meeting on 14 May 2008 and amended by the Catlin Compensation Committee on 4 August 2009; |
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| (iii) the Catlin Group Limited 2014 Deferred Bonus Share Plan approved by the Catlin Board on 13 May 2014; |
||
| (iv) the Catlin Group Limited Incentive Share Plan approved and adopted by the Catlin Board on 6 February 2014, amended by the Catlin Compensation Committee on 5 August 2014; |
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| (v) the Catlin Group Limited Savings-Related Share Option Scheme approved by the Catlin Shareholders on 14 May 2008, HMRC on 19 May 2008 and amended 7 August 2013 (with addendum for employee of Overseas Territories, Canada and Australia); |
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| (vi) the Catlin Group Limited US Employee Stock Purchase Plan effective 14 May 2008; and |
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| (vii) individual retention or buy-out share awards (in respect of no more than 204,192 Catlin Shares underlying such awards); |
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| ''certificated'' or ''in certificated form'' |
a Catlin Share which is not in uncertificated form (that is, not represented by a depositary interest in CREST); |
|
| ''Clearances'' | the merger control, competition and other regulatory approvals, consents, clearances, permissions and waivers referred to in the Conditions; |
|
| ''Closing Price'' | the closing middle market price of a XL Share or Catlin Share, as applicable, on a particular trading day as derived from the New York Stock Exchange for XL or the Daily Official List for Catlin; |
|
| ''Code'' | the City Code on Takeovers and Mergers (including the General Principles therein and the Appendices), as from time to time amended and interpreted by the Panel or by the Code Committee or, where the context requires, the Code Expert pursuant to the terms of the Implementation Agreement or, where the context requires, as otherwise agreed by XL, XL Sub and Catlin in writing; |
|
| ''Code Application Letter'' | a letter agreement dated 9 January 2015 entered into by XL and Catlin, pursuant to which they agreed, among other things, that, for the purpose of Rule 13.5(a) of the Code, it would be of material significance to XL in the context of the Offer, if any of the Conditions set out in paragraphs (C) (PRA approval), (D) (relating to Lloyd's approval), (E) (Bermuda Monetary Authority approval), |
| (F) (FINMA approval), (G) (Delaware Department of Insurance approval), (H) (Texas Department of Insurance approval), (I) (New York Department of Financial Services approval) (if applicable) or (M) (US Hart-Scott-Rodino clearance) is not satisfied, in each case, of Part A of Part Three of this Scheme Document; |
|---|
| the committee established pursuant to the Implementation Agreement, comprised of three representatives appointed by each of XL and Catlin, and which will be responsible for determining how the Code is interpreted and applied in relation to the Offer had Catlin been subject to the Code; |
| the independent expert appointed as such pursuant to the Implementation Agreement; |
| the Companies Act 1981 of Bermuda, as amended; |
| the conditions to the Offer and to the implementation of the Scheme set out in full in Part Three of this Scheme Document; |
| the non-disclosure undertaking entered into by Catlin and XL on 16 July 2013; |
| the Supreme Court of Bermuda; |
| the hearing at which Catlin seeks an order sanctioning the Scheme; |
| the meeting of Scheme Shareholders (and any adjournment thereof) convened pursuant to an order of the Court pursuant to section 99(1) of the Companies Act, to consider and, if thought fit, approve (with or without modification) the Scheme; |
| the system for the paperless settlement of trades in securities and the holding of uncertificated securities operated by Euroclear in accordance with the Regulations; |
| as defined in the CREST Manual; |
| the manual setting out CREST procedures, limitations and system timings, which is available at www.euroclear.com/CREST; |
| as defined in the CREST Manual; |
| the Daily Official List of the FCA; |
| an announcement pursuant to Rule 8 of the Code containing details of dealings in interests in relevant securities of a party to an offer; |
| Capita IRG Trustees Limited; |
| the period commencing on 17 December 2013 (being the date 12 months prior to the commencement of the offer period) and ending on 31 March 2015 (being the latest practicable date before the date of this Scheme Document); |
| the date on which the Scheme becomes effective in accordance with its terms; |
| the time and date by which elections under the Mix and Match Facility must be returned with Catlin's registrar and receiving agent, Capita Asset Services, in order to be valid, which is currently expected to be 1.00 p.m. (London time) on 28 April 2015, or such later time and date as Catlin may determine and announce through a Regulatory Information Service; |
| the XL Group as enlarged by the Catlin Group following the Effective Date; |
| earnings per share; |
| Euroclear UK & Ireland Limited, the operator of CREST; |
| ''Fairly Disclosed'' | denotes the information (i) fairly disclosed prior to the date of the Announcement by or on behalf of Catlin to XL or XL's financial, accounting, tax or legal advisers (specifically as XL's advisers in relation to the Offer); (ii) disclosed in Catlin's annual and/or half year report and audited accounts for the relevant financial period or periods referred to in the relevant Condition and published prior to the date of the Announcement; (iii) disclosed in any public announcement made in accordance with the UK Disclosure Rules and Transparency Rules by Catlin prior to the date of the Announcement; or (iv) disclosed in the Announcement; |
|---|---|
| ''FCA'' | the UK Financial Conduct Authority; |
| ''FINMA'' | the Swiss Financial Market Supervisory Authority; |
| ''Form of Election'' | the GREEN form of election for use by holders of Catlin Shares in certificated form in relation to the Mix and Match Facility; |
| ''Forms of Direction'' | either or both (as the context permits or requires) of the PINK form of direction for use by holders of Catlin Shares in uncertificated form in relation to the Court Meeting and the YELLOW form of direction for use by holders of Catlin Shares in uncertificated form in relation to the Special General Meeting; |
| ''Forms of Proxy'' | either or both (as the context demands) of the BLUE form of proxy for use by holders of Catlin Shares in certificated form in relation to the Court Meeting and the WHITE form of proxy for use by holders of Catlin Shares in certificated form in relation to the Special General Meeting; |
| ''FSMA'' | the Financial Services and Markets Act 2000, as amended; |
| ''HMRC'' | means HM Revenue & Customs; |
| ''Implementation Agreement'' | the agreement among XL, XL Sub and Catlin dated 9 January 2015, in relation to the implementation of the Offer; |
| ''ITB'' | Box Innovation Group Limited (which trades as ''insurebox''); |
| ''ITB Special Dividend'' | the special dividend declared by the Catlin Board out of the distributable surplus from the sale of ITB of 11.7 pence per Catlin Share, payable on 24 April 2015 to shareholders of record at close of business on 10 April 2015; |
| ''J.P. Morgan Cazenove'' | J.P. Morgan Limited (which conducts its UK investment banking business as ''J.P. Morgan Cazenove''); |
| ''Listing Rules'' | the listing rules made under FSMA by the UKLA and contained in the UKLA's publication of the same name, as amended from time to time; |
| ''Lloyd's'' | the Society and Corporation of Lloyd's created and governed by the Lloyd's Act 1871 to 1982, including the Council of Lloyd's (and its delegates and other persons through whom the Council may act), as the context may require; |
| ''London Stock Exchange'' | London Stock Exchange plc; |
| ''Long Stop Date'' | 9 October 2015, or such later date as XL and Catlin may agree and the Court may allow; |
| ''Merger Agreement'' | the conditional agreement effecting the merger of XL Sub and Catlin pursuant to section 104H of the Companies Act entered into on 9 January 2015 among XL, XL Sub and Catlin; |
| ''Morgan Stanley'' | Morgan Stanley & Co. International plc; |
| ''Mix and Match Facility'' | the facility provided for in the Scheme, pursuant to which a Scheme Shareholder may elect, subject to elections of other Scheme Shareholders, to receive more cash or more New XL Shares in respect of some or all of his Scheme Shares than he would receive absent such an election; |
|---|---|
| ''New XL Shares'' | the new XL Shares, each of US\$0.01 par value, to be issued to Scheme Shareholders pursuant to the Scheme; |
| ''Offer'' | the recommended offer made by XL to acquire the entire issued and to be issued ordinary share capital of Catlin, to be effected by the Scheme as described in this Scheme Document (or by the Takeover Offer under certain circumstances described in this Scheme Document) and, where the context admits, any subsequent revision, variation, extension or renewal thereof; |
| ''offer period'' | the period which commenced on 17 December 2014 and ending on the earlier of the date on which it is announced that the Scheme has become effective and/or the date on which it is announced that the Offer has lapsed or has been withdrawn (or such other date as the Code (as applied through Catlin's Bye-Laws) may provide); |
| ''Official List'' | the official list maintained by the FCA pursuant to section 74 of the FSMA; |
| ''Opening Position Disclosure'' | an announcement containing details of interests or short positions in, or rights to subscribe for, any relevant securities of a party to the offer if the person concerned has such a position, as defined in Rule 8 of the Code; |
| ''Operating Net Income'' | net income (loss) attributable to ordinary shareholders excluding: (1) net investment income - Life Funds Withheld Assets, net of tax, (2) net realized (gains) losses on investments sold, net of tax, (3) net realized (gains) losses on investments and net unrealized (gains) losses on investments, Trading - Life Funds Withheld Assets, (4) net realized and unrealized (gains) losses on derivatives, net of tax, (5) net realized and unrealized (gains) losses on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets, (6) the share of items (2) and (4) for XL's insurance company affiliates for the periods presented, (7) loss on sale of life reinsurance subsidiary, XLLR, net of tax, and, (8) foreign exchange (gains) losses, net of tax. ''Operating net income'', ''operating return on average ordinary shareholders' equity'' and ''operating return on average ordinary shareholders equity excluding unrealized gains and losses on investments'' are non US GAAP financial measures; |
| ''Ordinary Shareholders' Equity'' | total shareholders' equity less non-controlling interest in equity of consolidated subsidiaries; |
| ''Overseas Shareholder'' | a holder of Scheme Shares with a registered address in a jurisdiction outside the UK, the US, the Republic of Ireland or Bermuda, or whom Catlin or XL reasonably believes to be resident or incorporated in, or a citizen of, a jurisdiction outside the UK, the US, the Republic of Ireland or Bermuda; |
| ''Panel'' | The Panel on Takeovers and Mergers; |
| ''Personnel'' | in relation to any person, its board of directors or executive officers, members of their immediate families, related trusts and persons connected with them; |
| ''Phase 2 CMA reference'' | has the meaning given in the Definitions section of the Introduction to the Code; |
| ''Phase 2 European Commission proceedings'' |
has the meaning given in the Definitions section of the Introduction to the Code; |
| ''Possible Offer Announcement'' | the announcement issued by Catlin on 17 December 2014 confirming the approach made by XL to Catlin in connection with the Offer, which commenced the offer period; |
|---|---|
| ''PRA'' or ''Prudential Regulation Authority'' |
the UK Prudential Regulation Authority or its successor from time to time; |
| ''Reduction of Capital'' | the proposed reduction of share capital of Catlin pursuant to the Scheme; |
| ''Registrar of Companies'' | the registrar of companies in Bermuda; |
| ''Regulations'' | the Uncertificated Securities Regulations 2001 (SI 2001/3755), as amended; |
| ''Regulatory Information Service'' | a person approved as a primary information provider by the FCA under section 89P of FSMA; |
| ''Restricted Jurisdiction'' | any jurisdiction (other than the UK, the US, the Republic of Ireland and Bermuda) where the relevant action would or may infringe the laws of such jurisdiction or would or may require either Catlin or XL to obtain or comply with any governmental or other consent or any registration, filing or other formality with which either Catlin or XL is unable to obtain or comply with, or which either Catlin or XL regards as unduly onerous to obtain or comply with; |
| ''ROE'' | return on equity, a profitability ratio measuring a company's ability to generate returns for its shareholders; |
| ''Scheme'' or ''Scheme of Arrangement'' |
the proposed scheme of arrangement under section 99 of the Companies Act between Catlin and the holders of the Scheme Shares to implement the Offer, as set out in Part Four of this Scheme Document, with or subject to any modification, addition or condition approved or imposed by the Court and agreed between Catlin and XL; |
| ''Scheme Document'' | this circular dated 2 April 2015; |
| ''Scheme Record Time'' | the time and date by reference to which the entitlements of Scheme Shareholders under the Scheme will be determined, being 6.00 p.m. (London time) on 30 April 2015 or such later time and date as Catlin may determine and announce through a Regulatory Information Service; |
| ''Scheme Shareholders'' | the registered holders of Scheme Shares; |
| ''Scheme Shares'' | the Catlin Shares: |
| (i) in issue at the date of this Scheme; |
|
| (ii) (if any) issued after the date of this Scheme and before the Voting Record Time; and |
|
| (iii) (if any) issued at or after the Voting Record Time and before the Scheme Record Time in respect of which the original or any subsequent holder thereof shall be bound by this Scheme or shall by such time have agreed in writing to be bound by this Scheme, |
|
| and (in each case) remaining in issue at the Scheme Record Time but excluding any and all Excluded Shares, and including the A Shares, B Shares, C Shares and D Shares resulting from the reclassification (or subdivision and reclassification) of such Common Shares; |
|
| ''SEC'' | the US Securities and Exchange Commission; |
| ''Share Election'' | in relation to a Scheme Share, an election under the Mix and Match Facility to receive 0.28635 New XL Shares instead of 388 pence in cash and 0.130 New XL Shares; |
| ''Significant Interest'' | in relation to an undertaking, a direct or indirect interest of 20 per cent. or more of the total voting rights conferred by the equity share capital (as defined in section 548 of the United Kingdom Companies Act 2006) of such undertaking; |
|---|---|
| ''Solvency II'' | the European Parliament and Council Directive (2009/138/EC) (as subsequently amended by the Omnibus II Directive (2014/51/EU)) which sets out the framework for a new solvency and supervisory regime for insurers and reinsurers in the European Union; |
| ''Special General Meeting'' | the special general meeting of Catlin convened by the notice set out in Part Twelve of this Scheme Document, including any adjournment thereof; |
| ''Standards'' | the rules issued by the London Stock Exchange in relation to the admission to trading of, and continuing requirements for, securities admitted to the Official List; |
| ''Subordinated Notes'' | the US\$500 million aggregate principal amount of 4.45% subordinated notes due 2025 and US\$500 million aggregate principal amount of 5.5% subordinated notes due 2045 issued by XLIT Ltd., a wholly owned subsidiary of XL on 30 March 2015; |
| ''subsidiary'' | has the meaning given in section 1159 of the (United Kingdom) Companies Act 2006; |
| ''subsidiary undertaking'' | has the meaning given in section 1162 of the (United Kingdom) Companies Act 2006; |
| ''Takeover Offer'' | should XL elect to effect the Offer by way of a takeover offer (in lieu of the Scheme), the offer to be made by or on behalf of XL and, where the context so requires, any subsequent revision, variation, extension of renewal of such offer; |
| ''Third Party'' | means a central bank, government or governmental, quasi governmental, supranational, statutory, regulatory, self regulatory, quasi-regulatory or private body exercising any regulations, taxing or other governmental or quasi-governmental professional, or investigative body or authority (including any anti trust or merger control authority), stock exchange or listing authority, court, trade agency, professional association, institution, works council, employee representative body or any other body or person whatsoever in any jurisdiction; |
| ''TTE Instruction'' | a transfer to escrow made via CREST in respect of the Mix and Match Facility by a holder of Catlin Shares in uncertificated form, in accordance with the procedure detailed in Part Nine of this Scheme Document; |
| ''UK'' or ''United Kingdom'' | the United Kingdom of Great Britain and Northern Ireland; |
| ''UKLA'' | the Financial Conduct Authority in its capacity as the authority for listing in the United Kingdom; |
| ''uncertificated'' or ''in uncertificated form'' |
a share or other security recorded on the relevant register as being held in uncertificated form in CREST and title to which, by virtue of the Regulations, may be transferred by means of CREST. Catlin Shares ''in uncertificated form'' are depositary interests, each of which represents the beneficial interest in one underlying Catlin Share; |
| ''US'' | the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia; |
| ''US Exchange Act'' | the US Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder; |
| ''US Securities Act'' | the US Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder; |
| ''VAT'' | Means UK value added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similar nature; |
|---|---|
| ''Voting Record Time'' | the time and date by reference to which the right of Catlin Shareholders to attend and vote at the Court Meeting and Special General Meeting will be determined, being 6.00 p.m. (London time) on 17 April 2015 or, if the Court Meeting or Special General Meeting is adjourned, 6.00 p.m. (London time) on the day that is two business days before the date fixed for the holding of the relevant adjourned meeting; |
| ''Wider Catlin Group'' | Catlin Group and associated undertakings and any other body corporate, partnership, joint venture or person in which any member of the Catlin Group and such undertakings (aggregating their interests) have a Significant Interest; |
| ''Wider XL Group'' | XL and associated undertakings and any other body corporate, partnership, joint venture or person in which XL and all such undertakings (aggregating their interests) have a Significant Interest; |
| ''XL'' | XL Group plc, incorporated in the Republic of Ireland with registered number 482042; |
| ''XL Board'' | the board of directors of XL from time to time; |
| ''XL Director'' | a director of XL; |
| ''XL Group'' | XL, its subsidiaries and subsidiary undertakings, from time to time; |
| ''XL's Irish Prospectus'' | the document dated on or about the same date as this Scheme Document comprising a prospectus relating to the Enlarged XL Group and the New XL Shares, prepared and published by XL in accordance with applicable law and regulation in the Republic of Ireland and constituting an approved prospectus in the United Kingdom for the purpose of section 85 of the FSMA; |
| ''XL Officers'' | Michael S. McGavick (Chief Executive Officer), Peter R. Porrino (Executive Vice President and Chief Financial Officer) and Kirstin Gould (Executive Vice President, General Counsel and Secretary) as at the date of this Scheme Document; and |
| ''XL Sub'' | Green Holdings Limited, an exempted company incorporated under the laws of Bermuda with registered number 49880 and with its registered address at Crawford House, 50 Cedar Avenue, Hamilton HM11, Bermuda. |
2015: No. 89
and
NOTICE IS HEREBY GIVEN that, by an order dated 17 March 2015 made in the above matter, the Court has directed a meeting to be convened of the holders of Scheme Shares (as defined in the scheme of arrangement referred to below) for the purpose of considering and, if thought fit, approving (with or without modification) a scheme of arrangement in the form of the Scheme of Arrangement at Part Four of the document of which this notice forms part (in its present form or with or subject to any modification, addition or condition agreed by XL and Catlin and approved or imposed by the Court), proposed to be made between Catlin Group Limited (the ''Company'') and the holders of the Scheme Shares (the ''Scheme'') and that such meeting will be held at 5th Floor, Washington House, 16 Church Street, Hamilton HM11, Bermuda on 21 April 2015 at 11.00 a.m. (Bermuda time), at which place and time all holders of Scheme Shares are requested to attend in person or by proxy duly appointed.
A copy of the Scheme and a copy of the explanatory statement required to be furnished pursuant to section 100 of the Companies Act 1981 (as amended) are incorporated in the document of which this notice forms part.
Holders of Scheme Shares may vote in person at the meeting or they may appoint another person as their proxy to attend, speak and vote in their stead. A proxy need not be a member of the Company but must attend the meeting. A holder of Scheme Shares may appoint more than one proxy in relation to the meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that holder. A BLUE form of proxy for use at the meeting is enclosed with this notice. Completion and return of a Form of Proxy will not preclude a holder of Scheme Shares from attending and voting in person at the meeting, or any adjournment thereof.
In the case of joint holders of Scheme Shares, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the other joint holder(s) and, for this purpose, seniority will be determined by the order in which the names stand in the register of members of the Company in respect of the relevant joint holding.
It is requested that BLUE forms of proxy (together with any power of attorney or other authority under which they are signed, or a notarially certified copy of such power of attorney) be returned to the Company's registrar and receiving agent, Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom, by post, courier or hand, in accordance with the instructions printed thereon, so as to be received by 6.00 p.m. (London time) on 17 April 2015 or, if the meeting is adjourned, by 6.00 p.m. (London time) on the day that is two business days before the date fixed for the holding of the adjourned meeting. If forms of proxy are not so returned, they may be handed to Capita or to the chairman of the meeting at or before the start of the meeting.
Entitlement to attend and vote at the meeting and the number of votes which may be cast thereat will be determined by reference to the register of members of the Company at 6.00 p.m. (London time) on 17 April 2015 or, if the meeting is adjourned, 6.00 p.m. (London time) on the day that is two business days before the date fixed for the holding of the adjourned meeting.
By the said order, the Court has appointed Mr. John Barton or, failing him, Mr. Stephen Catlin or, failing him, Mr. Benjamin Meuli to act as chairman of the meeting and has directed the chairman to report the result of the meeting to the Court.
The Scheme will be subject to the subsequent approval of the Court.
Dated 2 April 2015
Appleby (Bermuda) Limited Canon's Court 22 Victoria Street Hamilton HM 12 Bermuda
Slaughter and May One Bunhill Row London EC1Y 8YY United Kingdom
Attorneys to the Company as to Bermuda law Notes:
Solicitors to the Company as to English law
Only registered holders of the Company's common shares, each of US\$0.01 par value, are entitled to attend and vote at this meeting. A member entitled to attend and vote may appoint a proxy who need not be a member of the Company to attend and vote at the meeting instead of the shareholder. You can only appoint a proxy using the procedures set out in these notes and the notes to the BLUE Form of Proxy. Forms of Proxy need to be completed, signed and returned (together with the original or notarised, certified copy of any power of attorney or other power under which it is executed) to the Company's receiving agent, Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom, by 6.00 p.m. (London time) on 17 April 2015 or, if the meeting is adjourned, by 6.00 p.m. (London time) on the day that is two business days before the date fixed for the holding of the adjourned meeting. Completion of a BLUE Form of Proxy will not preclude a member attending and voting in person at the meeting.
Holders of the depositary interests, each representing one of the Company's common shares of US\$0.01 par value, wishing to attend this meeting should contact Capita IRG Trustees Limited (the ''Depositary'') at The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom or email [email protected] to request a letter of representation no later than 6.00 p.m. (London time) on 16 April 2015. Alternatively, holders of depositary interests may complete the PINK Form of Direction to instruct the Depositary to vote the common shares underlying your depositary interests on your behalf at the meeting, either in person or by proxy. If you wish to instruct the Depositary (other than electronically using CREST), you must return the completed PINK Form of Direction (together with the original or notarially certified copy of any power of attorney or other power under which it is executed) to Catlin's registrar and receiving agent, Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom by 6.00 p.m. (London time) on 16 April 2015 or, if the meeting is adjourned, by 6.00 p.m. (London time) on the day that is three business days before the date fixed for the holding of the adjourned meeting. Alternatively, holders of depositary interests may instruct the Depositary how to vote by utilising the CREST electronic voting service. To instruct the Depositary how to vote or to amend a voting instruction via the CREST system, the CREST message must be received by the Company's registrar and receiving agent, Capita Asset Services (CREST Participant ID: RA10), by 6.00 p.m. (London time) on 16 April 2015 or, if the meeting is adjourned, by 6.00 p.m. (London time) on the day that is three business days before the date fixed for the holding of the adjourned meeting. In order for the instructions to the Depositary made by means of CREST to be valid, the appropriate CREST message must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications and must contain the information required for such instructions, as described in the CREST manual. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message. CREST personal members or other CREST sponsored members, and those CREST members who have appointed voting service provider(s), should contact their CREST sponsor or voting service provider(s) for assistance. For further information on CREST procedures, limitations and system timings, please refer to the CREST Manual, which is available from www.euroclear.com/CREST.
To have the right to attend and vote at the meeting (and also for the purpose of calculating how many votes a person entitled to attend and vote may cast), a person must be entered on the Company's register of members by 6.00 p.m. (London time) on 17 April 2015 or, if the meeting is adjourned, by 6.00 p.m. (London time) on the day that is two business days before the date fixed for the holding of the adjourned meeting. Changes to the register after this time shall be disregarded in determining the rights of any person to attend or vote at the meeting. A corporation which is a shareholder may, by written authorisation, appoint one or more corporate representatives who may exercise on its behalf, all its powers as a shareholder, provided that no more than one corporate representative exercises powers over the same shares. Any written authorisation (together with the original or notarised, certified copy of any power of attorney or other power under which it is executed) must be returned to the Company's registrar and receiving agent, Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom, by 6.00 p.m. (London time) on 17 April 2015 or, if the meeting is adjourned, by 6.00 p.m. (London time) on the day that is two business days before the date fixed for the holding of the adjourned meeting.
Notice is hereby given that a special general meeting of Catlin Group Limited (the ''Company'') will be held at 5th Floor, Washington House, 16 Church Street, Hamilton HM11, Bermuda on 21 April 2015 at 11.15 a.m. (Bermuda time) (or as soon thereafter as the meeting of the holders of Scheme Shares (as defined in the Scheme as referred to in the special resolution set out below) convened for 11.00 a.m. (Bermuda time) on the same day and at the same place, by an order of the Supreme Court of Bermuda, shall have concluded or been adjourned) for the purpose of considering and, if thought fit, passing the following resolution, which will be proposed as a special resolution.
THAT, for the purpose of giving effect to the scheme of arrangement dated 2 April 2015 between the Company and the holders of Scheme Shares (as defined in the said scheme of arrangement), a printed copy of which has been produced to this meeting and for the purposes of identification has been signed by the Chairman of this meeting, in its original form or subject to any modification, addition or condition agreed by the Company and XL Group plc (''XL'') and approved or imposed by the Court (the ''Scheme''):
59.1 In this Bye-Law 59, the ''Scheme'' means the scheme of arrangement dated 2 April 2015 between the Company and the holders of the Scheme Shares (as defined in the scheme of arrangement) under section 99 of the Companies Act of 1981 (as amended) in its original form or with or subject to any modification, addition or condition approved or imposed by the Supreme Court of Bermuda and agreed by the Company and XL Group plc (''XL'') and (save as defined in this Bye-Law) expressions defined in the Scheme shall have the same meanings in this Bye-Law.
59.5 The number of Consideration Shares to be allotted and issued, or transferred, pursuant to Bye-Law 59.3 shall be adjusted in such manner as the board of directors of the Company may determine, on any reorganisation of or material alteration to the share capital of either the Company or XL effected on or after the Effective Date, so as to put the New Member into the same position it would have been in but for such reorganisation of or material alteration to the share capital of either the Company or XL.
59.6 No fraction of a Consideration Share shall be allotted and issued, or transferred, to a New Member pursuant to Bye-Law 59.3 and the entitlement of each New Member who would, but for this Bye-Law 59.6, have been entitled to a fraction of a Consideration Share shall be rounded down to the nearest whole number of Consideration Shares. Any and all such fractions of Consideration Shares to which New Members would, but for this Bye-Law 59.6, have been entitled, shall be aggregated and rounded down to the nearest whole number of New XL Shares, allotted and issued to a person appointed by XL, and sold in the market as soon as practicable and the net proceeds of such sale (after the deduction of all expenses and commissions, including any amounts in respect of value added tax payable thereon) shall be paid to the holder(s) entitled thereto in due proportions, rounded down to the nearest whole penny.
Dated 2 April 2015
By Order of the Board Daniel Primer Company Secretary
Registered Office: Canon's Court 22 Victoria Street Hamilton HM12 Bermuda
Notes:
Only registered holders of the Company's common shares, each of US\$0.01 par value, are entitled to attend and vote at this special general meeting. A member entitled to attend and vote may appoint a proxy who need not be a member of the Company to attend and vote at the special general meeting instead of the shareholder. You can only appoint a proxy using the procedures set out in these notes and the notes to the WHITE Form of Proxy. Forms of Proxy need to be completed, signed and returned (together with the original or notarised, certified copy of any power of attorney or other power under which it is executed) to the Company's receiving agent, Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom, by 6.00 p.m. (London time) on 17 April 2015 or, if the special general meeting is adjourned, by 6.00 p.m. (London time) on the day that is two business days before the date fixed for the holding of the adjourned meeting. Completion of a WHITE Form of Proxy will not preclude a member attending and voting in person at the special general meeting.
Holders of the depositary interests, each representing one of the Company's common shares of US\$0.01 par value, wishing to attend this meeting should contact Capita IRG Trustees Limited (the ''Depositary'') at The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom or email [email protected] to request a letter of representation no later than 6.00 p.m. (London time) on 16 April 2015. Alternatively, holders of depositary interests may complete the PINK Form of Direction to instruct the Depositary to vote the common shares underlying your depositary interests on your behalf at the special general meeting, either in person or by proxy. If you wish to instruct the Depositary (other than electronically using CREST), you must return the completed YELLOW Form of Direction (together with the original or notarially certified copy of any power of attorney or other power under which it is executed) to Catlin's registrar and receiving agent, Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom by 6.00 p.m. (London time) on 16 April 2015 or, if the special general meeting is adjourned, by 6.00 p.m. (London time) on the day that is three business days before the date fixed for the holding of the adjourned meeting. Alternatively, holders of depositary interests may instruct the Depositary how to vote by utilising the CREST electronic voting service. To instruct the Depositary how to vote or to amend a voting instruction via the CREST system, the CREST message must be received by the Company's registrar and receiving agent, Capita Asset Services (CREST Participant ID: RA10), by 6.00 p.m. (London time) on 16 April 2015 or, if the special general meeting is adjourned, by 6.00 p.m. (London time) on the day that is three business days before the date fixed for the holding of the adjourned meeting. In order for the instructions to the Depositary made by means of CREST to be valid, the appropriate CREST message must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications and must contain the information required for such instructions, as described in the CREST manual. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message. CREST personal members or other CREST sponsored members, and those CREST members who have appointed voting service provider(s), should contact their CREST sponsor or voting service provider(s) for assistance. For further information on CREST procedures, limitations and system timings, please refer to the CREST Manual, which is available from www.euroclear.com/CREST.
To have the right to attend and vote at the special general meeting (and also for the purpose of calculating how many votes a person entitled to attend and vote may cast), a person must be entered on the Company's register of members by 6.00 p.m. (London time) on 17 April 2015 or, if the special general meeting is adjourned, by 6.00 p.m. (London time) on the day that is two business days before the date fixed for the holding of the adjourned meeting. Changes to the register after this time shall be disregarded in determining the rights of any person to attend or vote at the special general meeting. A corporation which is a shareholder may, by written authorisation, appoint one or more corporate representatives who may exercise on its behalf, all its powers as a shareholder, provided that no more than one corporate representative exercises powers over the same shares. Any written authorisation (together with the original or notarised, certified copy of any power of attorney or other power under which it is executed) must be returned to the Company's registrar and receiving agent, Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom, by 6.00 p.m. (London time) on 17 April 2015 or, if the special general meeting is adjourned, by 6.00 p.m. (London time) on the day that is two business days before the date fixed for the holding of the adjourned meeting.
Luxembourg 38. Macedonia 39. Malaysia 40. Malta 41. Mexico 42. Moldova 43. Montenegro 44. Morocco 45. Netherlands 46. New Zealand 47. Norway 48. Pakistan 49. Panama 50. Poland 51. Portugal 52. Qatar 53. Romania 54. Russia 55. Saudi Arabia 56. Serbia 57. Singapore 58. Slovak Republic 59. Slovenia 60. South Africa 61. Spain 62. Sweden 63. Switzerland 64. Thailand 65. Turkey 66. Ukraine 67. United Arab Emirates 68. United Kingdom 69. USA 70. Uzbekistan 71. Vietnam
Zambia
The following are the terms and conditions on which Computershare Investor Services PLC (''Computershare'') will provide the XL Nominee Account for XL Depositary Interests (also known as XL DIs) held on your behalf by the Computershare Nominee.
Computershare will not provide you with investment, taxation or legal advice. If you require any such advice or assistance concerning the XL Nominee Account, the acquisition or disposal of XL DIs or your tax liability you should seek independent professional advice.
The XL Nominee Account is available only to individuals being natural persons over the age of 18, resident in Ireland, the United Kingdom and the other Permitted Countries and is not offered to persons resident outside Ireland, the United Kingdom and the other Permitted Countries. Where these terms and conditions have been received in a country where the provision of the XL Nominee Account would be contrary to local laws or regulations, these terms and conditions should be treated as being for information purposes only. You may not participate in the XL Nominee Account if you hold any XL DIs in your own name.
Please read these terms and conditions carefully. They explain the relationship between you and us with respect to the XL DIs. On the XL DIs being issued to the Computershare Nominee to hold on your behalf, these terms and conditions will constitute a legally binding agreement between you and us. If there is anything in them which you do not understand, please contact us or seek professional advice. Our contact details are listed in clauses 11.2 and 11.3.
These terms and conditions do not constitute a recommendation to buy, sell, transfer or hold XL DIs. The decision to buy, sell, transfer or hold XL DIs will be solely your responsibility. Share prices may go down as well as up and, as such, are a risk investment which may result in you not receiving back the full amount invested.
These terms and conditions are dated 2 April 2015 and they can change from time to time on providing you with prior notice in accordance with clause 11.1. You can obtain an up-to-date version by calling Computershare. Our contact details are listed in clauses 11.2 and 11.3.
1.1 The following words and phrases used in these terms and conditions have the meanings set out below:-
''Act 2012'' means the UK Financial Services Act 2012, as amended or replaced, and any regulations made thereunder;
''Book-Entry Form'' means a system that allows shares to be recorded electronically, without the issue of a paper share certificate to evidence ownership;
''business day'' means any day (excluding Saturday) on which banks in the United Kingdom are generally open for non-automated business;
''Cancellation Period'' has the meaning given to it in clause 9.1;
''Computershare'' or ''us'' or ''we'' means Computershare Investor Services PLC;
''Computershare Nominee'' means such affiliate company of Computershare as Computershare may nominate from time to time to provide the XL Nominee Account, which shall be a member of CREST, and whose business shall consist solely of acting as a nominee holder of shares or other securities on behalf of other persons; this company shall initially be Computershare Company Nominees Limited;
''CREST'' means Euroclear UK & Ireland Limited;
''CREST System'' means the computer based system operated by CREST for the transfer of uncertificated securities;
''DTC'' means the system operated by The Depositary Trust Company for the holding and transfer of uncertificated securities (including Shares) in the United States of America;
''FCA'' means the UK Financial Conduct Authority;
''FSCS'' means the UK Financial Services Compensation Scheme;
''Participant'' means the CREST user nominated by the Computershare Nominee who is therefore able to send and receive CREST messages on behalf of the Computershare Nominee;
''Permitted Countries'' means the jurisdictions set out in clause 17, as amended from time to time;
''Retail Client'' means someone who is not a financial services professional. Retail Clients are offered the full protection of the FCA rules;
''Share'' means an ordinary share in XL;
''SRN'' has the meaning given to it in clause 2.6;
''stamp duty'' means stamp duty or stamp duty reserve tax, as applicable;
''Transfer Date'' has the meaning given to it in clause 11.21;
''Transferee'' has the meaning given to it in clause 11.21;
''VAT'' has the meaning given to it in clause 11.4;
''Withholding Agent'' means such person as Computershare may nominate from time to time to hold any Withholding Tax and remit the same to the appropriate tax authority (in any jurisdiction) on your behalf;
''Withholding Tax'' means any withholding or deduction for taxes required to be made by Computershare in respect of any dividend or other distribution payable to you;
''XL'' means XL Group plc, incorporated in Ireland with registered number 482042 and whose registered address is XL House, 8 St. Stephen's Green, Dublin 2, Ireland;
''XL Depositary Interest'' or ''XL DI'' is a 'domestic depository interest' (a type of security or instrument) representing Shares that enables those Shares to be held and settled electronically within the CREST System. References to ''your XL DIs'' are to XL DIs originally issued to the Computershare Nominee on your behalf and to any other XL DIs which are transferred or issued to the Computershare Nominee for your account (including if you have elected to take part in the XL Nominee Account dividend reinvestment plan);
''XL Nominee Account'' means the XL corporate sponsored nominee service provided by Computershare whereby the Computershare Nominee holds XL DIs as nominee in accordance with these terms and conditions;
''XL Nominee Share Dealing Facility'' means the facility provided by Computershare for the sale of XL DIs;
''XL Share Register'' means the share register maintained by XL or its agent for the Shares; and
''you'' means the person holding an interest in the XL DIs.
1.2 Words importing one gender shall (where appropriate) include any other gender, and words importing the singular shall (where appropriate) include the plural and vice versa.
1.3 References to any statute or statutory provisions shall, unless the context otherwise requires, be construed as a reference to such statute or statutory provisions (including all instruments, orders or regulations made under it or deriving from it) as in force from time to time.
1.4 For the avoidance of doubt, references in these terms and conditions to the United Kingdom, unless specified to the contrary, shall exclude the Channel Islands.
1.5 Any provision that says we will do something also means that we will arrange for the Computershare Nominee to do so, unless the context means otherwise.
1.6 References in these terms and conditions to selling XL DIs includes, where the context permits, the sale of the Shares underlying the XL DIs.
2.1 The Computershare Nominee will hold the XL DIs in uncertificated form in CREST. Nothing in these terms and conditions is intended to vary any of the Computershare's rights or duties in relation to XL as set out in XL's constitutional documents (as amended from time to time) and these terms and conditions must be interpreted to give that effect.
By participating in the XL Nominee Account, you have agreed to be bound by these terms and conditions. We will arrange for the Computershare Nominee to hold your XL DIs for you as bare trustee. It will be the legal owner of the DIs, bound by the deed constituting the XL DIs. You remain the beneficial owner of the XL DIs.
XL may from time to time arrange for XL DIs to be issued to the Computershare Nominee and direct that such XL DIs be held for you under the XL Nominee Account, and you authorise the Computershare Nominee to accept such XL DIs on this basis. Neither the Computershare Nominee nor Computershare will have or claim any interest in your XL DIs except as provided in clause 11.7 or as provided in any separate agreement or arrangement which you may have with Computershare.
You warrant to Computershare and the Computershare Nominee that your XL DIs are and will remain free of all liens, charges and encumbrances. You undertake to Computershare and the Computershare Nominee that you will not pledge or charge your XL DIs to a third party, or in any other way seek to give another person rights in or over your XL DIs. Neither the Computershare Nominee nor Computershare is acting as agent for XL in respect of the XL Nominee Account.
2.2 Computershare will maintain the register of persons for whom the Computershare Nominee holds XL DIs. You agree to provide Computershare promptly with any information which XL would be entitled to require from you if you were the registered holder of your XL DIs, including information required to satisfy any company law requirements or relating to ownership of the XL DIs. You can also instruct Computershare to arrange for the Computershare Nominee to hold your XL DIs for another person or persons (including, for the avoidance of doubt, the addition of persons as joint holders). Computershare will do this only if it receives the relevant form confirming that such a transfer is by way of gift. There is no charge for such a transfer. No other transfers (except as provided in clauses 2.3 and 2.4 below) other than by way of sale through the XL Nominee Share Dealing Facility will be permitted.
2.3 If you wish to transfer your XL DIs from the Computershare Nominee without selling them through the XL Nominee Share Dealing Facility, they must first be transferred out of the XL Nominee Account. XL DIs transferred out of the XL Nominee Account (and not immediately cancelled) can be transferred into a CREST participant account specified by you or the underlying shares can be transferred into a DTC participant account specified by you or you can request that the underlying Shares be registered in your name on the XL Share Register. Computershare will arrange for this if you complete the relevant form and send it to us. Additional copies of the relevant form can be obtained from Computershare. A fee, currently £50 or the Euro equivalent will be charged if you decide to transfer XL DIs from the XL Nominee Account. Unless you have specifically confirmed with another dealing service that you may do so, you should not deal through any other such service before this transfer is complete. If all of your XL DIs (or underlying Shares) are transferred as set out above or you elect to have the underlying Shares registered in your name on the XL Share Register, you will no longer participate in the XL Nominee Account.
2.4 Except where you have elected to participate in the XL Nominee Account dividend reinvestment plan, Computershare will not accept transfers into the Computershare Nominee or the XL Nominee Account unless directed to do so by XL in accordance with clause 2.1 above.
2.5 Computershare reserves the right not to accept any transfer instruction which is not given on the relevant form, or which is given on any form that has not been properly completed. Such forms or instructions, if not accepted, will be returned to you. You may not cancel or amend any transfer instructions once they have been sent to Computershare.
2.6 Computershare will act only on instructions in writing which contain your Security holder Reference Number (''SRN''). This number is shown on the statements of your holdings sent to you by Computershare. You must keep your SRN safe because if another person obtains the number, it may facilitate fraud. If you lose or fail to quote your SRN this may result in a delay in giving effect to an instruction from you. Upon request, instructions to transfer are acknowledged by an amended statement of holding. Other instructions are acknowledged by Computershare acting on them but are not otherwise acknowledged.
2.7 All notifications to Computershare concerning your XL DIs (for example any change of address, or instruction as to receipt of dividend payments) should quote your SRN.
Computershare will make available information about annual meetings and other meetings of XL shareholders together with a form which you can use to give the Computershare Nominee your voting instructions to vote by proxy on a poll or a show of hands. If you wish to attend, speak and vote in person at a shareholders' meeting, Computershare will appoint you as its proxy in respect of your XL DIs (so long as this is permitted by XL's constitutional documents) but, to do so, Computershare must have received the relevant instructions from you on a correctly completed form before the deadline notified to you. The services set out in this clause 3 are only available to the extent that CREST facilitates them.
4.1 Computershare will act in accordance with reasonable written instructions given by you concerning the exercise of any rights attached to or arising from your XL DIs (e.g. if there is a rights issue or a takeover concerning XL), provided that you give the instructions in accordance with these terms and conditions and any other conditions notified to you at the relevant time. Computershare reserves the right not to act on any instructions where Computershare has to make a payment unless it receives the payment from you by such date as may be specified by Computershare at the relevant time. In the case of a rights issue and in the absence of instruction from or payment by you, Computershare will allow your nil paid rights to lapse at the end of the offer period.
4.2 If any other rights or entitlements arise in connection with your XL DIs, Computershare will, where time and local legislation reasonably allows, take all reasonable steps so that, to the fullest extent possible, you are treated in the same way as you would have been as a registered holder of the XL DIs.
4.3 Where the Computershare Nominee holds XL DIs for a number of investors and XL DIs or other rights are allocated to the Computershare Nominee in respect of those XL DIs, it will allocate them between all such investors pro rata according to the number of XL DIs it holds for them. Any fractions of XL DIs which arise as a result of the Computershare Nominee holding XL DIs for a number of investors (for example through a bonus issue) will be aggregated and sold and the proceeds retained by Computershare for its own benefit.
4.4 If XL offers the option of a scrip dividend or a dividend reinvestment plan and Computershare does not receive any instructions from you by the specified time, Computershare will arrange for XL to pay you a cash dividend.
4.5 If you elect to receive a scrip dividend or to participate in the XL Nominee Account dividend reinvestment plan, the XL DIs will be issued to the Computershare Nominee to hold on your behalf in accordance with these terms and conditions and any cash balance will be retained in a non-interest bearing account with Computershare and carried forward and included in the calculation for your next scrip dividend or XL Nominee Account dividend reinvestment plan allocation. If you cancel your mandate, cease to be a holder of XL DIs or in the event of the death of a sole holder, any cash residue will be paid to you or added to the amounts of your next cash dividend, as appropriate.
4.6 Computershare will, as necessary, convert the amount of any cash dividend or other distribution attributable to your XL DIs in US Dollars into such currency (if any) that may be offered to you by XL or Computershare as part of an opportunity to participate in currency election, and then pay you this money by cheque or (where possible) via direct deposit into your nominated bank or building society account (should XL and Computershare offer this option), at or about the same time as dividend/ distribution cheques to other shareholders of XL are distributed and direct deposits made. Your money, including cash sums in respect of which cheques have been drawn in your favour, will be held in a non-interest bearing account in the name of Computershare Investor Services PLC. No trust is created in respect of monies held in this account. Any cash sums in respect of which cheques are drawn in your favour or direct deposits made in accordance with your instructions and which are unclaimed after 12 years will be forfeited by you and will revert to XL. Please note when we convert the cash dividend or other distribution from US Dollars into the relevant alternative currency, you will be responsible for paying any commission or other charges associated with converting to that currency. We will deduct such amounts from your dividend or other distribution before sending payment to you. Where we effect the currency conversion, the foreign currency exchange rate used will be a competitive rate based upon wholesale rates available in the market at the time. The wholesale rate is a point in time rate that is updated throughout the day subject to the availability of currencies for online trading. It will be derived from a reliable foreign exchange feed such as Reuters or Bloomberg and will also be dependent upon the ability to buy and/or sell currencies and the bulk buying position. We may aggregate a number of currency conversions in respect of which the shares are denominated in the same currency and execute them together. We may combine orders in this way in order to seek to provide a more favourable exchange rate than if each order were executed separately. Please note that the currency exchange rate can fluctuate in the period after you send us your instruction but before the conversion is effected and this may decrease the value of the dividend or other distribution you receive. Neither we nor XL accept any liability for any losses or expenses which you may suffer as a result of any such movement in the currency exchange rate. You may not specify the currency exchange rate or the minimum currency exchange rate to be applied to the conversion of your monies.
4.7 You acknowledge that the payment of any cash dividends or other distributions attributable to your XL DIs may be subject to Withholding Tax. Computershare may withhold any Withholding Tax from the amount of any cash dividend or other distribution otherwise payable to you and pay such amount to the relevant tax authority. Computershare shall be entitled to appoint a Withholding Agent to remit any Withholding Tax to the appropriate tax authority on your behalf. Upon request, you shall promptly provide Computershare with any information we or the Withholding Agent requires to determine the amount of any withholding or deduction, including (if relevant) a duly completed and properly executed United States form W-8BEN (or such other form as may be required by applicable law).
5.1 Computershare will provide you with a statement of the number of XL DIs held for you under the XL Nominee Account at the time when an account is first opened for you. Computershare will also send you a statement once a year of the number of XL DIs being held for you under the XL Nominee Account. When you sell XL DIs, you will also receive an advice note which will confirm the number of XL DIs you hold. These statements are provided free, but you will be charged a fee (currently £15 or the Euro equivilent) if you request a duplicate or additional statement.
5.2 You are required to check any statement which you receive from Computershare and, if you have any query or concern in relation to the matters disclosed by the statement, you should contact Computershare as soon as possible following receipt of the statement by you.
5.3 Computershare reserves the right to correct any erroneous debit or credit to the records maintained in respect of the XL Nominee Account relating to your XL DIs and will notify you (where relevant) of any correction which it makes.
6.1 The Computershare Nominee is a member of the CREST System. If you give instructions to Computershare, which means that a message must be sent through the CREST System (for example, where you instruct Computershare to transfer your XL DIs from the Computershare Nominee), then Computershare will pass that instruction to the Participant who is responsible for receiving and transmitting the instructions through the CREST System. Computershare will take reasonable care to ensure that the Participant acts on instructions given to it by Computershare. None of XL, Computershare or the Computershare Nominee accepts any responsibility for the operation of the CREST System and accordingly cannot be responsible to you for any delays or liabilities suffered by you as a result of the operation, failure or suspension of the CREST System, the insolvency or other default of CREST or of any participant in the CREST System or any other clearing system used as an alternative or successor to CREST or the failure by any CREST settlement bank to make, receive, credit or debit any payment. CREST has certain powers to suspend and terminate the Participant and, if such powers are exercised, then there may be a delay in giving effect to any instructions given by you. None of XL, Computershare or the Computershare Nominee accepts any responsibility for any delays, liabilities or costs which you suffer as a result of the suspension or termination of the Participant by CREST as a CREST participant except where such suspension or termination has been caused by negligence, wilful default or fraud on the part of Computershare or the Computershare Nominee.
6.2 If you instruct Computershare to transfer any of your XL DIs you will indemnify Computershare and the Computershare Nominee against any liabilities or costs which they may incur if, for any reason connected with you, the transfer cannot be completed. You undertake to notify Computershare if you have any reason to believe that any person may be seeking to try to prevent you from transferring your XL DIs.
7.1 You may not buy more XL DIs to be held in your XL Nominee Account, except that XL DIs may be added to your XL Nominee Account if you participate in the XL Nominee Account dividend reinvestment plan.
7.2 If you instruct Computershare to sell your XL DIs, you may sell those XL DIs only through the XL Nominee Share Dealing Facility (on its terms and conditions). If you wish to use another dealing service to sell your XL DIs, you will need to transfer your XL DIs out of the XL Nominee Account in accordance with one of the options set out in clause 2.3 of these terms and conditions.
7.3 You will receive an advice note when you sell XL DIs.
8.1 Computershare will take reasonable care in operating the XL Nominee Account, and will be responsible to you for any losses or expenses (including loss of XL DIs) suffered or incurred by you as a direct result of Computershare's negligence, wilful default or fraud or breach of the agreement formed by these terms and conditions (as amended from time to time) or the negligent or fraudulent acts or omissions or wilful default of the Computershare Nominee but not otherwise. The Computershare Nominee will maintain your XL DIs in accordance with these terms and conditions and the FCA rules, but you remain the beneficial owner of the XL DIs. If the Computershare Nominee became insolvent your XL DIs would be protected.
8.2 If Computershare cannot provide its services due to circumstances beyond its reasonable control (for example because of a failure of its or another person's computer systems or telecommunications links or industrial disputes or postal delays) Computershare will, where relevant, take such reasonable steps as it can to bring those circumstances to an end.
8.3 None of XL, Computershare or the Computershare Nominee shall be liable for any losses or expenses suffered by you as a result of the circumstances referred to in clause 8.2 above or as a result of a delay or failure in the provision of the XL Nominee Account or the XL Nominee Share Dealing Facility caused by such circumstances. None of XL, Computershare or the Computershare Nominee accepts liability for any indirect or consequential loss suffered by you.
8.4 None of XL, Computershare or the Computershare Nominee is responsible for any acts or omissions of XL, and XL is not responsible for any acts or omissions of Computershare or the Computershare Nominee.
8.5 Computershare will take reasonable care in its selection and continued use of the Participant, if any. but none of XL, Computershare or the Computershare Nominee accept any responsibility for any losses or expenses suffered or incurred by you as a result of any acts or omissions by the Participant (where the Participant is not a member of the same group of companies as Computershare).
8.6 Computershare will not be responsible for delays or failure to perform any of our obligations due to acts beyond its reasonable control. Such acts shall include, but not be limited to, acts of God, strikes, lockouts, riots, acts of war, terrorist acts, epidemics, governmental regulations superimposed after the fact, communication line failures, power failures, earthquakes or other disasters.
8.7 Nothing in these terms and conditions restricts any rights you may have under the rules of the FCA or under the Act 2012.
You have two separate rights: cancellation rights, which apply only when you first join the XL Nominee Account, and withdrawal rights, which apply at any time thereafter. They are simply two separate mechanisms you can use to leave the XL Nominee Account.
9.1 Cancellation rights: You can cancel your XL Nominee Account within fourteen calendar days of the date on which your account is first activated (the ''Cancellation Period'') and request that all of your XL DIs (if any are held in the XL Nominee Account) should be transferred into a CREST participant account specified by you, or that the underlying shares are transferred into a DTC participant account specified by you or you can request that the underlying Shares be registered in your name on the XL Share Register. However, you will lose your cancellation right if you make a request during the Cancellation Period for us to process any payment to you or sell any of your XL DIs for you in accordance with these terms and conditions. If you want to cancel your use of the XL Nominee Account you should advise us no later than the end of the Cancellation Period. If you exercise your right to cancel during the Cancellation Period in accordance with this clause, no fees will be payable as outlined. Once the aforementioned transfer has been effected, we will then no longer hold the XL DIs for you or remit any cash arising from dividends or other distributions in accordance with clause 4.6 above, and the terms and conditions of the XL Nominee Account will not apply to those XL DIs. If you do not exercise your right to cancel, we will provide the agreed services in accordance with these terms and conditions.
9.2 Withdrawal rights: If you no longer wish to hold your XL DIs through the XL Nominee Account you may give Computershare notice to terminate at any time in writing. You will be required to pay any applicable charges and any stamp duty associated with the removal of your XL DIs from the XL Nominee Account and their transfer into a CREST participant account specified by you or the transfer of the underlying Shares into a DTC participant account specified by you or for requesting that the underlying Shares be registered in your name on the XL Share Register, but you will not be required to make any additional payment in respect of the termination. No administrative charge will be payable if your participation in the XL Nominee Account terminates by reason of your entire holding of XL DIs being sold through the XL Nominee Share Dealing Facility or being transferred by you by way of gift pursuant to clause 2.2 above or where Computershare has introduced a charge pursuant to clause 11.2 below. Separate charges will apply, however, for the XL Nominee Share Dealing Facility. You may give notice of termination on the standard form sent to you by Computershare or you may write to Computershare. You need to give the details of the full name and SRN of the account which you wish to terminate. Any instruction to terminate an account in the name of joint holders must be signed by all joint holders.
9.3 Computershare may require you to cease using the XL Nominee Account at any time by giving 5 days' prior written notice to you or without notice if, in the opinion of Computershare, you are in material breach of these terms and conditions or the Computershare Nominee is unable to comply with any obligation to which it may be subject which relates to your XL DIs under the deed constituting the XL DIs, having used all reasonable endeavours so to comply. In such event, Computershare will arrange for the XL DIs to be transferred into a CREST participant account specified by you, or for the underlying Shares to be transferred into a DTC participant account specified by you or you may request that the underlying Shares be registered in your name on the XL Share Register. For the avoidance of doubt, in such circumstances Computershare will not charge a fee if such a notice is served.
9.4 If the agreement between Computershare and XL for the provision by Computershare of the XL Nominee Account terminates (in whole or in part) or if you or Computershare give notice of termination to the other under these terms and conditions or if the XL Nominee Account terminates for any other reason, Computershare will arrange for your XL DIs to be transferred into a CREST participant account specified by you, or for the underlying Shares to be transferred into a DTC participant account specified by you, or you may request that the underlying Shares be registered in your name on the XL Share Register.
9.5 Termination will not cancel or amend any instructions which have already been sent by you to Computershare. Termination shall not affect any rights or obligations arising prior to or continuing during or after the date of termination or which arise in consequence of it or which relate to Computershare's provision of the XL Nominee Account to you and all such rights and obligations shall continue to be subject to the terms and conditions prevailing at the time of termination.
9.6 Whenever Shares underlying XL DIs are transferred into your name on the XL Share Register, any mandates or other instructions given by you relating to your XL DIs may, at XL's discretion, be applied, so far as relevant and so far as possible, to your registered holding.
9.7 You appoint Computershare to be your agent for the purpose of issuing any instructions necessary to CREST in order to give effect to the transfers referred to in this clause 9.
10 Your attention is drawn to Part Seven of this Scheme Document, which sets out certain matters relating to the taxation treatment of Scheme Shareholders in respect of the Scheme in Bermuda, the UK, the US and the Republic of Ireland. In particular, your attention is drawn to the comments regarding Irish stamp duty and to the potential charge for a subsequent purchaser of Shares, settling in the form of XL DIs. Although this Scheme Document contains certain limited tax-related information, if you are in any doubt about your own tax position or you are subject to taxation in any jurisdiction other than Bermuda, the US, the US or the Republic of Ireland, you should consult an appropriately qualified independent professional adviser immediately.
11.1 All notices and other communications sent by you to Computershare must be sent to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ and include the full name and SRN of your account with the Computershare Nominee. This information will be provided to you on the statements of holdings sent to you by Computershare.
11.2 Notices and other communications sent to you by Computershare will be sent to your address shown on the register maintained by Computershare for the Computershare Nominee, or we may communicate with you by email where the sole or first named joint holder has provided us with an email address. Notices sent by Computershare will be treated as received by you 2 business days after the date on which they are posted or emailed. Any documents sent to you by Computershare and any documents sent by you, or on your behalf, to Computershare will be sent entirely at your own risk, and neither Computershare nor the Computershare Nominee accepts any liability prior to receipt of any document from you or, where relevant, after dispatch of any document to you. We will not accept any instructions from you by fax, email or photocopied forms.
11.3 You should notify Computershare of changes of address and changes of name (supported by appropriate documents, e.g. deed poll or certified copies of marriage certificate) as soon as possible. On death, your executors should contact Computershare for advice on the procedures to be followed.
11.4 Computershare's obligations and your obligations under these terms and conditions shall be binding on Computershare and your successors, executors, administrators and other legal representatives.
11.5 Where a person who is authorised to act on your behalf in relation to your XL DIs and who has given such proof of his authority to so act as Computershare may reasonably require gives any notice or takes any other action on your behalf, Computershare shall be entitled to rely on such notice or other action in all respects as if given by you in person.
11.6 Computershare provides its contractual terms in English and will communicate with you only in English during the duration of these terms and conditions.
12.1 Computershare may with the consent of XL amend these terms and conditions from time to time. All such amendments will be notified to you. You will be given at least 20 business days' prior notice of any amendment which could affect your rights against Computershare or liability to Computershare.
12.2 Save in respect of the XL Nominee Share Dealing Facility (in respect of which separate terms and conditions apply in accordance with clause 7.2 above) and save as set out in clauses 2.3, 4.6, 5.1, 9.2, 12.7, 15.6 and 16, the only charges for the XL Nominee Account are for the supply of duplicate tax vouchers and United States tax reporting forms. Computershare will give you at least one month's prior written notice of any other proposed charge for the XL Nominee Account. Up to date copies of these terms and conditions and current charges can be obtained by telephoning Computershare on +44 (0)870 707 1897.
12.3 You can obtain additional forms by writing to the XL Nominee Account, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ.
12.4 All fees, commissions and other charges payable to Computershare by you are exclusive of UK Value Added Tax (''VAT''). Where relevant, you must also pay an amount in respect of any UK VAT due on such sums.
12.5 Computershare reserves the right to notify the any applicable stock exchange of any client defaulting on settlement. This may affect your ability to deal in future with member firms of such stock exchanges.
12.6 These terms and conditions shall be subject to English law and you submit to the nonexclusive jurisdiction of the English courts.
12.7 Computershare reserves the right, subject to giving two business days' prior notice to you, to sell any of your XL DIs or connected rights and to keep the proceeds of sale to the extent that they cover any amount which you may at any time owe Computershare in respect of transactions or services governed by these terms and conditions. You authorise Computershare to execute any relevant stock transfer form or other relevant document or give any instruction necessary to give effect to any such sale. By appointing Computershare to provide services under these terms and conditions, you acknowledge and declare that your XL DIs and your rights and interests in or in relation to your XL DIs shall stand charged to Computershare as security accordingly. You agree to indemnify Computershare against any losses and expenses it incurs as a result of your failure to put Computershare in funds in relation to a matter instructed by you or otherwise as a result of a breach by you of these terms and conditions and against any taxes suffered by Computershare attributable to your use of the XL Nominee Account. Computershare reserves the right to charge interest at an annual rate equal to 2 per cent above the base rate from time to time of The Royal Bank of Scotland plc on any amount due to it from you. If you owe Computershare money it reserves the right not to act on instructions from you and to retain any documents it holds for you until you have paid Computershare in full.
12.8 Where Computershare owes you money and you owe money to Computershare under the XL Nominee Account, Computershare may set off the amounts due from and to Computershare and send you only the net amount (if any). Fractions of a penny arising in respect of money due to you are rounded down and retained by Computershare for its own benefit.
12.9 No conduct or delay on the part of Computershare shall be taken as a waiver or variation of any rights which Computershare has unless Computershare waives or varies a particular right in writing. No waiver or variation on a particular occasion will operate as a waiver or variation of any rights Computershare might have in respect of any other matter.
12.10 You authorise XL, Computershare or Computershare Nominee and the Participant may disclose to each other or another person carrying out functions in relation to the XL Nominee Account information relation to you provided it is required for the purposes of the provision or improvement of the XL Nominee Account.
12.11 You agree that XL, Computershare, the Computershare Nominee and the Participant may disclose to each other or to any other person carrying out functions in relation to the XL Nominee Account information relating to you provided it is required for the purposes of the provision or improvement of the XL Nominee Account.
12.12 We and our agents may affect transactions notwithstanding that they have a direct or indirect material interest or a relationship of any description with another party which may involve a conflict with its duty to persons using this service. We manage those conflicts of interest of which we are aware, and monitor the effectiveness of our policies and procedures on a regular basis. We make every effort to disclose our interests and those of our employees where it is suspected that a conflict of interest may arise. In accordance with our regulatory responsibility on this matter we operate a documented policy that details our obligations. Full details are available upon written request to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ.
12.13 We reserve the right to delay taking any action on any particular instructions from you if we consider that we need to do so to obtain further information from you, or to comply with any legal or regulatory requirement binding on us (including the obtaining of evidence of identity to comply with money laundering regulations), or to investigate any concerns we may have about the validity of or any other matter relating to the instruction.
12.14 Computershare does not recognise, in maintaining records for the Computershare Nominee, any trust and neither Computershare nor the Computershare Nominee will take notice of any trust whether express, implied or constructive.
12.15 Neither Computershare nor the Computershare Nominee will lend your XL DIs to any third party or borrow money using them as security.
12.16 If:
12.16.1 Computershare has sent documents to your address on two separate occasions and they have been returned and, after making reasonable enquiries, Computershare cannot find your current address, it will not send any more documentation to you until you provide Computershare with your address; or
12.16.2 two dividend payments in respect of your XL DIs have been returned on consecutive occasions to Computershare or otherwise not cashed and, after making reasonable enquiries, Computershare cannot find your current address, it will cease to send you dividend and other distribution payments. However, subject to clauses 4.4 and 4.5, the dividends and other distributions in respect of XL DIs will accrue in a non-interest bearing account in the name of Computershare; or
12.16.3 (i) on or after a 12 year period during which at least three dividend payments in respect of your XL DIs have been made and returned to Computershare or otherwise not cashed,
(ii) Computershare announces it intends to sell your XL DIs by placing an advertisement in a leading national newspaper in the Ireland and the UK and at least one newspaper appearing in the area of your address shown on the register maintained by Computershare for the Computershare Nominee,
(iii) during this 12 year period and for three months after the last of the advertisements appears, Computershare has not heard from you or any person who is automatically entitled to your XL DIs by law, and
(iv) Computershare has told the applicable stock exchange that it intends to sell your XL DIs,
Computershare may sell your XL DIs at the best price it can reasonably obtain and pay the proceeds to XL.
12.17 When Computershare (or its agents or delegates) arranges for the sale of XL DIs for you it or they could be:
12.17.1 acting for an associated company which is dealing as principal for its own account by buying XL DIs from you;
12.17.2 buying XL DIs where an associated company is involved in a new issue, rights issue, takeover or similar transaction concerning the XL DIs; or
12.17.3 otherwise in a position where it has a material interest in the transaction.
12.18 Computershare may employ agents and delegates on such terms as it thinks fit to carry out any part of its obligations or discretions in connection with the XL Nominee Account and, save as expressly provided in these terms and conditions, Computershare shall be liable for the acts and omissions of such agents and delegates on the same basis as if they were the acts or omissions of Computershare. Details of such delegation, in so far as it is in respect of regulated investment activities, and of the charges levied by such delegates against Computershare are available on request by writing to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ.
12.19 Your XL DIs will not be identifiable by separate certificates or other physical documents of title. Should Computershare default in any way, any shortfall in XL DIs registered in the name of the Computershare Nominee may be shared pro rata between you and other persons on whose behalf the Computershare Nominee holds XL DIs.
12.20 This service is a XL sponsored scheme which means that we charge XL a fee representative to the costs of operating it. This arrangement means that plan participants are not charged an annual fee. In accordance with our regulatory obligations, if you would like more detail on this arrangement please write to us at the address above.
12.21 Computershare may at any time transfer all or any of its rights and obligations under this agreement to any person (the ''Transferee'') who is in the reasonable opinion of Computershare able to perform the obligations of Computershare under these terms and conditions. The transfer will be given effect by Computershare and the Transferee sending a transfer notice to you specifying the date (the ''Transfer Date'') on and from which the Transferee will assume Computershare's rights and obligations under these terms and conditions. Any changes to the terms and conditions which will be necessary because of the transfer, for example changes of address and banking details, will be set out in the transfer notice. At least 30 days' prior notice of the transfer will be given. If you choose to leave the XL Nominee Account within the 30 day period then no charge will be payable by you. The transfer will not affect any rights you may have against Computershare which relate to the period before the Transfer Date. With effect from the Transfer Date:
12.21.1 the agreement formed by these terms and conditions (as amended from time to time) shall be treated for all purposes as having been transferred to, and as if entered into between you and, the Transferee in place of Computershare;
12.21.2 Computershare shall be released and discharged from all of its obligations and liabilities under these terms and conditions;
12.21.3 references to Computershare shall be read as references to the Transferee; and
12.21.4 the Computershare Nominee will be such company as is notified to you in the transfer notice, which company shall be a member of CREST and its business shall consist solely of acting as nominee.
12.22 In the provision of this service we are not required to assess the suitability of the investment or the service offered. You will not benefit from the protection of the FCA rules on assessing suitability.
12.23 For the purposes of the XL Nominee Account you will be categorised as a Retail Client.
13.1 The Computershare Nominee will not hold XL DIs for more than four joint holders. Where the XL DIs held by the Computershare Nominee for you are held for more than one person, references to ''you'' in these terms and conditions are to each of the joint holders separately as well as jointly and severally. Each such person agrees that:
13.1.1 all obligations, undertakings and agreements on the part of Computershare and the Computershare Nominee are given to the joint holders taken together and not separately to each of them; and
13.1.2 all obligations, undertakings, agreements and liabilities arising under or pursuant to these terms and conditions shall constitute joint and several obligations of each joint holder to Computershare (and, where relevant, the Computershare Nominee).
13.2 Computershare will only accept transfer instructions given by or on behalf of all of the joint holders. Computershare reserves the right to accept other instructions signed by one or more joint holders. In such a case the person(s) giving the instructions warrant(s) to Computershare that they have the necessary authority to give such instructions on behalf of all joint holders.
13.3 All notices, other documents and payments sent by Computershare pursuant to these terms and conditions will be sent to the first named holder on the nominee register and in any case will be treated as sent to all of the other joint holders. It is the responsibility of the holder who receives the notices, documents and payments to notify and account to the other joint holders. Only the first named holder may be nominated as proxy to attend, speak and vote at meetings of XL shareholders (to the extent such proxy facility is made available by CREST).
14.1 We have a procedure to help us resolve all complaints from our customers effectively. If you have any complaints about the service provided to you or wish to receive a copy of our complaints procedure, please write to us at Computershare Investor Services PLC, Shareholder Relations, The Pavilions, Bridgwater Road, Bristol, BS13 8AE. If you cannot settle your complaint with us, you may be entitled to refer it to the Financial Ombudsman Service, details of which are available on request.
14.2 Computershare Investor Services PLC is covered by the UK Financial Services Compensation Scheme and you may be entitled to compensation if we cannot meet our obligations. Most types of investment business are covered for 100% of the first £50,000 (i.e. a maximum of £50,000 per person). Further details of this scheme are available on request.
15.1 You authorise us to pool any client money we hold on your behalf in the provision of this service into any relevant omnibus bank accounts set up in accordance with the FCA's CASS Rules. You understand and accept that by pooling your client money with those of other clients you retain all rights you have as the legal owner of the monies.
15.2 All client money that we hold on your behalf as a consequence of administering this service will be maintained in an appropriately designated and named client money bank account at a UK approved bank. Your client money will be held on trust for the benefit of clients for whom we are holding client money and treated in strict accordance with the requirements of the FCA Rules. This means that in the event that we or the bank became insolvent your client money would be protected from creditors generally and subject to the prevailing terms of the FSCS. In such an event any irreconcilable shortfalls of client money in the client money bank accounts may be pro-rata with other clients in relevant client money bank accounts and you may not recover all of your client money.
15.3 If, for operational purposes, we are required to maintain your client money in a bank based in a jurisdiction outside the UK, then we will take all reasonable steps to protect the client money in accordance with the local equivalent law and rules with regard to how your client money is treated. These may be different to those in the UK and your rights in the event of insolvency may be reduced.
15.4 We will not pay interest on any client monies held on your behalf.
15.5 We may cease to treat your money as client money and, accordingly, remove it from the client money bank account(s) if there has been no movement in your balance for a period of at least six years (notwithstanding any payments or receipts of charges or similar items) and we have taken reasonable steps to trace you and return your balance. However if we take such steps, we undertake to make good any valid claim against removed balances.
15.6 Acquisition costs, statutory fees and any other costs associated with executing deals shall be borne by you and where appropriate may be paid by deduction from your credit balance.
16.1 You authorise us to provide information concerning you, your XL DIs and any instructions given by you in relation to your XL DIs to carefully selected third parties in order to facilitate provision of the XL Nominee Account. Your details will only be disclosed in accordance with the Principles set out in the United Kingdom Data Protection Act 1998: (i) to any person if that person has legal or regulatory powers over us or the Computershare Nominee; (ii) to XL (or any other person carrying out functions in relation to the XL Nominee Account, including CREST) in order to facilitate the provision of the XL Nominee Account; and (iii) to any person carrying out functions in relation to acting as the registrar of XL.
16.2 XL and some of its agents may be located in the United States or other jurisdictions which may not have data protection laws as strict as those in the United Kingdom, and you nevertheless authorise us to provide information to such persons as set out above. You have the right upon request to view what information we hold about you. We may charge you a small fee for providing you access to this information.
16.3 XL will have access at all times to the records we hold about you in order to inform you of your rights as a person on whose behalf XL DIs are held by the Computershare Nominee, including corporate and other details, and products or services specifically designed for shareholders.
17.1 We may require evidence of your identity from time to time to comply with money laundering legislation in relation to holding, selling or, if you participate in the XL Nominee Account dividend reinvestment plan, buying XL DIs. Delay or failure to provide satisfactory evidence may result in us refusing to hold XL DIs for you or in payments to you in connection with your XL DIs being withheld or a delay or refusal to act in following instructions.
17.2 If we believe that you are breaching money laundering legislation, we may refuse to allow you to participate in the XL Nominee Account and if appropriate may notify the relevant authorities.
17.3 We reserve the right to delay taking any action in relation to the XL Nominee Account or in relation to any particular instructions from you if we consider that we need to do so to obtain further information from you or to comply with any legal or regulatory requirement binding on us (including the obtaining of evidence of identity to comply with money laundering regulations) or to investigate any concerns we may have about your instruction.
18.1 The permitted jurisdictions for the XL Nominee Account are set out below. If you are resident in another territory you will be excluded from participating in the XL Nominee Account. If you are unsure of your status please call Computershare on +44 (0) 870 703 0008 (Monday to Friday, 9.00 a.m. to 5.00 p.m. (London time)). The permitted jurisdictions for the XL Nominee Account are: Argentina, Austria, Belgium, Botswana, Brazil, Bulgaria, Chile, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Guernsey, Guinea, Hungary, Iceland, Indonesia, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Namibia, The Netherlands, Norway, Paraguay, Peru, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan and the United Kingdom.
18.2 Computershare Investor Services PLC is authorised and regulated by the Financial Conduct Authority, Registered Office: 25 The North Colonnade, Canary Wharf, London E14 5HS. Computershare Investor Services PLC is on the Financial Conduct Authority Register with registration number 188534. Computershare Investor Services PLC is registered in England & Wales, Company No. 3498808, Registered Office: The Pavilions, Bridgwater Road, Bristol BS13 8AE. The main business of Computershare Investor Services PLC is the provision of share registry and shareholder services.
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