Catalina Holdings (Bermuda) Ltd (“Catalina”), an industry leader in the legacy (re)insurance space, has reached an in principle agreement to acquire Asia Capital Reinsurance Group Pte. Ltd. (“ACR”), a Singapore-headquartered reinsurance business.
The acquisition is expected to close in the first half of 2020, subject to regulatory and all other approvals.
The acquisition will be Catalina’s first in Asia and marks a strategic move to increase its exposure to the significant run-off market across the continent – according to PwC’s 2019 Global Insurance Run-off Survey, Asian non-life run-off reserves are estimated at around US$100 billion. Catalina intends to use ACR and Singapore as a hub to build a strong Asian run-off platform.
As part of the transaction, ACR will cease writing business with immediate effect and all existing policies in force will be serviced until expiry. ACR will continue to honour all valid reinsurance quotes issued to date, as well as liabilities from outstanding commitments to business partners.
ACR had US$835 million of shareholder equity, US$1.3 billion of gross liabilities including Unearned Premium Reserve, and total assets of US$2.1 billion as of 30th September 2019.
Its reinsurance portfolio extends across a broad geographic scope and wide range of business lines including property, motor, marine, agriculture, engineering and aviation. The business, which was founded in 2006, has offices located across Asia, including Singapore, Japan, South Korea, Malaysia and Hong Kong. Its existing major shareholders include 3i Group plc (and affiliates), Khazanah Nasional Berhad, Temasek Holdings (Private) Limited and Marubeni Corporation.
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Pro forma for the acquisition of ACR, Catalina will have total assets of US$7.5 billion.
Commenting on the transaction, Mr Chris Fagan, Chief Executive, Catalina Holdings said: “This is a strategically important transaction for Catalina, as it gives us a platform from which to build an Asian portfolio and to complete our geographic footprint. There are significant opportunities for further acquisitions in Asia, in what is a developing and growing run off market.”
Mr Hsieh Fu Hua, Chairman of ACR added: “This was a shareholder-led process, which has culminated in a successful exit. Catalina, as the buyer, has the experience and expertise to deliver on ACR’s outstanding commitments to clients and take the business into a new direction. On behalf of the Board, I would also like to formally express my appreciation to ACR’s business partners, management, staff and all other stakeholders for their support over the last 13 years.”
King & Spalding is acting as legal advisor to Catalina. Credit Suisse is acting as financial advisor and Allen & Overy is acting as legal advisor to ACR and its major shareholders. – BusinessNewsAsia.com