Bermuda-based re/insurer Catalina Holdings has agreed in principle to acquire the entirety of Singapore-headquartered Asia Capital Reinsurance Group (ACR).
The transaction is expected to complete in the first half of 2020, subject to regulatory and all other approvals, Catalina Holdings said in a statement.
In 2017, ACR was supposed to be acquired by two Chinese firms, but the deal did not push through.
This acquisition will be Catalina’s first in Asia, and, according to the firm, marks a strategic move to increase its exposure to the significant run-off market across the continent. It cited PwC’s 2019 Global Insurance Run-off Survey, which found that Asian non-life run-off reserves are estimated at around US$100 billion.
Catalina said that it intends to use ACR and Singapore as a hub to build a strong Asian run-off platform.
“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,” said Chris Fagan, CEO of Catalina Holdings. “There are significant opportunities for further acquisitions in Asia, in what is a developing and growing run off market.”
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 any outstanding liabilities.
As of September 30, 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. Its reinsurance portfolio encompasses a broad geographic scope and wide range of business lines, including property, motor, marine, agriculture, engineering and aviation.
Founded in 2006, ACR has offices 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.
“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,” said Hsieh Fu Hua, chairman of ACR. “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.
