Fairfax Asia is poised to take over Singapore Reinsurance Corporation (Singapore Re) with the offer of a take-private transaction.
The Asian arm of the Canada-based financial group currently owns around 28% of Singapore Re, and is looking to acquire the reinsurer’s remaining shares for the price of SG$0.35 per share.
The offer is 20.6% higher than the volume-weighted average price per share for the last one- and three- month periods. Meanwhile, it is 21.9% and 27.6% over the six and 12-month periods, respectively, according to a statement. As of March 18, the company’s share price was at SG$0.295.
Fairfax aims to gain majority control of Singapore Re and take it off the Singapore Exchange, making it a privately held company.
Singapore Re’s performance has been declining in recent years, which Fairfax has attributed to a mix of fierce competition, volatile underwriting performance, and rising natural catastrophe exposure. The reinsurer’s return on shareholder’s equity for the past financial year was 1.9%, down from an average of 4.7% over the past 10 years.
According to Fairfax, it has no intentions to make drastic changes to Singapore Re, and no staff cuts are planned. Instead, it will seek to grow the business by seizing opportunities in a long-term, sustainable manner.
