ACR to stop writing business as Catalina deal agreed

December 5 2019 by Andrew Tjaardstra

Bermuda-headquartered (re)insurance legacy player Catalina Holdings (Bermuda) has reached an agreement to acquire Asia Capital Re for an undisclosed amount.

As a result, ACR will cease writing business with immediate effect and all existing policies in force will be serviced until expiry. ACR said it will continue to honour all valid reinsurance quotes, as well as liabilities from outstanding commitments.

The acquisition will be Catalina’s first in Asia and ends a troubled period for the reinsurer which has struggled to build profitable momentum and had an aborted attempt at a sale to potential Chinese investors in 2017.

Catalina said that it intends to use ACR and Singapore as a hub to build a strong Asian run-off platform.

The  reinsurance portfolio includes property, motor, marine, agriculture, engineering and aviation.

Chris Fagan, chief executive, Catalina Holdings, commented: “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.”

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 September 30 2019; it will take Catalina’s assets up to US$7.5 billion.

The  reinsurance portfolio includes property, motor, marine, agriculture, engineering and aviation.

Hsieh Fu Hua, chairman of ACR, said: “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.”

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) and Marubeni Corporation.

The acquisition is expected to close in the first half of 2020, subject to regulatory and all other approvals.

According to PwC’s 2019 Global Insurance Run-off Survey, Asian non-life run-off reserves are estimated at around US$100 billion.