There has been a significant surge of sell-offs in the general insurance business across Europe, with companies looking to dispose of portfolios that are no longer active (see Insurers sell-off gathers pace
). However, just who is swooping to buy these forgotten strands of a business?
Insurance Business UK
decided to reach out to Compre, a London-based company that’s definitely looking to buy, to find the answers.
Describing itself as a legacy specialist with more than 30 years’ experience in the acquisition and management of reinsurance and insurance companies, Compre is building quite the reputation for itself having recently reached an agreement to acquire Allianz
IARD’s Ridgewell Fox & Partners (RFP) pool legacy reinsurance business for an undisclosed sum, its fourth acquisition of the year (see Compre makes fourth acquisition of the year
). So where does a company like this come from?
“We started as the back office of an active insurance company back in the mid-80s,” commented the company’s founding director and chief executive officer, Nick Steer. “We made our first acquisition in 1994 and we were a service based business for the next 10 years or so and then decided the outsourcing service business wasn’t the place to be as the margins were tight and the landscape was competitive – no-one was making a lot of money out of it.
“So we decided to become an acquirer of portfolios rather than just a manager of portfolios. In the mid-2000s we teamed up with a US business to buy a number of companies, mainly in the Nordic area but here as well, before we went our separate ways in 2008. We then teamed up with a private equity outfit here in the UK who we stayed with until last year and we are now largely owned by CBPE Capital.
“We purely buy legacy business – we buy insurance portfolios, non-life, reinsurance and direct business. To date we’ve bought 10 companies and we’ve been involved in about 22 reinsurance/portfolio deals.”
According to a recent Reuters report, sales of these portfolios could reach a record five billion euros this year. So what sort of companies is Compre targeting? It’s key objective, it states, is to secure legal, financial and operational finality for insurers and reinsurers seeking to exit their legacy exposures.
“We either look at the older books of business – the older, reinsurance style of business,” continued Steer, “or the younger direct business where people are just looking to restructure their balance sheets and restructure their capital where they realise that the capital could be better used to focus on their core business going forward.
“They’ve decided a part of the business isn’t profitable or they’ve decided to change focus – and that’s where we come in.”
But what happens to that legacy portfolio once a takeover is complete?
“We see ourselves very much as liability managers,” commented Steer. “We manage the claims. We settle the claims within the claims reserves on a proactive basis. We pay all valid claims in full.”
According to industry sources, many private equity firms could be looking to build a significant presence in the sector – and Compre is determined not to be left behind having secured deals for QBE
’s RFP legacy reinsurance business, a German mutual insurer and a legacy portfolio from Norwegian insurer Gjensidige Forsikring ASA, all in addition to the Allianz
deal, this year alone.
“We want to grow the business substantially,” continued Steer. “We have a European focus – our main market is continental Europe as there are perhaps more opportunities there than there are here right now.
“German-speaking Europe generally hasn’t been as proactive as the UK in dealing with its legacy business. Consequently there is a large, untapped market that is gradually opening up – perhaps not as fast as people were expecting – but it is opening up.
“We hope to make other announcements in the next few months or weeks depending on how the processes go. This year is looking like a good year for us – one of the best years that we have had.”
The message, it seems, is watch this space… this is an area of business that shows no signs of losing pace.
Insurance sell-off gathers pace
Compre makes fourth acquisition of the year