An Auckland-based credit and financial risk reinsurer has completed its $150 million purchase of its largest single client and France's largest specialist producer of construction-sector insurance, in a move expected to boost company earnings.
CBL Corporation Limited completed its acquisition of Securities and Financial Solutions Europe SA (SFS) and its claims management operation IMS Expert SA (IMS) in Luxembourg on 5 January, after receiving approval from Luxembourg's Commissariat aux Assurances in October 2016, BusinessDesk
"The acquisition of SFS is expected to provide important strategic benefits for CBL including the removal of distribution concentration risk that SFS represented being CBL’s largest client, the ability to further vertically integrate the group and to consolidate CBL’s market position in Europe, particularly in France, currently our largest European market," Peter Harris
, CBL managing director, said.
In 2015, SFS and IMS generated normalised operating earnings of 8.2 million euros on revenue of 41 million euros, the report said.
CBL completed the first tranche of a planned capital raising in September, selling $60 million new shares at $3.45, reducing its pro forma debt from $162 million to $102 million. It also launched a share purchase plan at the same price and declared a 3 cent dividend in October, BusinessDesk
In 2015, reinsurance business from SFS accounted for 41.4 per cent of CBL's gross written premiums, as compared to 49.9 per cent in 2014. The regional insurer posted an annual profit of $35.5 million in 2015, significantly higher than $26.1 forecast in its initial public offering prospectus.
The acquisition was paid through a combination of cash, bank debt, and vendor funding.
Antoine Guiguet, SFS executive chairman, will retain his position as well as his 26 per cent stake in the company. Gerard Marichy, IMS MD, will also keep his position and buy a 3 per cent stake in the subsidiary. Meanwhile, Patrice Gilles, SFS principal owner, will leave his position and take on the role as ambassador of SFS.