Insurer with Kiwi connection buys up big in Asia

by Maryvonne Gray 22 Aug 2014

Insurer with Kiwi connection buys up big in Asia

Swiss insurer Allied World is to acquire the Hong Kong and Singapore operations of Royal & Sun Alliance (RSA) for approximately $215 million.

The insurer, who is the capacity provider for recently-launched Kiwi underwriting agency Delta Insurance, also opened a new branch office in Sydney in May overseen by William Cotter, executive vice president, Asia Pacific Division.

Allied World says the transaction with RSA, which is subject to regulatory and court approvals in Singapore and Hong Kong, will complement its global specialist insurance strategy by providing meaningful additional scale in the region.

The business includes a niche group of speciality lines, including casualty, construction and engineering, marine and property.

In 2013 the businesses had total gross written premiums of approximately $250 million.

President and CEO Scott Carmilani said: “This is a truly unique opportunity to acquire leading specialty businesses in key Asian markets. This transaction will significantly deepen and broaden our presence in Asia.
 
“The business brings regional market leadership, complementary product offerings, extensive distribution and an experienced and talented management team to Allied World, strengthening our global insurance franchise.”
 
Delta director Craig Kirk welcomed the move, saying: “We certainly see their acquisition as a good thing for us as it highlights their commitment to the Asia Pacific region.”

Under the terms of the transaction, Allied World will acquire the in-force portfolio and related assets and liabilities of both branches. Allied World’s current operations in Hong Kong and Singapore include an established commercial insurance business.
 
Subject to adjustments, on completion, Allied World will fund the purchase price of $215 million with cash on hand. In addition to the purchase price, Allied World expects that an additional $90 million will likely be required to appropriately capitalize the business on an ongoing basis.
 
The transaction is expected to be completed during the first half of 2015 and to be accretive to Allied World’s earnings immediately.
 
Barclays is acting as financial advisor to Allied World and Baker & McKenzie is acting as legal counsel.