Gerling NCM Credit and Finance AG, the credit insurer in which Gerling currently has a 55.9 percent stake, will be reorganized as part of a complex transaction, which will see Swiss Re, which already has a 25 percent stake, Deutsche Bank, and Sal. Oppenheim become the majority shareholders, while Deutsche Bank will offload its current 34.6 percent minority interest in Gerling.
Gerling NCM, the world’s second largest credit insurer with around a 25 percent market share, is currently valued at around 655 million Euros ($747 million). Swiss Re issued a statement indicating that “Gerling will reduce its shareholding from 55.90% to 3.04%. It will receive a cash payment of EUR 120 million [$137 million] from Deutsche Bank and of EUR 60 million [$68.5 million] and the annulment of certain rights from Swiss Re.”
The parties plan on closing the transaction by the end of this summer pending regulatory approvals. Upon completion “the shareholders of Gerling NCM will be: Swiss Re 47.50%, Deutsche Bank 35.32%, Sal. Oppenheim 7.00%, Gerling NCM Pension Trust 7.14% and Gerling Beteiligungs-GmbH 3.04%,” said Swiss Re’s announcement.
Swiss Re and Deutsche Bank will also underwrite 55 million Euros ($62.75 million) each of a 110 million Euro ($125.5 million) subordinated note to bolster Gerling NCM’s capital base.
Swiss Re CEO John Coomber, commented, “Gerling NCM is a major credit insurer and has an excellent future as an independent company. Swiss Re considers Gerling NCM to be an attractive investment and is pleased to support this capital restructuring.”
The announcement added that, “Since the creation of Gerling NCM in 2001, it has been the intention to secure an independent financial future for the company through an Initial Public Offering. It remains the goal of Swiss Re and Deutsche Bank, together with the management of Gerling NCM, to work towards an Initial Public Offering within the next few years, dependent on market conditions.”
Deutsche Bank, which announced over a year ago that it wanted to part with its minority stake in Gerling, will finally be able to do so. According to a report from Dow Jones Newswires, part of the transaction provides for the bank to transfer 28.6 percent of its stake in Gerling-Konzern Versicherungs-Beiteilgungs (GKB), the Group’s main operating company, to a company controlled by Rolf Gerling, and 6 percent to Joachim Theye.
When completed the deal will leave Gerling free of Deutsche Bank’s influence, and somewhat richer for the experience. It is in the process of trying to sell its reinsurance operations, which are currently in runoff, and plans to concentrate on its core primary insurance business in the future.
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