The Chubb Corporation has completed the strategic transaction that created a new Bermuda-based global reinsurance company, Harbor Point Limited.
Chubb has received from Harbor Point $200 million of 6 percent convertible notes and warrants, representing in the aggregate approximately 16 percent of the equity of the new company on a fully converted and diluted basis. Chubb expects the transaction to result in a pre-tax gain of approximately $200 million, of which $168 million would be recognized in the fourth quarter of 2005 and $32 million would be deferred.
Under arrangements entered into with Harbor Point as part of the transaction, Chubb will also receive cash payments over the next two years. The amounts will be based on the amount of reinsurance business placed through Chubb by Harbor Point during this transition period and the amount of Chubb business renewed by Harbor Point. Chubb expects to recognize these amounts in income in 2006 and 2007.
Source: The Chubb Corporation
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