Bermuda-based RenaissanceRe Holdings Ltd. announced that it has “entered into a definitive agreement with QBE Holdings, Inc. to sell its U.S. property and casualty business underwritten through managing general agents, its crop insurance business underwritten through Agro National Inc. and its commercial property insurance operation.”
The transaction is expected to close in the first half of 2011, and is subject to regulatory approvals and customary closing conditions.
RenRe explained that the “consideration for this transaction is year-end 2010 GAAP book value, currently estimated to be approximately $275 million, payable in cash at closing. The transaction represents substantially all of the Company’s Insurance segment business and will be immediately accretive to RenaissanceRe’s tangible book value per share.”
CEO Neill A. Currie commented: “We are pleased to enter into this transaction with QBE to sell our U.S. insurance business. We believe the time is right for us to exit in light of the relatively small scale of our U.S.-based insurance operations in an environment that currently favors consolidation in certain U.S. insurance lines.”
He added that RenRe would “continue to participate in the U.S. excess and surplus lines insurance market through our Lloyd’s platform and Glencoe Insurance Ltd., our Bermuda-domiciled insurer. As always, we are committed to disciplined underwriting and to managing our portfolio of businesses to generate superior returns over time.”
In a separate announcement QBE confirmed the purchase price, adding that the “net tangible assets acquired” are expected to be “valued at approximately US$215 million.”
QBE also stated that the “acquisition will be funded from existing resources,” and that the “business acquired is expected to generate over US$350 million of gross written premium in 2011 and net profit after tax of over US$30 million.”
QBE’s CEO Frank O’Halloran commented: “The acquisition is in line with our strategy of acquiring specialist businesses to further enhance our product diversification and distribution. The acquisition is complementary to the NAU crop insurance business announced in June this year. The acquisition is expected to be earnings per share accretive in year one, subject to the usual caveats.”
Source: RenaissanceRe Holdings Ltd. and QBE Insurance Group
Was this article valuable?
Here are more articles you may enjoy.