19 September, 2018
Randall & Quilter Investment Holdings Ltd. is pleased to announce that it has signed a definitive agreement to acquire Global U.S. Holdings Incorporated from AXA DBIO, SCA, a subsidiary of investment funds managed by AXA Liabilities Managers SAS (“AXA LM”).
Global U.S. Holdings Incorporated is the 100% parent of GLOBAL Reinsurance Corporation of America (collectively, “Global Re US”). Global Re US is a New York domiciled insurance company in run-off that underwrote predominantly property and casualty pro-rata treaties and facultative business for regional and specialty insurance companies on non-standard automobile, multi-peril and general liability lines in the US. In August 2002, it went into run-off and was acquired by an investment vehicle managed by AXA LM in June 2014.
As at 31 December 2017, Global Re US reported total assets of $260m, gross reserves of $146m and $107m of shareholders’ equity. In the year to December 2017, it made a profit of $15m after tax. During 2018 the company has distributed $25m of its shareholder’s equity to an investment vehicle managed by AXA LM and has reported a small trading profit.
R&Q will acquire Global Re US for a consideration of approximately $80.5m in cash at closing from R&Q’s cash at hand and debt facilities. This represents a small discount to the company’s current net assets. Global Re US will be managed by R&Q, which is a specialist in managing US asbestos, pollution and health hazard (“APH”) exposures.
The acquisition is subject to regulatory approval from the New York Department of Financial Services. The investment vehicle managed by AXA LM may also seek to extract additional capital prior to completion. Should regulatory approval for a further capital extraction be received prior to completion, this will be reflected in a dollar for dollar reduction in the consideration price.
Based on R&Q’s own reserve assessment and significant operational synergies, the acquisition will generate a material gain for the Group. Should regulatory approval be received and completion occurs before the end of 2018, it is expected to result in the Group’s profit for full year 2018 being substantially ahead of market expectations.
Ken Randall, Chairman and Chief Executive Officer of R&Q said: “R&Q is delighted to agree terms to acquire Global U.S. Holdings Incorporated. We are very experienced in managing portfolios of this nature which reflects our expertise in managing long-tail US liabilities.
“It is a significant legacy transaction for the Group and, with a continuing pipeline of further potential acquisitions, we anticipate an active second half of the year. Two weeks ago we announced our largest ever legacy reinsurance transaction providing a limit of $146m for a US based Risk Retention Group for a premium of approximately $108.5m. These transactions demonstrate both the breadth of our ability to provide exit solutions and our continuing penetration into larger deal activity.”
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