presentation to german run-off forum. compre hir grf 2015.pdf · presentation to german run-off...

Compre.....One Business - One Team 1

Presentation to German Run-Off Forum

March 2015 Dr. Hubertus Labes

www.compre-group.com

Agenda

2 .....your insurance solutions partner

1. What we do & what we are • Compre • HIR • CBPE

2. Non-life Run-off markets

3. “Perception of a solution provider entering the

German Run-off Market„ 4. Resume / Perspective

WHAT WE DO & WHAT WE ARE



WHAT WE DO

4

• Acquisition of companies in run-off and portfolios of non-life legacy

business in Europe

• Maintain and enhance our reputation as a reliable partner, build on

a strong track record in key markets

Successfully positioned the business as a platform to take advantage of the largest European markets

.....your insurance solutions partner


COMPRE ACQUISITIONS TRACK RECORD

10 Acquisitions 17 Portfolio transfers (+ 5 HIR transfers)

• FIGRE (UK -1994)

• Patria Re (Finland – 2004)

• ST International (Finland – 2004)

• Bothnia (Finland – 2006)

• Moorgate (UK – 2006)

• WI Insurance (Wasa) (Sweden – 2009)

• Stockholm Re (Sweden – 2009)

• London & Leith (UK – 2010)

• AURORA Versicherungs AG

(Switzerland – 2013)

• Hamburger Internationale Rückversicherung AG (Germany – 2014)

• If P&C (Finland – 2006)

• Tryg Vesta (Denmark – 2009)

• LF 8 portfolios (Sweden – 2012)

• Sparebank 1 2 portfolios (Norway –

2012)

• Unison 3 portfolios (Norway – 2012)

• Anonymous LPT 2 portfolios (UK –

2014)



• Compre acquired from major financial institutions, e.g.:-

– HSBC – If P&C – LF – Pohjola – Sampo – Sparebank 1 – Swiss Re – Tryg

RELEVANT BUSINESS AREAS

TERRITORIES

Acquisition of non-life insurance and reinsurance companies in run-off Acquisition of portfolios of non-life insurance and reinsurance run-off business

• UK • Nordics • Germany / Austria • Switzerland • Europe (e.g. France and Italy)

AREAS OF FOCUS

Worldwide, but linked to territories above



Value creation from acquired portfolios :

Capital optimisation, investment returns, cost efficiencies, reinsurance collection

7 .....your insurance solutions partner 7

1965 – 1990

• Foundation 1965

Activ reinsurer with

< 1bln. DM premium

US P/C

Branch

Orlando,

FL, USA

HIR Srl

Milano, Italy

HIR Mmgt.

Services

Kuala

Lumpur

Manaysia

HIR Ltd.

London, GB

HIR UK

London, GB

HIR LA

Orlando,

FL, USA


HAMBURGER INTERNATIONALE RÜCKVERSICHERUNG AG - HIR


1965 – 1990

• Foundation 1965


< 1bln. DM premium

• Merger with Hamburg-

Bremer Rück (1975)

US P/C

Branch

Orlando,

FL, USA

HIR Srl

Milano, Italy

HIR Mmgt.

Services

Kuala

Lumpur

Manaysia

HIR Ltd.

London, GB

HIR UK

London, GB

HIR LA

Orlando,

FL, USA

Hamburg Bremer Rück AG




1965 – 1990

• Foundation 1965


< 1bln. DM premium


Bremer Rück (1975)

• Sale of Volksfürsorge in

1990 caused the cessation

of active underwriting in

HIR

US P/C

Branch

Orlando,

FL, USA

HIR Srl

Milano, Italy

HIR Mmgt.

Services

Kuala

Lumpur

Manaysia

HIR Ltd.

London, GB

HIR UK

London, GB

HIR LA

Orlando,

FL, USA

Hamburg Bremer Rück AG




10

1965 – 1990

• Foundation 1965


< 1bln. DM premium


Bremer Rück (1975)




HIR

• Portfolio Transfer to

Hannover Re

US P/C

Branch

Orlando,

FL, USA

HIR Srl

Milano, Italy

HIR Mmgt.

Services

Kuala

Lumpur

Manaysia

HIR Ltd.

London, GB

HIR UK

London, GB

HIR LA

Orlando,

FL, USA

Hamburg Bremer Rück AG PFT




11

1965 – 1990

• Foundation 1965


< 1bln. DM premium


Bremer Rück (1975)




HIR

• Portfolio Transfer to

Hannover Re

• Take over of various HIR

daughter companies by

Hannover Re

US P/C

Branch

Orlando,

FL, USA

HIR Srl

Milano, Italy

HIR Mmgt.

Services

Kuala

Lumpur

Manaysia

HIR Ltd.

London, GB

HIR UK

London, GB

HIR LA

Orlando,

FL, USA

Hamburg Bremer Rück AG PFT



.....your insurance solutions partner 12

1990 – 2002

• Sale of HIR to Ivor

Kiverstein (1990)

Ivor Kiverstein

US P/C

Branch

Orlando,

FL, USA

HIR Ltd.

London, GB

HIR UK

London, GB

12 www.compre-group.com



1990 – 2002


Kiverstein (1990)

• IK also 100% shareholder

of Chiltington

Ivor Kiverstein

US P/C

Branch

Orlando,

FL, USA

HIR Ltd.

London, GB

HIR UK

London, GB




1990 – 2002


Kiverstein (1990)


of Chiltington

• Solvent Scheme of

Arrangement for HIR UK

(1998)

Ivor Kiverstein

US P/C

Branch

Orlando,

FL, USA

HIR Ltd.

London, GB

HIR UK

London, GB




1990 – 2002


Kiverstein (1990)


of Chiltington



(1998)

• Take-over of PFA Re from

AGF (1999)

Ivor Kiverstein

US P/C

Branch

Orlando,

FL, USA

HIR UK

London, GB

HIR Ltd.

London, GB

Pavant

Paris,

France




1990 – 2002


Kiverstein (1990)


of Chiltington



(1998)


AGF (1999)

• MBO after retirement of Ivor

Kiverstein (2002)

MBO

US P/C

Branch

Orlando,

FL, USA

HIR UK

London, GB

HIR Ltd.

London, GB

Pavant

Paris,

France




1990 – 2002


Kiverstein (1990)


of Chiltington



(1998)


AGF (1999)

• MBO after retirement of Ivor

Kiverstein (2002)

• Chiltington group became a

100% daughter of HIR

MBO

US P/C

Branch

Orlando,

FL, USA

HIR UK

London, GB

HIR Ltd.

London, GB

Pavant

Paris,

France




2002 - 2015

• Up to 20 Partner, all

members of the Chiltington

management

20 Partner

US P/C

Branch

Orlando,

FL, USA

HIR Ltd.

London, GB

Pavant

Paris,

France




2002 - 2015



management

• Foundation of various

Chiltington offices

20 Partner

Orlando Hamburg

New Jersey

Sydney

Buenos Aires

Chicago

Santiago Madrid

Triest

London

Lima Bogota

Mexico City

US P/C

Branch

Orlando,

FL, USA

HIR Ltd.

London, GB

Pavant

Paris,

France




2002 - 2015



management


Chiltington offices

• Purchase of

• Pluspunkt Market.

AG (51%)

• agens AG (34%)

• ASS GmbH (70%)

20 Partner

Orlando Hamburg

New Jersey

Sydney

Buenos Aires

Chicago

Santiago Madrid

Triest

London

Lima Bogota

Mexico City

US P/C

Branch

Orlando,

FL, USA

Pavant

Paris,

France

Pluspunkt

Marketing

AG

Hamburg,

Germany

HIR Ltd.

London, GB

agens

Consulting

AG

Quickborn,

Germany

ASS GmbH

Sunder,

Germany




2002 - 2015



management


Chiltington offices

• Purchase of


AG (51%)

• agens AG (34%)

• ASS GmbH (70%)

• Closing of US PC Branch

20 Partner

Orlando Hamburg

New Jersey

Sydney

Buenos Aires

Chicago

Santiago Madrid

Triest

London

Lima Bogota

Mexico City

US P/C

Branch

Orlando,

FL, USA

Pavant

Paris,

France

Pluspunkt

Marketing

AG

Hamburg,

Germany

HIR Ltd.

London, GB

agens

Consulting

AG

Quickborn,

Germany

ASS GmbH

Sunder,

Germany




2002 - 2015



management


Chiltington offices

• Purchase of


AG (51%)

• agens AG (34%)

• ASS GmbH (70%)


• Sale to Tawa plc. (2012)

20 Partner

Orlando Hamburg

New Jersey

Sydney

Buenos Aires

Chicago

Santiago Madrid

Triest

London

Lima Bogota

Mexico City

US P/C

Branch

Orlando,

FL, USA

Pavant

Paris,

France

Pluspunkt

Marketing

AG

Hamburg,

Germany

HIR Ltd.

London, GB

agens

Consulting

AG

Quickborn,

Germany

ASS GmbH

Sunder,

Germany




2002 - 2015



management


Chiltington offices

• Purchase of


AG (51%)

• agens AG (34%)

• ASS GmbH (70%)


• Sale to Tawa plc. (2012)

• HIR Sale to Compre (2014)

20 Partner

Orlando Hamburg

New Jersey

Sydney

Buenos Aires

Chicago

Santiago Madrid

Triest

London

Lima Bogota

Mexico City

US P/C

Branch

Orlando,

FL, USA

Pavant

Paris,

France

Pluspunkt

Marketing

AG

Hamburg,

Germany

HIR Ltd.

London, GB

agens

Consulting

AG

Quickborn,

Germany

ASS GmbH

Sunder,

Germany




Pavant

Paris,

France

HIR Ltd.

London, GB

Current situation

• Sale of HIR to Compre

Holdings Ltd. without

Chiltington and other

consulting companies

(2014)

• Shareholders:

• CBPE Capital LLP

• Management

• Business model:

• Transfer of

reinsurance port-

folios in Run-off

• 5 portfolios

transferred 2011-14

• Concentration on

Continental Europe



Management

CBPE


CBPE background

Selective approach

Differentiators

• €1bn funds under management

• Operating in mid-market – companies valued up to €250m

• 2 - 3 new investments per annum

• Allows us to devote considerable time and resource to

opportunities

• Significant experience in investing in global businesses

• Supporting management teams in organic expansion and

acquisitions


NON-LIFE RUN-OFF MARKETS





• Strong rationale for insurers portfolio exits

• Regulatory change and capital requirements will lead to more run-off book exits

• The market is immature in large parts of Europe

• High barriers to industry entry, relationships built over time

The market

Levers for value creation

• Value on acquisition relative to net assets

• Proactive claims management provides an opportunity to accelerate value

• Efficient funding structure and opportunity to pool risks

• Efficiency of back office operations

• Approach to asset management



Attractions and challenges in non-life run-off market

Attractions:

• Robust base of net assets

• Opaqueness of industry – barriers to entry and value creation potential

• Size of market opportunity

• Ability to scale business (deploy more institutional capital)

• Regulatory driven market dynamics

Challenges:

• Low interest rate environment – pressure to acquire to grow NAV

• Securing attractive priced acquisition targets

• Slow development of certain geographic markets

• Other geographic markets e.g. UK very competitive

• Monitoring the investment



Reasons to transfer a run-off book

Transferor:

• Adverse development

• Concentration on core business

• Discontinuation (line of business / territory)

• M&A

• IT

• Administration cost reduction

• Capital management / capital release

Transferee:

• Core business

• Strategic

• Run-off expertise



“Good old times” / Today

„Good old times“

• Increasing number of catastrophes and large losses

• Latent claims

• Technical losses

• Run-off administration

• No adequate claims management

• No designated attention

• No management responsibility

Today

• Increasing pressure from competitors and costs

• Ceasing to sign new business, ….. from certain regions, LoB

• Concentration of core business

• Often professional treatment

• Run-off has become part of professional insurance business

• Run-off has become a strategic business field



Acquisitions in Europe 2013-2015

Transferee Transferor Conclusion Company/Portfolio Athene Delta Lloyd 2015 Company Enstar National Suisse 2015 Company Compre HIR 2014 Company Compre Sparebank 1 2013 Portfolio Compre Aurora 2013 Company HIR GAN 2013 Portfolio DARAG ERV Sweden 2013 Portfolio DARAG Aigaion 2013 Portfolio Riverstone Eagle Star 2013 Company Riverstone Home & Overseas 2013 Company Riverstone City of London 2013 Company Riverstone Brit Ins. Ltd. 2013 Company R&Q Hickson 2013 Company R&Q Flagstone Alliance 2013 Company * Source: E+S Re



Influence of Solvency II • 98% of the insurers did value their run-off books in view of Solvency II

and developed a strategic plan to actively manage these books. Major reasons given:

• Pillar I capital requirements

• ORSAs and other compliance requirements

• Additional challenge: Capital provision, capital management, capital costs

• Value-driven structure optimization incl. run-off, reporting, and use of capital in view of Solvency II

• Solvency II was already a driver for transfers and transactions

• Portfolios are reviewed according to their economic contribution

• Competition through consolidation in order to increase profitability

* Source: E+S Re; PwC, Unlocking Value in Run-Off - A Survey of Discontinued Insurance Business in Europe, 8th Edition 2014



Run-off options

Run-off

Commutation strategy

Novation

Solvent Scheme of Arrangement

Buy Back Reinsurance solutions

Portfoliotransfer

Sale of renewal rights

Merger

Active claims-

management Sale

Guarantees

Liquidation

Outsourcing

Collection

Hedging

Capital reduction

Indemnity

Insolvency Part VII Transfer

Audits



Run-off options

• In-house solution

• Sale of the company

• Portfolio transfer • Transfer approved by regulators (EU directive) • Part VII transfer • Novation

• Financial reinsurance instruments

• Retrospective solutions (reinsurance)

• LPT

• Finite Reinsurance

• Strategic commutation program

• Liquidation

• Solvent Scheme of Arrangement

• Insolvency



Run-off options

• In-house solution

• Sale of the company

• Portfolio transfer • Transfer approved by regulators (EU directive) • Part VII transfer • Novation

• Financial reinsurance instruments

• Retrospective solutions (reinsurance)

• LPT

• Finite Reinsurance

• Strategic commutation program

• Liquidation

• Solvent Scheme of Arrangement

• Insolvency

Finality



Run-off options

• Insurance Supervisory Act – Article 63 : Swiss business

• International direct business

• Reinsurance business

• The Merger Act – Article 29 : Spin-off

• The Merger Act – Article 69 : Transfer of assets and liabilities

• FINMA view

Framework in Switzerland



Run-off options

• The Legacy Insurance Management Act (“LIMA”) is a possible

mechanism for transferring a portfolio of legacy policies.

• This will provide finality to any transfer if the policyholders give

affirmative consent to novate the policies

• LIMA is a relatively new and untested mechanism. It does provide a

vehicle that gives the credibility of regulator involvement and

supervision in seeking policyholder consent

Vermont Legacy Insurance Management Act (“LIMA”)

PERCEPTION OF A SOLUTION PROVIDER…



… ENTERING THE GERMAN RUN-OFF MARKET



COMPRE VISION

“To be the leading European non-life legacy insurance business

consolidator”



COMPRE VISION


consolidator”



COMPRE VISION


consolidator”

Maintain presence in markets in which we have been long established – the Nordics and UK

Expand presence in identified target markets – Germany and Switzerland

Seek to broaden our reach to other markets – Austria, Baltics, Benelux, France, Italy, Portugal and Spain

42

• 3 countries

• Strong history in UK and Nordics

• Mature markets

• Size of markets

• Growth potential in Europe

• Logical consequence:

Expand into Europe

Other Western Europe

Helsinki

Stockholm

London

Malmo


COMPRE GROUP 2012


43


Helsinki

Stockholm

London

Baar

Malmo



COMPRE GROUP 2013 • 4 countries


• Mature markets

• Size of markets



Expand into Europe

• Purchase of Aurora from

Swiss Re

44


Helsinki

Stockholm

London Munich

Baar

Hamburg

Malmo



COMPRE GROUP 2014 • 5 countries


• Mature markets

• Size of markets



Expand into Europe

• Purchase of Aurora from

Swiss Re

• Purchase of HIR

• Foundation of

Stockholm Re Germany

SIZE OF THE MARKET

45

Germany & Switzerland

Central & Eastern Europe

4841

105

5 1125

UK & Ireland France &Benelux

Germany &Switzerland

Central &Eastern Europe

Scandinavia OtherWesternEurope

Scandinavia

4841

105

5 1125





France & Benelux

4841

105

5 1125






4841

105

5 1125





UK & Ireland

• €235bn market

• Nearly half the global market

• Largest regional opportunity is in Germany and Switzerland

• Other European markets still have very good opportunities

4841

105

5 1125





4841

105

5 1125







Source: PwC, Unlocking Value in Run-Off A Survey of Discontinued Insurance Business in Europe, 8th Edition 2014



Strong Management Team

Business

Exit

Market

• Clear strategy to deliver growth

• Ability to execute strategy and adapt to changing market conditions

• Value added services and stable customer relationships

• Expansion opportunities

• Strong market position and established platform

• Opportunities to grow either organically or through acquisition

• Attractive to both trade and financial buyers in the future

CBPE


Why HIR?

PAVANT INTERNATIONAL RE

• Staff with specific run-off know-how

• Active claims and dispute management

• Special know-how i.r.o. latent claims (e.g. US-asbestos)

• Specialists in commutations (markets / languages)

• Specific asset and risk management

• Active management of solvability

• Existing track record:


Report published in March 2014

• No reservations versus run-off specialists

• Run-off specialists provide additional possibilities for insurers to change their strategy or to react to difficult economic situations

• Run-off specialists have their role in the market if they comply with regulations

Presentation Elke König in Hamburg 3 April 2014

• Run-off companies need to comply with all regulatory requirements

• For portfolio transfers run-off specialists need to fulfill all legal and regulatory requirements as any other insurer/reinsurer

• Run-off specialists can add value to the industry



BaFin approach

RESUME / PERSPECTIVE





Compre / HIR fit

• Compre is a leading independent provider with over 30 years of professional experience and expert knowledge in delivering finality and exit solutions

• Compre has a positive track record of acquiring companies and portfolios in several European locations

• Compre already had a strong presence in the Nordics, UK, and Switzerland

• Logical next step: Compre was actively seeking to grow their operations in Germany

• This business models of Compre and HIR are completely focusing on the acquisition and the administration of insurance and reinsurance run-off portfolios

• It can therefore be expected that Compre and HIR vice versa take benefit from joint forces

Strategic decision: concentration on German speaking markets

Contact details Nick Steer, CEO DDI: +44 (0)20 3551 6513

[email protected] Mob: +44 7881 950589

Will Bridger, Managing Director – Acquisitions DDI: +44 (0)20 3551 6550

[email protected] Mob: +44 7764 988953

Dr. Hubertus Labes, Managing Director – Germany/Austria DDI: +49 4101 471104

[email protected] Mob: +49 171 608 4235

For further details about Compre please visit our website at www.compre-group.com

www.compre-group.com 51 .....your insurance solutions partner

mailto:[email protected]










http://www.compre-group.com/





German reinsurers in Run-off • Aachener Rückversicherungs-Gesellschaft AG

• Agrippina Rückversichrung AG

• Alte Leipziger Rückversicherung AG

• Barmenia Rückversicherungs-AG

• Condor Transport und Rückversicherungs-Aktiengesellschaft

• DBV und Partner Rückversicherungs-Aktiengesellschaft

• ESG European Specialty Rückversicherung AG

• Europa Rückversicherung Aktiengesellschaft

• Gerling-Konzern Globale Rückversicherungs-Aktiengesellschaft

• Gothaer Rückversicherung AG

• Hamburger Internationale Rückversicherung Aktiengesellschaft

• Hanseatica Rückversicherungs-Aktiengesellschaft

• Herold Rückversicherungs-Aktiengesellschaft

• Rheinland Rückversicherung Aktiengesellschaft

• Storebrand Rückversicherungs-Aktiengesellschaft

• Transatlantische Rückversicherungs-Aktiengesellschaft

• Victoria Rückversicherung AG



German direct insurers ceased u/w reinsurance

• Albingia Versicherungs-Aktiengesellschaft

• DARAG Deutsche Versicherungs- und Rückversicherungs-

Aktiengesellschaft

• Feuersozietät Berlin Brandenburg

• Iduna Allgemeine Versicherung AG

• Niedersachsen Versicherungs-Aktiengesellschaft

• Nürnberger Allgemeine Versicherungs-Aktiengesellschaft

• Provinzial Rheinland Versicherung AG

• SV SparkassenVersicherung Holding AG

• Württembergische Versicherung Aktiengesellschaft

presentation to german run-off forum. compre hir grf 2015.pdf · presentation to german run-off...

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