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Compre The European Finality Experts
Compre The European Finality Experts
Introduction
We are experts in delivering finality through a variety of structures –including interim reinsurance, portfolio and company acquisitions, mergers and demergers
Key benefits of finality include capital release, cost reduction, reduced volatility and less distraction for management
Solvency II demands a greater need to proactively manage non-life legacy liabilities
Compre has an extensive track record and strong reputation for providing legacy business finality solutions. Maintaining the vendor’s reputation is paramount
We have detailed knowledge and practical experience of the different regulatory and legislative regimes in multiple jurisdictions
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Compre The European Finality Experts
What is Compre?
A leading European legacy specialist with over 30 years of experience in the acquisition and management of (re)insurance companies and portfolios in run-off. Compre has operations in Finland, Germany, Malta, Switzerland and the UK
Privately owned with shareholders actively involved in management of the business
Significant experience in all classes of direct and reinsurance business, including property, liability, marine and motor
Strong balance sheet and access to varied forms of acquisition capital to suit different transactions
Compre has acquired from major financial institutions including: Allianz, Axa, Generali, Gjensidige, HSBC, QBE and Swiss Re. Many of these counterparties have sought finality with Compre on more than one occasion
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Compre The European Finality Experts
Compre History
2015 Increased growth capital
from CBPE Capital to support management
investment and replace Milestone funding; cease
provision of 3rd party services
2004 Joint venture with
Cargill; focus changed to acquisition of legacy business; continue to provide third party
services
2008 Joint venture with
Cargill ceases; Compre acquires
100% of Joint Venture Vehicle
1994 1st run-off company
acquisition
1991 Compre formed
2011 Growth Capital from
Milestone Capital Partners to support
management investment
2016 Compre forms first
legacy focused SE in the UK and
redomiciles SE to Malta
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2017 Largest deal to date, with
Generali
Compre The European Finality Experts
Executive Management
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Mark Lawson co-CEO
Will Bridger co-CEO
Former Partner heading EY’s Transaction Advisory practice for the Insurance Sector. Corporate financier by background and training over the past 20 years. Jointly responsible as co-CEO for the strategic development of the business and driving the growth agenda. Specific oversight responsibility for business generation, market engagement and relationships, and corporate development.
Qualified actuary with nearly 20 years’ experience in the insurance and reinsurance legacy sector. Jointly responsible for the strategic development of the business and driving the growth agenda. Specific oversight responsibility for operations, finance, risk, regulation and investments. Mark spent 16 years at PwC before joining Compre in 2016.
Compre The European Finality Experts
Executive Management
Rhydian Williams Managing Director – Operations
Paul Matson Chief Financial Officer
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Hubertus Labes Managing Director – Germany/Austria
Previously Head of the Pools, Security and Insolvency Department at Equitas/ Resolute. Almost 30 years experience in the Lloyd’s and Run-off sectors. Responsible for driving operational efficiencies and value from the insurance liabilities.
Previously CFO at Giles Insurance Brokers, backed by Charterhouse. Paul has over 15 years experience of being CFO in private equity backed businesses. Responsible for all aspects of Finance, Funding and Corporate Structuring.
Hubertus is also CEO of HIR which was acquired by Compre in 2014. Previously Director of Chiltington. Hubertus is a lawyer by profession and is responsible for leading Compre’s activities in Germany and Austria.
Compre The European Finality Experts
Group Structure
Aurora Versicherungs AG (Switzerland)
Service Operations Finland, Germany, Malta, UK
Malta Holding Companies (2)
UK Holding Companies (3)
Insurance & Reinsurance Companies
Hamburger Internationale
Rückversicherung AG (Germany)
Bothnia International Insurance Company
Ltd (Finland)
Moorgate Insurance Company
Ltd (UK)
London & Leith Insurance PCC SE
(Malta)
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DubliMont DAC
(Ireland)
Compre The European Finality Experts
Acquisitions Track Record
Company Acquisition
FIGRE (UK)
Patria Re (Finland)
ST International (Finland)
Bothnia (Finland)
Moorgate (UK)
WI Insurance (Wasa) (Sweden)
Stockholm Re (Sweden)
London & Leith (UK)
AURORA Versicherungs AG (Switzerland)
Hamburger Internationale Rückversicherung AG (Germany)
DubliMont DAC(Ireland)
If P&C (Finland)
Tryg Vesta (Denmark)
LF (8 portfolios) (Sweden)
Sparebank 1 (2 portfolios) (Norway)
Unison (3 portfolios) (Norway)
Gjensidige (1 portfolio) (Norway)
Wüstenrot & Württembergische RFP (Germany)
Swiss Re International SE Gibbon (Luxembourg)
Atlantic Mutual (2 portfolios) (UK)
LVM (Germany)
QBE RFP (UK)
Allianz IARD RFP (France)
AG Insurance UK Branch (Belgium )
Axa Insurance Gibbon (Switzerland)
Gjensidige (1 portfolio) (Norway)
Allianz Versicherungs AG (Germany)
Generali Assicurazioni SpA (2 portfolios) (Italy)
Confidential (2 Portfolios) (Germany)
Portfolio Acquisition
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Compre The European Finality Experts
Reasons to Exit Legacy Business
Release of capital to support core and/or new business opportunities
Remove the drag caused by non-core legacy business
Remove volatility risk and achieve finality
Shareholder scrutiny of long tail claims which can be difficult to predict, understand and manage
Solvency II has highlighted the capital tied up by legacy business, generating little return
Operational changes such as IT developments or loss of experience/knowledge/people
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Compre The European Finality Experts
Routes to Exit Legacy Business
Portfolio Acquisition
• Offers full legal and economic finality of all insurance liabilities
• Local jurisdiction determines mechanism of transfer
• Operational finality achieved once transfer complete
• Dependant upon jurisdiction, the legal transfer can sometimes take several months and is often initially supported with a Reinsurance Solution
Reinsurance Solution Company Acquisition
• The sale of 100% of the shares in the company in run-off
• Structured as a Share Purchase Agreement
• Non-insurance due diligence required
• Requires the approval of local regulators
• Legal, economic and operational finality on completion of deal in typically 6 months
• Also known as a Loss Portfolio Transfer (LPT)
• Provides economic and operational finality for the seller but no legal transfer of insurance or reinsurance policies
• Typically achieved by agreeing the terms of a 100% Net Quota Share reinsurance agreement
• Can be effective immediately
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Compre The European Finality Experts
Capital & Solvency Benefits of Sale So
lven
cy II
Bas
is
Loca
l Bas
is
Wor
ked
Exam
ple
ASS
ETS
RM
Solvency Ratio 150% = (A + B) / B
Surplus Own Funds (SOF) = 200
400 (B)
200 180
360 (B)
230 (A)
1,000 900
200 (A)
20
SOF
1,800 1,670
130 100
40
LIA
BILI
TIES
ASS
ETS
SCR SCR
RM
ASS
ETS RM
LIA
BS
RM
SCR
SOF Solvency Ratio 164% = (A + B) / B
Surplus Own Funds (SOF) = 230
ASS
ETS
1,100 1,800
LIA
BILI
TIES
Net Assets = 700
PRE-SALE
ASS
ETS
110 130
LIA
BILI
TIES
SALE OF 10% OF LIABILITIES
RP Risk Premium of 20
ASS
ETS
990
1,670
LIA
BILI
TIES
Net Assets = 680
POST-SALE
Assets (Local/SII basis) 1,800 Technical Provisions (incl. ULAE)
Local basis 1,100 SII basis (discounted) 1,000
Risk Margin (20% of SII TPs) 200 SCR (40% of SII TPs) 400
Key Assumptions:
• Portfolio sale – 10% of Vendor’s overall book
• Vendor and Compre have the same view of reserves (if prudently reserved, may be a better outcome than shown below)
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ASS
ETS
LIA
BS
Compre The European Finality Experts
Reputation
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Compre has been consistently trusted by major financial institutions for over 30 years to deliver complex finality solutions and manage their future claims
Compre continually aims to protect and enhance the reputation of the vendor. This is key to every solution we provide which will always ensure proactive claims management and the timely payment of all valid claims
We have open and positive relationships with regulators in multiple jurisdictions
Compre The European Finality Experts
Conclusion
We are experts in delivering finality through a variety of structures –including interim reinsurance, portfolio and company acquisitions and mergers, demergers
Key benefits of finality include capital release, cost reduction, reduced volatility and less distraction for management
Solvency II demands a greater need to proactively manage non-life legacy liabilities
Compre has an extensive track record and strong reputation for providing legacy business finality solutions. Maintaining the vendor’s reputation is paramount
We have detailed knowledge and practical experience of the different regulatory and legislative regimes in multiple jurisdictions
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Appendices
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Compre The European Finality Experts
Case Study - Generali’s first legacy deal
• Driven by Generali’s strategy to optimise its capital allocation and increase operational efficiency as well as to dispose of non-core operations
• Compre provided finality to Generali for their UK and US Branches in December 2017
• Direct and reinsurance business written between 1960s and 2000s, including US APH and non-APH, UK Employers’ Liability and Motor liabilities
• Both branches were given economic finality via LPTs provided by Bothnia. The UK branch will achieve legal finality via a legal transfer
– UK Branch: Italian business transfer process from Generali (Italy) to Bothnia (Finland) with approval from IVASS. Likely to take approximately 6 months
– US Branch: Long term collateralised reinsurance
– Potential future legal transfer subject to legislation developments such as Reg 68 in Rhode Island
– Both branches achieved immediate operational finality via a Run off management agreement (ROMA)
– Significant capital release achieved for Generali
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Compre The European Finality Experts
Compre’s Investors - CBPE
About CBPE Capital
• 32 year history
• 9 funds raised
• Over €1bn AuM
• Financial services focus
Capital commitment to support Compre growth
• Ambition for Compre to acquire minimum gross reserves of €250m and grow net assets to > €150m
CBPE has a wide variety of institutional investors
• Pension funds
• Government bodies
• Insurance companies
• Universities
BNPPrivateEquity
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Compre The European Finality Experts
Compre’s Vision for the Future
Vision To be the leading European non-life legacy insurance business consolidator
Aim To grow the net tangible asset value of the business
Growth Strategy Acquisition of legacy (re)insurance portfolios and creation of value from acquisitions made
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Compre The European Finality Experts
Contact Details
Will Bridger co-CEO
Direct Dial: +44 20 3551 6550
Mobile: +44 7764 988 953
Mark Lawson co-CEO [email protected]
Direct Dial: +44 20 3551 6557
Mobile: +44 7949 297 456
Hubertus Labes Managing Director – Germany
Direct Dial: +49 40 593 556210
Mobile: +49 171 6084235
Joseph Pallaro Managing Director – Switzerland
Mobile: +41 79 106 75 76
For further details about Compre please visit our website: www.compre-group.com