New-Zealand's CBL expands to US through Affirmative acquisition
New Zealand-based credit and financial risk re/insurer CBL Corporation is set to acquire US insurer Affirmative Direct Insurance Company for $5.7 million.
The acquisition, which will be funded by existing cash resources, is subject to approval from the State of New York Department of Financial Services, and is expected within the next four months.
The New York-incorporated insurer formed in 1987 wrote non-life insurance business until 2007, when it ceased all underwriting operations and began running off its business. The company no longer has any outstanding claims or run off insurance, but holds cash and cash investments, regulatory capital and has current insurance licences in 14 US states.
Affirmative comes with no employees or employee liabilities; however, US-resident independent directors will be appointed upon completion, CBL said in a statement.
CBL's managing director Peter Harris said that the "transaction offers the company a unique opportunity to acquire a US insurance vehicle and valuable insurance licences within to write niche insurance business opportunities generated by CBL within its core existing expertise."
"The US is the largest insurance market in the world and is one that we have been following for many years. The opportunity to gain direct access to this market in a low-risk, controlled and manageable way when we are ready is one we don’t want to pass up," he added.
CBL said that it expects to start writing a small amount of business before the end of the year. Initially, it will provide product capacity, underwriting and claims management expertise, along with the managing general agents appointed to write Affirmative’s business, but expects to build a US-based management structure once the business written in the US is of sufficient scale, it said.
CBL reported gross written premium of NZD 321.7 million ($226.9 million) in 2016 compared to NZD 242.6 million in 2015. Net profit shrank 13.5 percent over the period to NZD 30.7 million.
Today’s top stories
UK insurers and brokers invest heavily in IT
CNA Hardy and THB partner to offer new cyber security product
Lloyd’s calls on insurers to improve cities' resilience to catastrophes
Life insurance loses appeal in France
Did you enjoy reading this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
