DARAG raises €60m to fund run-off deals
DARAG Deutsche Versicherungs- und Rueckversicherungs-AG (DARAG), the run-off insurer, has raised €60 million of new capital which it says will be used to finance new acquisitions ahead of an expected increase in deal flow in the coming months.
The capital injection has come from Keyhaven Capital Partners in London and increases DARAG’s capital base to a total of €83 million. Existing investor Augur Financial Opportunity SICAV maintains its majority stake in the business.
Of the €60 million raised, some €24 million has already been transferred to DARAG. Further tranches will be called as necessary to finance new acquisitions.
DARAG said it conducted a fund-raising exercise to address an expected increase in deal flow in the coming months. There has been speculation that new capital allocation guidelines introduced under Solvency II could trigger an increase in businesses being put into run-off and sold to third parties.
“We are currently evaluating ten portfolios of about €219 million technical liabilities and expect to close about six deals this year,” said Arndt Gossmann, CEO of DARAG. “The financial backing by Keyhaven Capital Partners and their readiness to make additional funding available in the future provides what is key for our clients: rock-solid financial stability.”
Claus Stenbaek, managing partner at Keyhaven Capital Partners added: “DARAG occupies one of the most attractive financial service niches that we see at present, and we are very enthusiastic about the opportunity to invest in a market with such a dynamic growth potential.”
DARAG was founded in 1949 in Berlin as a re-insurer by the Soviet Union and was privatised after German reunification in 1990. Since 2009 the business model has focused on run-off (re)insurance, after Augur took over DARAG from AIG (WueBa).
Today, DARAG is focuses on non-life run-off insurance in Continental Europe and was the first insurance company in the region to focus exclusively on acquiring and managing discontinued lines of business from other insurance companies.