The European Finality Experts - compre-group.com€¦ · QBE RFP (UK) Allianz IARD RFP (France) AG...

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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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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 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


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.


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.


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)


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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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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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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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


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


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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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’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’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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Contact Details

Will Bridger co-CEO

[email protected]

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

[email protected]

Direct Dial: +49 40 593 556210

Mobile: +49 171 6084235

Joseph Pallaro Managing Director – Switzerland

[email protected]

Mobile: +41 79 106 75 76

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

The European Finality Experts - compre-group.com€¦ · QBE RFP (UK) Allianz IARD RFP (France) AG...

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