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Hanover sells Chaucer to China Re
Posted on Friday, 14 September 2018 08:40
China Reinsurance (China Re) is acquiring the Lloyd’s-focused international speciality business known as Chaucer to Hanover Insurance for a total USD 950.00 million later this year or the first quarter of 2019.
The deal is part of the Hong Kong-listed, state-owned property and casualty, life and health and asset management company’s strategy to increase its presence in the overseas market, in line with Beijing’s Belt and Road initiative.
Chaucer comprises three entities, two of which are UK-registered Hanover Insurance International Holdings and Ireland-incorporated Chaucer Insurance Company Designated Activity.
The third, Hanover Australia HoldCo, was formed to carry out the purchase of Australia’s SLE Holdings, which distributes speciality property and casualty products for insurers.
Hanover operates through London-based Lloyd’s writing business globally – participating through the provision of capital to support the underwriting activities of syndicates and the ownership of Chaucer Syndicates (CSL).
CSL manages two syndicates currently underwriting at Lloyd’s: Syndicate 1084 for treaty, marine, aviation and political, casualty, energy and property; and Syndicate 1176 for physical damage and exposures from nuclear power generation stations.
The purchase price implies a multiple of 1.66 times Chaucer tangible equity of USD 520.00 million, as of 30th June 2018.
Hanover’s Jeffrey Farber noted the deal “represents an attractive return for shareholders, providing us with greater financial flexibility to invest in the growth of our US agency business”.
The company will also be able to hand back capital “through a variety of options including continued dividends, stock buybacks, debt management, and special dividends”.
At USD 950.00 million, the acquisition is the one of the top 25 deals targeting a reinsurer and insurer announced so far this calendar year, according to Zephyr, the M&A database published by Bureau van Dijk.
© Zephus Ltd