Catalina said the transaction – which is subject to regulatory approvals and the approval of the High Court in Ireland – will be completed in two stages: initially a reinsurance of relevant policies from Zurich to Catalina General Insurance Ltd - Catalina’s Bermudan Reinsurance subsidiary - followed by an Irish Section 13 insurance business transfer of liabilities to Catalina London Limited.
Total assets of Catalina pro forma for this transaction will be US$6bn.
The deal comes on the back of Apollo Global Management’s injection of $700mn into Catalina in October.
Around the same time, Apollo also bought out Catalina’s minority shareholders CDPQ and Ontario Teachers, leaving the alternative investment firm as Catalina’s controlling shareholder, with management and an affiliate of RenaissanceRe as minority holders.
This publication also revealed that Apollo has launched a new Bermudian reinsurer, Acra Re Ltd, which will be used as a platform for capital risk transactions such as the Zurich legacy deal.
In addition, it has acquired an 8 percent stake in the listed Bermudian reinsurer Maiden Re, which acts as AmTrust’s quota share reinsurer.
Commenting on the legacy deal with Zurich, Chris Fagan, chairman and chief executive of Catalina said: “This transaction with Zurich demonstrates our ability to execute on larger and complex transactions.”
“Our substantially increased financial firepower gives us scope to provide finality solutions to a range of much larger legacy market opportunities as the sector develops into a more accepted and useful part of the insurance market,” Fagan added.
“Our track record and significant financial resources combined with our capital efficient, low cost operating platforms positions us to provide compelling value solutions to businesses looking to transfer legacy insurance portfolios. We are delighted to have done another deal with Zurich.”
Neil Freshwater, CEO of Zurich Legacy Solutions added: “The sale of this legacy portfolio reflects Zurich’s strategy to simplify our business, manage risk and focus on ongoing operations.”
“For this substantial portfolio, it was important for us to find someone who would have the experience, expertise and capacity to maintain the management focus and service standards to our customers and claimants. To that end, we are delighted to be working again with Catalina,” Freshwater went on.