Bermudian run-off specialist Premia Holdings Ltd has made what it describes as a “groundbreaking” acquisition of a US insurer.

The reinsurer bought Public Service Insurance Company and its wholly-owned subsidiary Western Select Insurance Company from the director of the Illinois Department of Insurance, acting in her capacity as statutory and court-affirmed rehabilitator for PSIC.

Under the terms of the deal, Premia acquired certain assets of PSIC, including WSIC, and the direct insurance liabilities of PSIC. Other assets and liabilities were retained in and channelled to the Estate of PSIC, in rehabilitation.

In addition to the Illinois Department of Insurance’s approval, the transaction was approved by the presiding judge of the Chancery Division of the Circuit Court of Cook County Illinois overseeing the Rehabilitation of the PSIC Group.

After notice, an objection period, and extensive briefing on the issues, the court approved the deal.

Bill O’Farrell, chief executive officer of Premia Holdings Ltd, said: “This was a new and elegant solution for the policyholders of Public Service and the fact that not a single claimant, policyholder, ceding company or reinsurer objected to this transaction is further evidence of the compelling solution in this matter and a real credit to the Illinois Department of Insurance.”

The transaction closed on Wednesday this week.

Mr O’Farrell added: “I am very pleased that we were able to deliver this solution to the Public Service Estate. It provides better capital support to Public Service’s policyholders and provides Premia a strong operating platform for additional US transactions.”

DLA served as deal counsel to Premia in this matter, while Griffin Financial Group acted as financial adviser to the director of the Illinois Department of Insurance in her capacity as rehabilitator of PSIC.

Premia Holdings Ltd has reinsurance operations in Bermuda, the US and Europe, focused on sourcing, structuring and servicing run-off business.

The company, which has about $500 million in capital, is sponsored by Arch Capital Group Ltd and Kelso & Company. Premia carries an A- financial strength rating from Kroll Bond Rating Agency.