Catalina Holdings (Bermuda) Ltd, an acquirer of businesses in run-off, made after-tax net income of $57.2 million last year — an increase of 32 per cent from the previous year.

The fast-growing company, which was launched on the island in 2005 by Chris Fagan, chairman and chief executive officer, and Dean Dwonczyk, his business partner, when they bought out Overseas Partners Re with the help of private-equity and bank funding, has made 20 acquisitions.

Catalina is privately held, owned by its management, Caisse de Dépôt et Placement du Québec and funds managed by Apollo Global Management, and has publicly announced its financial results for the first time.

Earlier this week, Catalina announced it had completed its acquisition of AGF Insurance Ltd, a UK-based subsidiary of Allianz, continuing a pattern of steady accumulation. The company sees many more opportunities ahead and has the means to pursue them.

Mr Fagan said Catalina’s institutional investors had committed $300 million of additional equity capital to help fund future acquisitions.

He added that Catalina employs 140 people in nine offices around the world and that he expects headcount to rise to 200 by the end of this year.

“Catalina’s business model is to acquire non-life insurance and reinsurance companies and portfolios in run-off,” Mr Fagan explained.

“Over the past 11 years we have bought publicly listed companies, private companies from financial sponsors and subsidiaries from large insurance corporates and banks who are restructuring.

“We do not write new premiums other than where the commitment was made prior to our acquisition. In some cases we may acquire a company which is writing live business but where more value exists for that business as a run-off with renewal rights being sold to another live writer, although this is uncommon.”

Catalina Holdings’s first acquisition came in 2008, Quanta Capital Holdings Ltd, a Bermuda company listed on the Nasdaq Stock Exchange. In July this year, the company agreed to acquire Hartford Financial Products International Ltd from US insurance giant The Hartford.

“At the time of writing we have made 20 acquisitions with total shareholders’ equity of acquired companies of $1.9 billion, total gross reserves, including from transferred portfolios, of $4.3 billion, and total assets of $6.3 billion,” Mr Fagan said.

“Our flexible business model allows us to acquire all types of non-life insurance and reinsurance companies and portfolios. We have acquired and successfully run-off short tail catastrophe reinsurance writers, such as Glacier Reinsurance AG in Switzerland, as well as long tail casualty companies, such as KX Reinsurance Company Ltd in the UK, and portfolios. We are also active acquirers of direct insurance companies and portfolios.”

Professional-services firms have estimated the global run-off market as having about $400 billion in liabilities, representing significant growth opportunities for companies like Catalina and Bermudian competitor Enstar Group.

“This is not a static figure and it is growing as live insurance and reinsurance companies reassess their business models, place in the distribution chain and use of capital,” Mr Fagan said.

“As well as the old legacy liabilities, this results in increasing opportunities for an innovative company like Catalina to grow its business in liability classes it understands and is experienced in, whilst providing a valued service to sellers.

“We continue to see opportunities in Bermuda, the US, across Europe and increasingly in the Far East and some less well-developed markets. We are also seeing a trend towards larger transactions with an increasing number of sellers being multinational insurers with substantial balance sheets.

“Catalina’s ability to transfer substantial portfolios in excess of $1 billion has opened up a broader range of opportunities. As well as acquisitions and portfolio transfers of legacy liabilities, we are also starting to find that some large potential sellers are interested in partnering with Catalina to benefit from our focused experience and track record in the run-off sector.”

Mr Fagan added that Catalina’s mergers and acquisitions, actuarial, claims and diligence teams “remain as busy as they have ever been reviewing new opportunities”.