ACE goes shopping and target may be CAT
what Bermuda executives have been speculating about for some time -- a new acquisition target.
It is believed that the burgeoning Bermuda insurer, as early as today, could announce they have bought their second Bermuda `cat' reinsurer, CAT Ltd., or, purchased a substantial portion of the equity in the Bermuda company.
If true, it would come after last year's purchase by ACE of another Bermuda `cat' Tempest Reinsurance Co. Ltd., and would indicate that the wave of consolidation in the insurance and reinsurance industries is very much alive.
Others have speculated that ACE might be instead, set to announce some form of strategic alliance. Reliable sources say, at the very least, they see new opportunities for ACE through CAT.
The privately-held CAT announced as early as this January that it intended to go public with an IPO, as speculation mounted that some early investors wanted out, or at least to redeem some of their initial capital. There has been no official word since.
One useful target in the CAT portfolio that may be of interest to ACE is the recently incorporated Enterprise Re, the new Bermuda Class 4 reinsurer begun with Employers Re that CAT has a 60 percent stake in.
CAT Ltd. was formed in 1993 as Centre Cat Ltd. by financial service leaders such as Morgan Stanley Capital Partners, Chemical Bank, The Chubb Corporation, Chase Venture Partners, the pension funds of AT&T and General Motors, the Plymouth Rock Co. and Zurich Insurance.
CAT provides catastrophe reinsurance on a global basis through traditional and customised coverages, capital market products and financial reinsurance.
Enterprise Re, capitalised at $100 million, is an admitted US insurer set up in response to increased client demand for structured solutions for property, casualty, life and health insurance risks. Other investors include Chubb and Morgan Stanley Capital Partners.
A new provider of finite reinsurance, insurance and strategic risk financing, Enterprise Re's underwriting operations are established here, while the firm is headquartered in New York.
