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Bermuda life reinsurer sold to Canada Pension for $1.8b

Bermuda-based Wilton Re said on Friday it had agreed to be sold to Canada Pension Plan Investment Board in a deal worth $1.8 billion.

The life reinsurance company focuses principally on the US life reinsurance market, specialising in the acquisition of in-force life insurance and annuities.

As of September 30 last year, Wilton Re has $8.5 billion in total assets, $1.5 billion of equity and $120 billion of insurance in force.

The reinsurer is being acquired from investors including Stone Point Capital, Kelso & Co and Vestar Capital Partners Inc, the Toronto-based fund manager said on Friday in a statement. The purchase is Canada Pension's first direct investment in the insurance sector.

In a statement, Canada Pension said it “is committed to the management, employees and organisation of Wilton Re, and will support management in the future growth of the company”.

The company's Bermuda office is on Par-La-Ville Road, Hamilton, and the Wilton Re Bermuda CEO is Sylvia Oliveira, formerly the chief actuary of Ace Tempest Life Reinsurance.

The transaction involves the 100 percent stock acquisition of Wilton Re Holding Ltd, a Bermuda insurance holding company and all subsidiaries within the Wilton Re Group, including Wilton Reinsurance Bermuda Ltd, Wilton Reassurance Company, Wilton Reassurance Life Company of New York, and Texas Life Insurance Company.

This is Canada Pension's largest public acquisition since it led a consortium to purchase Neiman Marcus Group Ltd last year. Canada Pension describes itself as “a professional investment management organisation that invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 18 million Canadian contributors and beneficiaries”, manages a C$201.5 billion ($179 billion) as of the end of last year.

The transaction is expected to close prior to August 2014 and is subject to customary closing conditions and regulatory approvals.

“CPPIB is an ideal owner for Wilton Re that positions the company for growth and enhances our service offerings to clients and policyholders,” said Chris Stroup, Wilton Re's chairman and CEO.

“CPPIB represents the next phase for Wilton Re — a strategic owner, committed to our business model, with a very long term investment horizon and unparalleled capital resources. Under CPPIB ownership, we anticipate the capital resources necessary to accelerate growth and expand our core In Force Solutions offerings as well as enhance our competitiveness overall.

“We remain committed to our middle market customers and will continue to emphasise and expand our worksite and private labelling solutions.”

As reported in The Royal Gazette, Wilton Re struck deals this year to assume liabilities from CNO Financial Group and CNA Financial Corp, the insurer controlled by Loews Corp. Since its creation in 2005, Wilton Re has invested at least $1.7 billion in acquisitions and risk-transfer deals, according to the company's statement.

“In making a long-term investment in Wilton Re, CPPIB views the company as an ideal platform through which CPPIB can deploy significant follow-on capital at scale in the US life insurance sector,” said André Bourbonnais, senior vice-president, Private Investments at Canada Pension. “Closed-block life insurance is an asset class with attractive risk-adjusted returns, well-suited to our long-term horizon.”

Stone Point has backed Bermuda insurers before, including run-off specialists Enstar Group Ltd and reinsurer Harbor Point Ltd. Kelso also invests in the industry and is one of the backers of 2012 Bermuda start-up Third Point Reinsurance Ltd.

Wilton Re CEO Chris Stroup

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Published March 24, 2014 at 9:00 am (Updated March 23, 2014 at 8:04 pm)

Bermuda life reinsurer sold to Canada Pension for $1.8b

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