by Shawn Cumberbatch
Sagicor, the insurance and finance company rooted in Barbados, is offloading its burdensome European business in a corporate deal worth $170.5 million.
It has forged an agreement with AmTrust Financial Services, Inc., a multinational insurance holding based in New York, for the sale of Sagicor Europe Limited and its subsidiaries.
Chief among the companies being sold in the deal is Sagicor at Lloyd’s Limited, which has had $117.6 million in losses over the last two years, $86.4 million last year and $31.2 million in 2011.
News of the sale was made public in New York yesterday, and today in England, via the London Stock Exchange where Sagicor is listed and in other markets where the company operates.
Officials involved said the SEL was being sold for $45.6 million above its net asset value as of the end of last year. SEL is a holding company registered in the Cayman Islands and in addition to Lloyd’s at London the sale included a reinsurance arm of the business.
Sagicor and AmTrust’s top brass expected the sale to conclude before year’s end, but this depends on when they get the necessary approvals, including permission from regulators.
The leaders of both companies commented on the acquisition in statements made to the market.
“Sagicor entered into this sales process to enable SEL to have access to more capital to fund its business growth. We believe this transaction will be beneficial to our shareholders,” Sagicor’s President and CEO Dodridge Miller said.
AmTrust Financial Services, Inc. President and CEO, Barry Zyskind said his company was “excited about the addition of SEL’s managing agency and Lloyd’s syndicates to our organisation”.
“Access to Lloyd’s global resources greatly expands the capabilities of our insurance business. Lloyd’s brand, rating, and efficient capital structure contributes significantly to our global insurance platform,” Zyskind stated.
“We believe the combined organisations’ talent, experience and commitment to underwriting discipline will enhance shareholder value.”
The sale of SEL will mean Sagicor no longer has a presence in Europe, and that it’s operations will be in 21 countries in the Caribbean, United states and Latin America.
The poor performance of SEL has been troubling the company’s board and management for some time and just recently Chairman Stephen McNamara said they “made the determination that the Sagicor Europe operations, comprising our Sagicor at Lloyd’s insurance business, would be divested and the group would realise its value through a sale of the business”.
Completion of the deal will also be good news for Sagicor’s rating from Standard & Poor’s, as earlier this month S&P announced it had placed both Sagicor Life and Sagicor Finance Limited under negative credit watch because the Lloyd’s business was not yet sold.
At the time the ratings agency said Sagicor would be downgraded if it failed to sell the business within “the next three months”.
“If the sale is completed, our capital calculations and operating performance should remain in line with our expectations, and we could affirm the rating. However, due to the company’s large exposure to Jamaica, which recently restructured its debt amid a stalled economy, the outlook will most likely remain negative,” S&P stated.
by Shawn Cumberbatch