CBL Corp plans to buy France's Securities and Financial Solutions Europe SA (SFS) for 94 million euros, (NZ$147m) taking over its biggest customer in a deal expected to lift the credit and financial risk insurer's earnings.
The Auckland-based company has been granted exclusivity to pursue the acquisition, which would include IMS Expert Europe SA, a related claims management operation, it said in a statement. The deal is subject to regulatory processes and consents and is expected to be wrapped up before October 31.
SFS is France's biggest specialist producer of construction sector insurance and, with the IMS claims management operation, generated normalised operating earnings of 8.2 million euros on revenue of 41 million euros in 2015.
"The strategic acquisition would assist in removing the distribution concentration risk that SFS represented to CBL in being such a large client, and would further vertically integrate and consolidate CBL's market position in Europe, particularly in France," managing director Peter Harris said. "The acquisition would be expected to be earnings accretive in the first full year of CBL ownership."
Reinsurance business originated from SFS accounted for about 41.4 percent of CBL's gross written premiums in 2015, down from 49.9 percent in 2014. The NZX-listed insurer posted an annual profit of $35.5 million last year, beating the forecast in its initial public offering prospectus for earnings of $26.1 million.