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CBL completes $143m purchase of French insurance creator

CBL chief executive Peter Harris signs the purchase agreement in Luxembourg. Photo/supplied
CBL chief executive Peter Harris signs the purchase agreement in Luxembourg. Photo/supplied

CBL Corporation has completed its 94.5 million euro ($142.7m) purchase of its biggest customer.

The deal will see the company take over France's Securities and Financial Solutions Europe SA (SFS), in a move the credit and financial risk insurer expects to lift earnings.

The Auckland-based company closed the deal in Luxembourg on January 5, after receiving approval from Luxembourg's Commissariat aux Assurances in October 2016.

SFS is France's biggest specialist producer of construction sector insurance and, with the IMS claims management operation which CBL has also bought, generated normalised operating earnings of 8.2 million euros on revenue of 41 million euros in 2015.

"The acquisition of SFS is expected to provide important strategic benefits for CBL," managing director Peter Harris said.

"[This includes] the removal of distribution concentration risk that SFS represented being CBL's largest client, the ability to further vertically integrate the group and to consolidate CBL's market position in Europe, particularly in France, currently our largest European market."

In September, CBL completed the first tranche of a planned capital raising in a "heavily oversubscribed" placement, selling $60 million of new shares at $3.45, an 8.2 per cent discount, reducing CBL's pro forma debt to $102 million from $162 million.

It also launched a share purchase plan at the same price, and declared a 3c dividend in October.

Reinsurance business originated from SFS accounted for about 41.4 per cent of CBL's gross written premiums in 2015, down from 49.9 per cent in 2014.

The NZX-listed insurer posted an annual profit of $35.5 million in 2015, beating the forecast in its initial public offering prospectus for earnings of $26.1 million.

CBL paid for the acquisition through cash, bank debt and vendor funding.

SFS executive chairman and shareholder Antoine Guiguet will keep his position and retain 26 per cent of the CBL subsidiary acquiring the companies, while IMS managing director Gerard Marichy will also keep his position and buy a 3 per cent stake in the subsidiary.

SFS's principal owner Patrice Gilles will exit and become an ambassador of SFS.

CBL listed on the NZX in October 2015, raising $90 million at $1.55 a share to help fund the acquisition of Australian insurer Assetinsure.

The company said in November that it's on track to reach 2016 prospectus forecasts for net profit of $40.4 million.

The shares fell 0.3 per cent to $3.69, and have gained 66 per cent in the past year.

- BusinessDesk

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