Life insurer Monument Re explores options including sale -sources
16/08/2023 08:00
By Amy-Jo Crowley and Pablo Mayo Cerqueiro
LONDON, Aug 16 (Reuters) - Monument Re, a buyer of
European life insurance portfolios, is exploring strategic
options after reporting a drop in its capital ratios last year,
people familiar with the matter told Reuters.
Citigroup C.N and Fenchurch Advisory are working with the
company and its owners on the options, which include a possible
sale, said the people, who declined to be named because the
discussions are private.
The Bermuda-based company, which takes on unwanted policies
from the likes of Allianz ALVG.DE and AXA AXAF.PA , had a
book value of close to 1.2 billion euros ($1.3 billion) as of
December.
It has a fragmented ownership structure with several
institutional and individual shareholders, including Enstar
Group ESGR.O , Hannover Re HNRGn.DE and Caspar Berendsen, a
partner at private equity house Cinven, one of the people said.
Enstar, Hannover Re, Citi and Fenchurch declined to comment.
Berendsen and Monument Re chairman Jonathan Yates also declined
to comment.
A spokesperson for E-L Financial ELF.TO , which Monument Re
listed in December among its institutional backers, said it was
no longer a shareholder, declining to comment further.
Monument Re reported a solvency ratio – a core measure of
financial strength – of 167% last year, comfortably above its
minimum regulatory requirement but well under the 299% it posted
in 2021.
It attributed the decline to changes in solvency valuation
methodology and a 202 million euro payout aimed at reducing
group debt.
While profit after tax remained relatively stable, the
company also reported unrealised losses on its investment
portfolio of more than 1.2 billion euros in 2022, mirroring
other financial institutions that have seen the value of their
investments fall as a result of soaring interest rates.
Monument Re has grown rapidly by buying books of policies
from insurers that were seeking to free up capital held against
those liabilities.
However, the market has felt the impact of soaring interest
rates, which have left some insurers with potential losses on
their bond investments and in some cases prompting customers to
redeem their policies early.
Bermuda, a popular jurisdiction for insurance groups, is
enhancing its supervision of the sector in a bid to align itself
more closely with European rules, according to lawyers at
Skadden.
($1 = 0.9154 euros)
(Reporting by Amy-Jo Crowley and Pablo Mayo Cerqueiro in
London; Editing by Elisa Martinuzzi and Tomasz Janowski)
((amy-jo.crowley@thomsonreuters.com;))