Auckland's CBL completes €94m purchase of French insurance creator

CBL Corp has completed its €94.5 million purchase of France's Securities and Financial Solutions Europe SA (SFS), taking over its biggest customer in a deal the credit and financial risk insurer expects to lift earnings.

The Auckland-based company closed the deal in Luxembourg on Jan. 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 including 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," CBL managing director Peter Harris said.

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 percent 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 3 cent dividend in October.

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 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 percent of the CBL subsidiary acquiring the companies, while IMS managing director Gerard Marichy will also keep his position and buy a 3 percent 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 percent to $3.69, and have gained 66 percent in the past year.

(BusinessDesk)