Prudential Financial is buying a 13.1 percent stake in Hong Kong-based reinsurer Peak Reinsurance Co. Ltd.
The deal is taking place through a wholly owned subsidiary of Prudential Financial Inc. (PFI), which inked an agreement to invest in Peak Reinsurance Holdings Ltd., the sole shareholder of Hong Kong-based Peak Reinsurance Co. Ltd.
Prior to the transaction, Fosun International Ltd. owned 86.9 percent of Bermuda-headquartered Peak Re Holdings and the World Bank’s International Finance Corp. (IFC) owned 13.1 percent.
Once the transaction is complete, Prudential Financial will take over the IFC’s shareholding via the issuance of new shares. The transaction will conclude pending regulatory approvals and other customary closing conditions.
When Peak Re was formed in 2010, it was originally backed by Fosun and the IFC, which focuses on emerging market development. Peak Re now offers reinsurance services covering a range of lines across Asia Pacific, EMEA and the Americas.
Franz-Josef Hahn, chief executive officer of Peak Re, commented: “We want to thank Fosun and International Finance Corporation for supporting this successful venture and are pleased to welcome PFI as a new investor as we continue to build Peak Re into a leading global reinsurer.”
The latest transaction marks a further step in the long-term strategic partnership between Shanghai-based Fosun and Newark, N.J.-based PFI, which jointly own and operate a life insurance joint venture in China, the companies said in a statement. (PFI does business as Pramerica in selected countries outside the U.S. and is one of the largest insurance groups globally. It is not connected with the UK’s Prudential plc.)
A.M. Best commented that the credit ratings of Peak Re and its Switzerland-based reinsurance subsidiary, Peak Reinsurance AG, remain unchanged following the announcement of PFI’s agreed share purchase.
The transaction will increase Peak Re Holding’s total capital and have a positive impact on the company’s balance sheet, said the ratings agency.
“A.M. Best expects that the new capital injected by PFI through this transaction will be used to support the continued business growth and maintain a risk-adjusted capitalization supportive of Peak Re’s current ratings,” it added. “Peak Re also may benefit from PFI’s global insurance expertise and profile in the long run.”
Morgan Stanley acted as exclusive financial adviser to Peak Re on the transaction.
Source: Peak Re Holdings