China Re has successfully completed its acquisition of Chaucer, the London-based and Lloyd’s focused specialty (re)insurance business of The Hanover.
The transaction was valued at around $950mn, made up of a cash consideration of $865mn paid by China Re, as well as a pre-signing dividend from Chaucer of $85mn.
The Hanover, which acquired Chaucer back in 2011, had been exploring strategic alternatives for its Chaucer businesses in London and in Lloyd’s, while China Re had been looking for diversifying add-ons to enhance its global footprint and provide it greater access to the London specialty (re)insurance marketplace.
After gaining approval from European regulators at the beginning of December 2018, China Re has finalised the 100 percent equity acquisition of Hanover Insurance International Holdings Ltd., the holding company of Chaucer Holdings Ltd., from The Hanover Insurance Group, Inc.
Two other parts of the acquisition, the Dublin based Chaucer Insurance Company DAC and Hanover Australia Hold Co Pty Ltd (SLE) are still subject to local regulatory approval, but expected to close by the end of first quarter in 2019.
China Re plans to transfer its Syndicate 2088 at Lloyd’s into Chaucer’s Managing Agency, subject to regulatory approval. The syndicate had previously been managed by Catlin Managing Agency.
Commenting on the completed acquisition, Yuan Linjiang, chairman of China Re, shared: “This is an exciting time for China Re. We are very pleased to have gained the regulatory approvals to complete the acquisition of Chaucer Holdings Limited. This deal fits China Re’s strategic positioning of ‘reinsurance as the core business’ and the pursuit of international development in our ‘One Core, Three Breakthroughs and Five Cross-overs’ corporate strategy. We expect to take advantage of Chaucer’s business platforms across the world to maximize the opportunities for mutually beneficial growth.”
He Chunlei, vice chairman and president of China Re, commented: “Chaucer is an outstanding performer in the Lloyd’s market run by a well-respected management team with business access to more than 200 countries and regions across the world. The acquisition of Chaucer will expand China Re’s global reach and raise our profile in the international markets.”
“This is an auspicious day for Chaucer, our clients and for China Re as this significantly enhances the strength of our market offering and creates new global opportunities to explore, including those from the Belt and Road initiative,” said John Fowle, CEO at Chaucer.
Adding: “The completion of this transaction marks a significant milestone in our history and we are ready to accelerate our business development and growth with the support of China Re.”
Aon Securities, the capital markets and M&A unit of the broker, and law firm Sidley Austin both provided advice to China Re during the acquisition process.