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Auckland insurer completes French deal

NZ Newswire logoNZ Newswire 5/01/2017 Sophie Boot

CBL Corp has completed its 94.5 million euro ($NZ142m) purchase of France's Securities and Financial Solutions Europe SA, 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 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 8.2m euros on revenue of 41m euros in 2015.

SFS is expected to provide 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, says CBL managing director Peter Harris.

In September, CBL completed the first tranche of a planned capital raising in a "heavily oversubscribed" placement, selling $60m of new shares at $3.45, an 8.2 per cent discount, reducing CBL's pro forma debt to $102m from $162m. 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 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 $35.5m in 2015, beating the forecast in its initial public offering prospectus for earnings of $26.1m.

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

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