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CBL to buy Affirmative for foothold in US

NZ Newswire logoNZ Newswire 24/03/2017 Paul McBeth

CBL Corp wants to add US insurer Affirmative Direct Insurance Company in a US$5.7 million deal which would expand its global footprint to the world's biggest economy.

The Auckland-based credit surety and financial risk insurer filed a regulatory application to buy the US business, giving it a US insurance vehicle and licences to expand in the US, it said in a statement.

Affirmative started running off its business since it stopped underwriting operations in 2007 and has no outstanding claims, and holds cash, investments, regulatory capital and current licences in 14 states.

"The US is the largest insurance market in the world and is one that we have been following for many years," CBL managing director Peter Harris said.

"The opportunity to gain direct access to this market in a low-risk, controlled and manageable way when we are ready is one we don't want to pass up."

The US beachhead comes hot on the heels of CBL completing its 94.5 million euro acquisition of France's Securities and Financial Solutions Europe SA (SFS) and continues a series of purchases since the firm listed on the NZX in 2015.

CBL was anticipating annual operating earnings growth of between 18 per cent and 22 per cent in calendar 2017, which was predicated on the annual contributions of SFS and UK tax investigation insurance provider Professional Fee Protection.

The insurer posted a 27 per cent increase in operating earnings to $76.2 million, which disappointed some in the market despite beating the firm's own prospectus forecast.

Mr Harris said the company has already set up relationships in the US and expects to start writing a "small amount" of business before the year's out.

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