Arch Capital Group Ltd., the Bermuda headquartered insurance and reinsurance specialist, is acquiring a majority stake in France-based trade-credit insurance firm Coface.
Arch Capital has entered into a share purchase agreement with French corporate and investment bank Natixis, which has been selling down its majority stake in Coface.
The sale of shares in Coface will reduce Natixis’ stake to just 12.2%, likely triggering a deconsolidation of Coface in the banks accounts, helping it to free up solvency capital.
Arch Capital said that the acquisition of Coface shares will be completed at a price of €10.70 per share (dividend until closing attached), which corresponds to a transaction value of roughly €480 million based on the current number of shares.
Marc Grandisson, Arch’s Chief Executive Officer, commented on the news, “This is a long-term, strategic investment in Coface, and fits with Arch’s efforts to develop uncorrelated sources of underwriting income. Our companies share a focus on specialty underwriting where knowledge and expertise create value for our clients, and trade credit contributes to Arch’s specialty-driven business model.
“We support Coface’s management team and are aligned with their strategic plan.”
Natixis’ seven representatives on Coface’s board of directors are set to resign once the sale is completed.
They will be replaced by four nominees for board positions from Arch Capital.
As a result, the majority of Coface’s board members will be independent.
Coface has said that it intends to seek a new independent board member and will also appoint a chairman of the board from among the independent board member roster.
Natixis had been Coface’s main shareholder since 2002, but began selling down its stake in 2014.