German reinsurer Munich Re has sold 12.1 million shares, or 4% of its holding in UK-based insurer Admiral Group at a price of £29.40 per share, leading the carrier’s share price to fall by 5.5% on Wednesday morning to £28.80.
At 9am, the FTSE 100 index of leading shares was 7 points lower, as early trading on Wednesday reflected investors anticipation of the UK budget announcement.
Reports show that the worst performer on the FTSE was Admiral, driven by the sale of 12.1 million shares by Munich Re at a discount of around 3.7% on Tuesday’s closing price.
Munich Re’s shareholding in Admiral goes back to 2002 and prior to the end of April 2009, totalled 15.1%.
However, on April 30th, 2009, the reinsurer announced that it had sold 13 million shares in the company, reducing its holding to 10.2%.
Until this morning, it appears as though Munich Re’s holding in Admiral had remained unchanged at more than 10%. Now, however, the firm’s shareholding has reduced further to 6% of its market cap, meaning Munich Re still owns around 18 million shares in Admiral.
Industry reports suggest that currently, there’s no indication that Munich Re is planning to offload the rest of its holding in the company.
Of course, the pair also have a long-standing reinsurance relationship relating to co-insurance and reinsurance arrangements for Admiral’s UK car insurance business.
Under this arrangement for 2021, which Admiral announced back in August has been extended, Munich Re will underwrite 30% of the business through co-insurance via its Great Lakes subsidiary, and 10% through quota share reinsurance arrangements. Admiral retains 22% of its UK car business.
During its H1 2021 results announcement, Admiral revealed the extension of its arrangements with Munich Re.
The 10% quota share agreement remains in place until at least 2023. For the remaining 30%, 20% of this will now be on a co-insurance basis via Great Lakes, and will extend to 2029. While the remaining 10% will be on a quota share reinsurance basis and these arrangements have been extended to 2026.
