Tawa will buy Connecticut-based PXRE for $114m
UK run-off consolidator Tawa has entered into a stock purchase agreement with Argo Group to acquire its Connecticut, USA, subsidiary, PXRE Reinsurance Company (“PXRE”) for an estimated cash consideration of $114m.
The acquisition would give Tawa its first operation in the US, the largest run-off market in the world and is in accordance with Tawa’s stated consolidation strategy set out at the time of its admission to AIM in July 2007.
PXRE, primarily wrote reinsurance of property, marine and aerospace risks with a focus on catastrophe-related coverage. Its operations were put into run-off in February 2006 following PXRE’s downgrade by analysts as a result of the 2005 hurricanes in the Gulf of Mexico. As of 30 June 2007 PXRE’s undiscounted pro forma net assets were $144m.
Subject to regulatory approval from the Connecticut Department of Insurance and certain pre-closing transfers and adjustments, the acquisition is expected to be completed before the end of the first quarter of 2008.
Gilles Erulin, chief executive officer of Tawa, commenting on the transaction stated: “PXRE is an important acquisition for Tawa, as it fits the profile of our target portfolio very well and it demonstrates that Tawa can seize growth opportunity in non-European markets. We are confident that our ability to provide a liquid exit route for owners of run-off operations, places us well to effect further value enhancing acquisitions.”