Monument Re, a buyer of European life insurance portfolios, is exploring strategic options after reporting a drop in its capital ratios last year, people familiar with the matter told Reuters.
Citigroup and Fenchurch Advisory are working with the company and its owners on the options, which include a possible sale, said the people, who declined to be named because the discussions are private.
The Bermuda-based company, which takes on unwanted policies from the likes of Allianz and AXA, had a book value of close to 1.2 billion euros ($1.3 billion) as of December.
It has a fragmented ownership structure with several institutional and individual shareholders, including Enstar Group, Hannover Re and Caspar Berendsen, a partner at private equity house Cinven, one of the people said.
Enstar, Hannover Re, Citi and Fenchurch declined to comment. Berendsen and Monument Re chairman Jonathan Yates also declined to comment.
A spokesperson for E-L Financial, which Monument Re-listed in December among its institutional backers, said it was no longer a shareholder, declining to comment further.
Monument Re reported a solvency ratio – a core measure of financial strength – of 167% last year, comfortably above its minimum regulatory requirement but well under the 299% it posted in 2021.
It attributed the decline to changes in solvency valuation methodology and a 202 million euro payout aimed at reducing group debt.
While profit after tax remained relatively stable, the company also reported unrealised losses on its investment portfolio of more than 1.2 billion euros in 2022, mirroring other financial institutions that have seen the value of their investments fall as a result of soaring interest rates.
Monument Re has grown rapidly by buying books of policies from insurers that were seeking to free up capital held against those liabilities.
However, the market has felt the impact of soaring interest rates, which have left some insurers with potential losses on their bond investments and in some cases prompting customers to redeem their policies early.
Bermuda, a popular jurisdiction for insurance groups, is enhancing its supervision of the sector in a bid to align itself more closely with European rules, according to lawyers at Skadden.
Source: Reuters.com