As a part of its long term strategy to expand presence in the
specialty reinsurance business
Tower Group International, Ltd.
) is buying American Safety Reinsurance, Ltd. (ASRe).
Based in Bermuda, ASRe is the reinsurance subsidiary of
American Safety Insurance Holdings, Ltd. (ASI).
Tower Group will be buying ASRe from Fairfax Financial
Holdings Limited (Fairfax Financial) for approximately $59
Tower's buyout of ASRe will be completed upon Fairfax's
acquisition of New York-listed insurer American Safety Insurance
(ASI) for $306 million.
After the acquisition of ASI, Fairfax will spin out ASRe to
Tower Group International for $59 million. The unit will
then be integrated with Tower's Bermudian reinsurer Tower Re.
The acquisition will be completed by the second half of
The acquisition will expand the operation of Tower Re which
currently carries out the company's specialty reinsurance
business. Tower Re was formed in the first quarter of 2013,
following the merger of Tower with Canopius.
Tower Re currently writes qualifying quota share reinsurance
treaty business for Lloyd's syndicates and property
retrocessional excess quota share business underwritten with
select partners. The acquisition with ASRe will add
casualty-focused reinsurance business, which will complement
Tower Re's existing business.
With the acquisition of ASRe, Tower will gain instant access
to the former company's skilled casualty underwriting, support
staff and extensive network of reinsurance brokers and specialty
insurance company clients in the U.S.
Tower expects the acquisition to bring in approximately $40
million of premiums. The buyout is also expected to be modestly
additive to Tower's earnings in 2013, with increasing
contribution from 2014 onwards.
Tower Group presently carries a Zacks Rank #3 (Hold). Property
and casualty insurers ,
HCI Group Inc.
AXIS Capital Holdings Ltd.
Montpelier Re Holdings Ltd.
), among others, carry favorable Zacks Rank #1 (Strong Buy) and
AXIS CAP HLDGS (AXS): Free Stock Analysis
HOMEOWNERS CHCE (HCI): Free Stock Analysis
MONTPELIER RE (MRH): Free Stock Analysis
TOWER GRP INTL (TWGP): Free Stock Analysis
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