Gerling Canada to Be Acquired by Local Investors

The Gerling Canada Insurance Co. is set to be sold for an undisclosed amount to a group of Toronto-based financial and private equity investors organized by Newport Partners. Gerling Canada declined to comment on the pending sale, stating that it is a “private matter”.

Rating agency A.M. Best placed the Gerling’s Canadian company’s “A- (excellent)” rating under review following news of the pending the sale. Once complete, A.M. Best says uncertainty over the company’s future should be resolved. A.M. Best confirms that it is involved in discussions with the buyers of Gerling Canada, and that a “stand-alone” rating will be assigned to the Canadian operation on completion of the sale. Standard & Poor’s also downgraded the Canadian company’s rating to “BB+” from “BBB” in February, mainly due to the financial problems experienced by the German parent company. “On the close of this transaction, Gerling Canada will no longer be constrained by the rating ceiling on the Gerling Insurance Group,” S&P says.

In 2002, Gerling Canada recorded net written premiums of $58.9 million. The company posted an underwriting profit of $4.0 million for the year on the back of a combined ratio of 92.7%.

The group’s parent, Gerling Konzern Beteiligungs-AG (GKB) has been under pressure, having sold its reinsurance operations to a run-off company. It is now in the process of selling off its primary insurance operations on a piecemeal basis. The group also recently announced the sale of its credit insurance operation, Gerling NCM, to Deutsche Bank and Swiss Re.

In addition, Deutsche Bank has sold it stake in GKB, amounting to almost a 35% stakeholding, back to the group’s family member Rolf Gerling and the chair of GKB’s supervisory board, Dr. Joachim Theye. “This clear shareholding structure gives us back our full freedom of movement,” comments Bjrn Jansli, executive board chairman of GKB. Rolf Gerling plans to find a new majority shareholder for GKB, and a fresh infusion of capital, following Deutsche Bank’s departure. However, the sale of the entire group is also a possibility. “Rolf Gerling and the executive board fully agree on this goal,” says Jansli.