$150m acquisition of French insurance underwriter approved

MEDIA RELEASE

11 OCTOBER 2016

CBL obtains regulatory approval for $150m acquisition of French insurance underwriter

International credit and financial risk insurer CBL Corporation Limited (CBL) announced today it had been given the regulatory green light to proceed with its $150m strategic acquisition Securities and Financial Solutions Europe SA (SFS).

SFS is France’s largest specialist producer of construction-sector insurance and CBL’s largest single client. The regulatory approval was obtained from the Commissariat aux Assurances in Luxembourg (CAA). The approval also applies to IMS Expert Europe SA (IMS), SFS’ claims management operation.

CBL Managing Director Peter Harris said: “SFS was an important strategic acquisition for us in terms of furthering our growth ambitions in Europe. It provides support to CBL doing additional business in that region. It is also expected to provide excellent opportunities for several companies within the CBL Group in Europe.”

CBL began working with SFS in 2005, building a strong relationship with the company and its principal owner Mr Patrice Gilles. This resulted in SFS becoming the largest building risk specialist in France and writing the largest proportion of CBL’s French construction-sector insurance products, mainly Dommages Ouvrage (project-specific workmanship), and Decennial Liability.

The approval from the CAA satisfies the most significant outstanding condition precedent to the acquisition.

Mr Gilles said: “I’m delighted that the regulatory process has been satisfied, and I expect that under the new ownership of CBL, both SFS and CBL will continue to grow to new levels. I am extremely pleased to see SFS as part of the strong and well established CBL Group where management and staff will continue to grow.”

Mr Harris said: “This is the fifth acquisition CBL has done in Europe over the past 11 years, with four different regulators, and each one adds to CBL’s regulatory and governance experience. Our recently upgraded financial strength rating from AM Best to A- (Excellent) presents an opportunity to make CBL and SFS into even more significant players in the French construction insurance market, and will add to the quality of the Group’s business in Europe overall.”

Mr Harris paid tribute to Mr Gilles for the work done by him and his team over the 10 years that CBL had been doing business with SFS, and to ensure the acquisition progressed smoothly through this process. “As an entrepreneur, Mr Gilles built the SFS business up to become a leading specialist MGA (Managing General Underwriting Agency) in France, and 3-4 years ago expanded its branch network to 35 branches throughout France, whilst expanding its broker network to now number more than 3,000.”

During this time, the senior executive team was strengthened and Mr Antoine Guiguet was appointed as CEO of SFS. Mr Guiguet is a lawyer who has CEO experience in the construction sector. He is also an investor in the SFS business.

As an MGA, SFS does not bear any insurance risk and earns revenue from brokerage and fees. Its subsidiary, IMS, is a claims management business that manages the claims for SFS and other third party clients, and earns revenue from claims management fees.

CBL would maintain continuity in SFS and IMS with the executive management of Mr Guiguet, and Mr Gérard Marichy (Managing Director of IMS) remaining in their roles. Between them, Mr Guiguet and Mr Marichy have agreed to maintain a shareholding in the French company alongside CBL. They will own 29% of the combined entity, with CBL owning the remaining 71%. “We are delighted with the approvals being given,” said Mr Guiguet. “We are looking forward to being a part of the CBL and supporting them to achieve the long term goals for SFS and the wider CBL Group. SFS has achieved significant growth over the past few years, which all have benefited from, and it expects this growth to continue under CBL ownership.”

Mr Gilles will be paid out, and would not retain a shareholding, but would be appointed as Chairman of an Advisory Panel for SFS.

CBL and SFS are now working towards completing documentary formalities, satisfying final conditions precedent, and pre and post-acquisition accounting procedures, with Completion and Settlement proposed for just prior to year-end or early in the New Year.

The acquisition is being funded by a combination of cash, bank and vendor funding.

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