Posted on Jan 12, 2022, 7:06 p.m.Updated Jan 12, 2022, 7:23 PM
Major maneuvers in sight in French reinsurance. After 2021 marked by the acquisition of the reinsurer PartnerRe by the French mutual insurer Covéa, the Caisse centrale de réassurance could once again move the lines in the sector.
The French public reinsurer is in fact studying an opening of the capital of its subsidiary CCR Re, we learned from corroborating sources.
According to our information, the group launched a selection process for investment banks at the end of last week to better identify its options and set up, if necessary, an auction process.
A small player in a global insurance market for insurers dominated by giants such as Munich Re and Swiss Re, CCR Re operates in the traditional branches of property damage and civil liability, life and health, but also in certain specific segments (credit, marine, aviation, space, agriculture).
“This subsidiary is experiencing very strong organic growth, which underlies capital support and is not among the priorities of the State today”, indicates a person familiar with the matter. The subsidiary could be valued at more than 600 million euros according to initial estimates.
“The CCR is carrying out internal reflections on the methods of strengthening its only market subsidiary, CCR Re. These are only reflections and there is therefore no decision by the ministry on the subject”, indicates do we at Bercy.
For the moment, the scheme is not stopped. Thus, the process will not necessarily lead to full privatization. “It could be a minority format, majority or not even, depending on the offers. The group has already issued bonds to meet its needs, ”said a source.
Born in 2016
The idea of opening up capital is not new and can be explained by the special position of CCR Re. The entity was born in 2016 when its shareholder wanted to separate its reinsurance activities carried out in competition with private players. operations linked to the compensation plan for natural disasters. These benefit from a state guarantee.
Since then, the group has been focusing on the development of its traditional reinsurance subsidiary. Again last summer, as part of its latest strategic plan, CCR said it wanted to “consolidate” CCR Re’s positioning on the international market.
In 2020, the subsidiary set itself the ambition of increasing its turnover by nearly 30% in two years, to bring it to 832 million euros in 2022. An objective that it has undoubtedly already achieved last year. In the first half of 2021 alone, CCR Re recorded 665 million gross written premiums, representing a growth of the subscribed portfolio of 14%.
By 2022, the subsidiary expects to generate a net profit of 42 million euros against 18 million euros in the year of the start of the health crisis, we can read in the documents published by the company. CCR Re’s positive trajectory prompted the S&P rating agency to raise its credit rating in 2020 to “A” and maintain it since.
“Even if they don’t necessarily have the same levels of expertise as their competitors, the fact that they have a very good credit rating helps them [à se développer] », Notes a good connoisseur of the sector. The desire to keep this rating, linked to the public dimension of CCR, could also plead for only limited opening of the capital, continues this observer.
It remains to be seen which players might be interested in this asset. The spectrum of suitors will not be restricted to players rooted in France or reinsurance players, say several sources.