Apollo has committed to invest $700m in new equity capital in Catalina, a Bermuda-based non-life insurance and reinsurance company.
With this transaction, Apollo becomes the majority stakeholder, while minority stakeholder in Catalina will be held by RenaissanceRe. This brings the committed and undrawn equity in the company to $850m.
The commitment to investment is a follow-up to an agreement, announced last October by Apollo Funds to acquire a majority stake in the company. The investment was made by Apollo Funds’ affiliate Apollo Global Management.
Catalina chairman and CEO Chris Fagan said: “We are pleased to announce that the transaction has closed, and delighted to have secured additional equity commitments of $700m, which together with our existing committed and undrawn equity, prior commitments from Renaissance Re, and our own strong cashflow generation, gives us equity firepower of over $1bn.
“When that is combined with our relationship with Apollo’s other entities, it gives Catalina very substantial financial resources to originate much larger transactions than have been done in the non-life legacy sector to date.”
The reinsurer has been associated with Apollo since December 2013, when the funds managed by Apollo’s affiliates invested in the Bermuda-based insurance company.
Since then Catalina has grown significantly and has completed 16 transactions, acquiring $3.8bn of non-life insurance and reinsurance liabilities. As of August 31, this year, the company had total assets of $4bn.
Apollo senior partner Gernot Lohr said: “We believe the completion of this sizable equity financing, and the Apollo Funds becoming majority shareholders, are a significant milestone for Catalina. This transaction consolidates the Company’s position as a leader in the non-life run-off industry.
“We look forward to building upon our strong relationship with Chris and the outstanding team at Catalina, and leveraging Apollo’s deep insurance expertise and our other reinsurance entities to continue to help drive the Company’s significant growth.”
In April this year, Catalina assumed a portfolio of US Property & Casualty liabilities from Arch Reinsurance for about $410m. And, in last November, the company signed an agreement to acquire the German legacy medical malpractice liabilities unit from Zurich Insurance. The unit has liabilities of about $450m.