Published On: Wed, Jul 28th, 2021

Hong Kong-based re-insurer Peak Re acquires complete ownership of NAGICO

PHILIPSBURG — Insurance Company Nagico will become 100 percent subsidiary of Peak Re (Peak Reinsurance Company), pending regulatory approval, NAGICO said in a press statement.

Peak Re is a Hong Kong-based reinsurance specialist. On its website it reports 550 clients in more than seventy countries and $1.7 billion in gross written premiums per the end of 2019.

The contacts between NAGICO and Peak Re date back to December 2014, when NAGICO first went in search of a strategic partner for more financial muscle to finance its expansion drift in Spanish-language markets like Puerto Rico and Latin-America.

The chairman of the board, Imran Mcsood Amjad, confirmed in April 2015 in an interview with the Today newspaper that NAGICO was negotiating with “a Chinese insurance conglomerate about the establishment of a strategic alliance.”

“We need capital for expansion in Puerto Rico and Latin-America,” McSood said at the time. “This is about expansion so there will be no dismissals.”

However, McSood was adamant that he wanted to stay in control, saying that he had turned down the investor’s desire to acquire a 70 percent interest. “Then I may as well sell the whole company. I want to keep control over NAGICO. I will remain in charge.”

NAGICO began operations back in 1982 with a modest starting capital of 75,000 guilders (close to $42,000) but by 2015 the company’s value had shot up to $200 million.

Peak Re first invested in NAGICO in August 2016 when it acquired 50 percent of the shares. According to NAGICO’s press statement, this enabled the company to pursue growth opportunities in the Eastern Caribbean region. Following three category 5 hurricanes in 2017 – Irma, Maria and Dorian –  NAGICO paid out almost $1 billion in claims.

In March 2018, McSood said he expected that the company would have to pay half a billion in claims. “Of that amount, 98 percent is covered by re-insurers,” he told StMaartenNews.com. “The re-insurers are able to absorb that.”

McSood emphasized the crucial role of re-insurance, after estimating the damages caused by Hurricanes Irma and Maria on both sides of the island at between $2 and $3 billion. “There is no way you will cover such damages from insurance premiums you collect in St. Maarten over a period of 25 years.”

NAGICO is therefore more than pleased with the takeover by Peak Re. “The outlook for NAGICO is positive,” interim CEO Kyria Ali states in the press release. Ali is also NAGICO’s chief strategy and development officer.

“This transaction, when concluded, would result in the group being a wholly owned subsidiary of an A.M. Best A and Moody’s A3 rated global insurer with approximately $1.5 billion in equity. This strengthens our profile and broadens our reach. Our mutual desire to harness the power of technology and deliver exceptional service augurs well for our clients in the near-term.”

A.M. Best, established in 1899, is the world’s first credit rating agency, specialized in the insurance industry. John Moody founded Moody’s in 1900 after the publication of his Manual of Industrial and Miscellaneous Securities.

NAGICO and Peak Re are now focusing on ensuring that all requirements for regulatory approval and closing conditions are met.

Peak Re states on its website that in settled 90 percent of all claims in 2019 within five days.

“NAGICO will benefit from Peak Re’s expertise and its strong balance sheet, to further strengthen its capabilities and offerings to clients,” the new owner states in an press release on its website.

Peak Re CEO Franz-Joseph Hahn describes NAGICO as “a leading composite insurer in the Caribbean region” and emphasizes the significance of the deal for his own company. “NAGICO provides a broad range of personal and business insurance solutions. The acquisition of the remaining 50 percent share in NAGICO will enhance Peak Re’s geographical and portfolio diversification.”

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