Reuters: Monument Re owners considering a sale

Bermuda-based Monument Re is exploring strategic options including a sale, Reuters news agency reported.

The legacy life reinsurer reported a drop in its capital ratios last year, sparking the talks.

Reuters said Citigroup and Fenchurch Advisory are working with the company and its owners on the options, quoting people connected with the talks.

Monument has taken on policies from Allianz and AXA and had a book value of close to 1.2 billion euros ($1.3 billion) as of December.

Its owners including Bermuda-based Enstar Group, Hannover Re and Caspar Berendsen, a partner at private equity house Cinven, Reuters reported, citing a source.

Developments come after the group’s solvency ratio fell from 299% at end-2021 to 167% at end-2022, a development which management blamed on 2022 market woes, a change in solvency measures and a deleveraging, Reuters noted.

Available  capital  for the solvency measurement fell €377 million or 34% in 2022  owing  to  the methodology change and a dividend  payment  of  €201.5 million for the deleveraging furthered the solvency erosion.  The  new  capital  regime, being implemented over nine years from 2019,  accounted for 44% of the measure for the 2022 reading.

Monument Re has built its growth on a track-record of acquiring life insurance portfolios across Europe. Six purchases in 2022 brought the lifetime total to 26 by end-year with two more announced YTD in 2023.

Monument Re has grown rapidly by buying books of policies from insurers that were seeking to free up capital held against those liabilities.

However, the market has felt the impact of soaring interest rates, which have left some insurers with potential losses on their bond investments and in some cases prompting customers to redeem their policies early, Reuters said.

Bermuda, a popular jurisdiction for insurance groups, is enhancing its supervision of the sector in a bid to align itself more closely with European rules.