24 March 2014News

Wilton Re to be acquired by Canada Pension

Bermuda-based Wilton Re is to be acquired by Canada Pension Plan Investment Board (CPPIB) for $1.8 billion, as the Canadian fund manager looks to develop its presence in the insurance space.

Canada Pension is the largest pension fund in Canada and has indicated that the acquisition will help to complement the fund’s long-term investment strategy. Wilton Re provides insurance and reinsurance solutions to the US life insurance market and Canada Pension indicated that it intends to further strengthen the firm’s offering in the market.

“In making a long-term investment in Wilton Re, CPPIB views the company as an ideal platform through which CPPIB can deploy significant follow-on capital at scale in the US life insurance sector,” says André Bourbonnais, senior vice-president, private investments at CPPIB. “Closed-block life insurance is an asset class with attractive risk-adjusted returns, well-suited to our long-term horizon.”

Wilton Re’s management also views the deal as one that can benefit from considerable synergies. “CPPIB ownership positions the company for growth and enhances our service offerings to clients and policyholders,” says Wilton Re chairman and CEO, Chris Stroup.

“CPPIB represents the next phase for Wilton Re – a strategic owner, committed to our business model, with a very long term investment horizon and unparalleled capital resources. Under CPPIB ownership, we anticipate the capital resources necessary to accelerate growth and expand our core In Force Solutions and middle market insurance, and enhance our competitiveness overall.”

Canada Pension is acquiring Wilton Re from a group of investors led by Stone Point Capital, Kelso & Company, Vestar Capital Partners and FFL, who are active participants in the global insurance and reinsurance market.

Bourbonnais says that the company is investing in a “common vision”, with CPPIB’s $201.5 billion of funds under management likely to provide considerable impetus to any future offering.

Following news of the acquisition, Fitch placed Wilton Re’s rating under positive watch, citing greater certainty regarding the company’s long-term ownership structure and strengthened financial flexibility as being behind the decision.