Wilton Re Acquired By Canada Pension Plan

March 21, 2014

[Updated] Wilton Re Holding Limited has entered into a definitive agreement for the sale of 100% of Wilton Re’s outstanding stock to Canada Pension Plan Investment Board [CPPIB]

The transaction involves the 100% stock acquisition of Wilton Re Holding Limited, a Bermuda insurance holding company and all subsidiaries within the Wilton Re Group.

The total cash consideration will be US$1.8 billion at closing, and the transaction is expected to close prior to August 2014 and is subject to customary closing conditions and regulatory approvals.

“CPPIB is an ideal owner for Wilton Re that positions the company for growth and enhances our service offerings to clients and policyholders,” said Chris Stroup, chairman and CEO, Wilton Re.

“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 offerings as well as enhance our competitiveness overall. We remain committed to our middle market customers and will continue to emphasize and expand our worksite and private labeling solutions.”

“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 U.S. life insurance sector,” said André Bourbonnais, Senior Vice-President, Private Investments. “Closed-block life insurance is an asset class with attractive risk-adjusted returns, well-suited to our long-term horizon.”

Update 1.44pm: Fitch Ratings has placed the ‘A’ Insurer Financial Strength (IFS) ratings of Wilton Reassurance Company, Wilton Reinsurance Bermuda Limited, Wilton Reassurance Life Company of New York and Texas Life Insurance Company, as well as the long-term Issuer Default Rating (IDR) of ‘BBB+’ of Wilton Re Holdings Limited, on Rating Watch Positive.

Fitch said they view this transaction as a “potential credit positive for Wilton Re, since it removes uncertainty regarding the long-term ownership structure of the company and improves the company’s financial flexibility.

“CPPIB manages the retirement funds on behalf of 18 million Canadians, with C$201.5 billion in assets under management as of year-end 2013,” added the ratings agency.

“Fitch would upgrade the IFS rating following the close of the transaction with the final rating based upon its evaluation of Wilton Re’s capitalization and any updates to its operating plans, strategic importance to CPPIB and degree of support.

“Fitch could affirm the current ‘A’ IFS rating if the transaction fails to close or Fitch ultimately views Wilton Re as not having strategic importance to CPIBB.”

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