On Wednesday, Catalina Holdings (Bermuda) Ltd (“Catalina”) and SPARTA Insurance Holdings, Inc. (“Sparta”) announced a definitive agreement under which Catalina will acquire Sparta.
Once the deal is closed, Catalina plans to place some of Sparta’s business into run off and to transfer Sparta’s alternative market business to Arch Insurance Company under a separate renewal rights agreement.
Sparta predominantly focuses on specialty program and alternative risk transfer (ART) alternatives in the United States.
This is Catalina’s twelfth transaction since the business was established in 2005. Total assets of Catalina pro forma for this acquisition will be in excess of $2.9 billion.
In a statement announcing the deal, Chris Fagan, chairman and chief executive of Catalina, said: “The acquisition of Sparta adds significantly to our operations in the northeast of the United States, and follows quickly after our recent acquisition of Alea North America.”
Sparta had total assets of $911million as of Dec. 31, 2013, net reserves of $309million and shareholders equity of $201million.
Sparta stated: “We have carefully explored our strategic alternatives and have concluded that the Catalina transaction combined with the renewal rights sale is in the best interests of our stakeholders. The alternative market customers and program administrators will be offered an opportunity to transfer, along with some of the senior leadership team from Sparta, to Arch Insurance Company.” Catalina will acquire Sparta from cash at hand and a senior debt facility. The transaction, which is subject to regulatory approval, is expected to close in the third quarter of 2014.
Mayer Brown LLP acted as legal advisers to Catalina in this transaction.
J.P. Morgan Securities LLC acted as financial advisor and Willkie Farr & Gallagher LLP acted as legal advisors to Sparta in this transaction.
About Catalina Holdings (Bermuda) Ltd
Catalina Holdings (Bermuda) Ltd (“Catalina”) is a long term consolidator in the non-life insurance/reinsurance run-off sector. Catalina was established in 2005 to focus solely on the acquisition and management of non-life insurance/reinsurance companies in run-off. Shareholders include substantial financial institutions including funds managed by Apollo Global Management, Ontario Teachers’ Pension Plan and Caisse de Depot et Placement du Quebec.
Since its foundation, Catalina has made over $1 billion of acquisitions in the non-life insurance and reinsurance run-off sector.
Source: Catalina Holdings