Best’s News & Research Service - February 13, 2018 10:27 AM (EST)
A.M. Best Comments on Credit Ratings of Peak Reinsurance Company Limited and Its Subsidiary Following Announced Transaction
- February 13, 2018 10:27 AM (EST)
Hong Kong //BestWire// - A.M. Best has commented that the Credit Ratings (ratings) of Peak Reinsurance Company Limited (Peak Re) (Hong Kong) and its reinsurance subsidiary, Peak Reinsurance AG (Peak Re AG) (Switzerland), remain unchanged following the announcement that a wholly owned subsidiary of Prudential Financial, Inc. (PFI) (Newark, NJ) [NYSE: PRU] has signed definitive agreements to purchase a 13.1% stake in Peak Reinsurance Holdings Limited (Peak Re Holdings) (Bermuda), the sole and direct holding company of Peak Re, via the issuance of new shares (the transaction).
Subsequent to signing the definitive agreements in connection with the transaction, Fosun International Limited (Fosun) had indirectly acquired the entire stake in Peak Re Holdings held by International Finance Corporation, which has temporarily increased Fosun’s ownership of Peak Re Holdings to 100% before the closing of the transaction. While the final consideration is subject to closing adjustments, A.M. Best expects the transaction to increase Peak Re Holding’s total capital. The transaction is pending regulatory procedures and other customary closing conditions. Once these occur, Fosun and PFI will indirectly hold 86.9% and 13.1% of the shares in Peak Re, via Peak Re Holdings, respectively.
While the impact to Peak Re’s balance sheet strength is expected to be positive, A.M. Best expects that the new capital injected by PFI through this transaction will be used to support the continued business growth and maintain a risk-adjusted capitalization supportive of Peak Re’s current ratings. Peak Re also may benefit from PFI’s global insurance expertise and profile in the long run.
A.M. Best will further assess the impact on the rating fundamentals and strategic direction of Peak Re and its subsidiaries following the closing of the transaction.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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