Tower Group International, Ltd. has announced that it is terminating its previously announced agreement to buy American Safety Reinsurance, Ltd. (ASRe).
As a part of a long term strategy to expand its presence in the specialty reinsurance business in June, Tower Group announced to buy ASRe, the reinsurance subsidiary of American Safety Insurance Holdings, Ltd. (ASI). The company had agreed to buy ASRe from Fairfax Financial Holdings Limited (Fairfax Financial) for approximately $59 million.
Since the agreement has been terminated, Tower Group will receive $5 million as compensatory charges.
Fairfax Financial will now sell ASRe to Catalina Holdings Bermuda Ltd.
The acquisition would have expanded the operation of Tower Re which currently carries out the company’s specialty reinsurance business. Tower Re was formed in the first quarter of 2013, following the merger of Tower with Canopius.
Tower Re currently writes qualifying quota share reinsurance treaty business for Lloyd’s syndicates and property retrocessional excess quota share business underwritten with select partners.
The acquisition of ASRe, would have enabled the company to gain instant access to the former company’s skilled casualty underwriting, support staff and extensive network of reinsurance brokers and specialty insurance company clients in the U.S.
The company has made a number of acquisitions in recent years. With the fallout of the ASRe deal we expect the company to look out for a similar acquisition opportunity.
Tower Group presently carries a Zacks Rank #3 (Hold). Property and casualty insurers , HCI Group Inc.
, Everest Re Ltd.
(RE - Free Report
) and State Auto Financial Corp.
(STFC - Free Report
) , carry favorable Zacks Rank #1 (Strong Buy) and look impressive.