The ownership of Peak Re, the Hong Kong based global reinsurance company, could soon change, as it’s been reported by Reuters that Chinese conglomerate Fosun is looking to offload its majority stake in the company.
A formal sales process has yet to kick off, Reuters reported this morning, but its four sources state that Fosun International Ltd. has appointed Deutsche Bank to advise on a possible sale of its stake in Hong Kong-based reinsurance company Peak Re.
Fosun has been dealing with high levels of debt, with parts of its conglomerate not delivering the profitability expected.
Our sister publication Reinsurance News reported in October that Fosun was said to be exploring a possible sale of Peak Re, as one way to pay down its debt.
The latest report from Reuters suggests this process could now be moving forwards, with details on the stake to be sold said to be expected to be sent to potential buyers by year-end.
Fosun owns 86.9% of Peak Re, having originally bought into the reinsurance company at its launch with a $468 million investment giving it a 85.1% stake, then adding $100 million to its investment in Peak Re in 2016, taking its stake to 86.9%.
Peak Re reported total equity of US $1.47 billion as of the end of 2021, suggesting Fosun stands to make a healthy profit from any sale of its stake in the reinsurer.
Gross written premiums were reported at $2.15 billion for 2021, while Peak Re’s net profit was $73.2 million.
Fosun has reportedly sold over $5 billion in assets already this year, as it looks to pay down its debt and replenish liquidity.
Recall that Peak Re has a collateralized reinsurance sidecar vehicle, in Lion Rock Re, and the company also sponsored its first catastrophe bond in 2022, a $150 million Black Kite Re Limited transaction.
Peak Re also has a Bermuda-based insurance-linked securities (ILS) investment manager unit named Peak Capital Ltd.
As a result, the company has a well-formed reinsurance and third-party capital focus and could be an attractive bolt-on for a major global reinsurer, or an attractive buy as a new reinsurance venture for another type of investor, such as a private equity player.