Sirius Group formally puts itself up for sale

Property and casualty insurance and reinsurance underwriter Sirius International Insurance Group, Ltd. has launched a formal sales process, after its parent China Minsheng agreed to the sale.

Sirius was sold to Chinese investment group China Minsheng Investment Corp., Ltd. in 2015 by its previous owner White Mountains.

The sale included the transfer of activities related to third-party reinsurance capital to China Minsheng, as Sirius had an active number of private collateralised quota share reinsurance transactions and sidecar like initiatives with third-party investors at the time.

That sale process closed in early 2016, but already Sirius is back being marketed to potential suitors again.

The reason is that China Minsheng has been reported to have experienced a range of financial difficulties which came to a head in 2019, resulting in an increasingly urgent need to reduce its debt and better capitalise its operations.

One way to achieve that was to put Sirius up for sale, as the P&C insurance and reinsurance group was seen as an asset that had not devalued like many others held by the Chinese investment firm.

Sirius has also been downgraded and put on a negative rating review by A.M. Best, due to the financial difficulties of its parent.

Now, after a strategic review internally, the decision has been made to sell the company.

The strategic review had involved looking at recapitalising the re/insurer, among other options. But having received a number of expressions of interest, the Board of Sirius and its parent have decided to sell.

It seems likely that a number of potential buyers could step forwards, if the price is right.

Sirius has a strong franchise in P&C insurance and reinsurance, as well as a well-diversified operational base, which should make it an attractive buy, at the right price.

Timing is everything though and given the impacts of the ongoing Covid-19 coronavirus pandemic, it remains to be seen whether a valuation reached a few weeks ago would still stand today.

Sirius said there is no guarantee a sale goes ahead, but we’d imagine under the circumstances a solution will be found as it will otherwise become increasingly urgent.

Kip Oberting, President and Chief Executive Officer of Sirius Group, commented, “I am pleased that we have secured CM Bermuda Limited’s commitment to launch a coordinated sales process to ensure the engagement necessary to facilitate an optimal outcome.”

Peter Tan, Chairman of CMIG International Holding Pte. Ltd., added, “We appreciate the opportunity to work cooperatively and collaboratively with the management team and the Strategic Review Committee to achieve an optimal outcome for Sirius Group. The involvement of key stakeholders is critical to ensuring an orderly and successful outcome for any transaction.”

Meyer Frucher, Chairman of the Board, also said, “Maintaining the strength of Sirius Group’s 75-year deep-rooted franchise and maximizing value for all stakeholders remains our number one priority. Our executive team supported by Sirius Group’s talented and dedicated employees will continue operations as usual, as we work with CM Bermuda Limited towards completing the strategic review process and announcing a transaction expeditiously.”