Canada’s CPP Investments to Sell Ascot Group, Wilton Re in Strategy U-turn: Sources


Canada Pension Plan Investment Board (CPP Investments) is searching for to sell its Wilton Re and Ascot Group insurance platforms, marking a strategic U-turn for the fund within the face of intense competition, people accustomed to the matter said on Wednesday.

CPP Investments is preparing to launch the sale processes in the brand new 12 months. The investment bank working for the fund on the sale of Wilton Re, which the sources said may very well be valued at greater than $4 billion plus debt, has already begun informally reaching out to potential bidders to gauge their interest. It just isn’t clear what valuation Ascot Group could attain.

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The sources spoke on condition of anonymity and cautioned that no deal is definite for either business.

CPP Investments, Ascot Group and Wilton Re declined to comment.

Private equity firms and investment managers including Blackstone Inc., Brookfield Asset Management and KKR & Co. Inc. have been increase their insurance arms within the last two years.

They see a chance to make use of the capital from life insurance and annuities policies to take a position in corporate credit, where the cash managers can lock in spreads between their liabilities and their returns. Insurers are offloading the policies as they struggle to service them amid historically low rates of interest.

Money managers’ interest within the space has been spurred on by Apollo Global Management’s success with Athene Holding Ltd. The reinsurance platform, which Apollo is ready to amass in January in an $11 billion deal, will account for around 40% of Apollo’s $481 billion of assets under management once combined.

Toronto-based CPP Investments, which invests for retirement on behalf of 20 million Canadians, had been an early mover on this space.

It acquired Wilton Re, which takes over or reinsures life insurance and annuity portfolios from insurers, for $1.8 billion in 2014, and Ascot Group, the previous Lloyd’s of London property and casualty insurance business of American International Group, in 2016 for $1.1 billion.

It also bought credit businesses it could use to take a position the insurance assets. It acquired Antares Capital, a lender to firms, from General Electric for $12 billion in 2015.

Nonetheless, with competition ramping up, making it harder to amass from insurers the life insurance and annuity policies which CPP Investments needs to make use of to earn the spreads on credit products, it has decided to exit its insurance businesses, the sources said.

Norwalk, Conn.-based Wilton Re is the holding company for a variety of insurance and reinsurance entities, including Wilton Reassurance Co., Texas Life Insurance Co. and Wilco Life Insurance Co.

Ascot Group provides global insurance and reinsurance products through its Lloyd’s operations, in addition to its platform in Bermuda. It has U.S. operations under the Ascot U.S. and Ethos brands, based on its website.


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