Arch Capital to buy 29.5% stake in Coface worth $520m

Written by Adam Cadle

25/02/2020

Arch Capital has entered into a share purchase agreement with Natixis regarding the acquisition of a 29.5% stake in French credit insurer, Coface, worth $520m.

Arch Capital has approximately $13.23bn in capital at 31 December 2019 providing insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly owned subsidiaries.

Marc Grandisson, Arch Capital's CEO, said, “This is a long-term, strategic investment in Coface, and fits with Arch’s efforts to develop uncorrelated sources of underwriting income. Our companies share a focus on specialty underwriting where knowledge and expertise create value for our clients, and trade credit contributes to Arch Capital's specialty-driven business model.

“We support Coface’s management team and are aligned with their strategic plan.”

As part of the transaction, Natixis’ seven representatives on Coface’s board of directors will resign and be replaced by four Arch Capital nominees. This will result in the majority of Coface’s board members being independent. Coface has indicated that it will seek a new independent board member and will appoint a chairman of the board from among the independent board members.

There are no anticipated impacts on Coface’s or Arch Capital's employees resulting from the proposed transaction. Arch Capital has indicated that it does not intend to seek control of Coface for a period of 12 months after the closing of the transaction.

The transaction remains subject inter alia to antitrust and regulatory approvals, including in particular, approval by the French prudential regulator, the Autorité de Controle Prudentiel et de Résolution (ACPR).

Moody’s vice president and senior credit officer Brandan Holmes said:“The significant minority investment by Arch Capital would be credit positive for Coface because it would provide a strong platform for Coface to expand its presence in the US market, and afford Coface access to the expertise and resources of a strong diversified insurer as a strategic partner.”

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