July Proves To Be a Busy Month for DARAG Legacy Transactions

The Malta-based legacy acquirer, DARAG Group Limited (DARAG), has announced a number of transactions so far in July 2019.

Innovative Physicians Solutions RRG

Effective July 1, 2019, SOBC DARAG acquired the Vermont risk retention group (RRG) Innovative Physicians Solutions RRG.

SOBC DARAG focuses on acquisitions, loss portfolio transfers, and other business transfers for insurance companies, captive insurance companies, and RRGs within the US, Bermuda, and Caribbean runoff markets.

Stephanie Mocatta, CEO of SOBC DARAG, said, "This is our second acquisition in Vermont of [an RRG] in recent months and our fourth overall. We … are pleased to be building upon previously completed transactions, including the acquisition of American Safety [Retention Group, Inc., of Vermont (December 2017)]."

Established in the United Kingdom in 2007, SOBC later expanded its operations to Connecticut, Ohio, New York, and Bermuda. Then in 2018, SOBC DARAG formed to build on the strong infrastructure base in the United States to expand in the small-to-midsized runoff space to challenge traditional players at the larger end of the market.

In November 2018, SOBC DARAG acquired Peachtree Casualty Insurance Company (Peachtree), which DARAG announced this June had completed its first assumption of legacy liabilities since the acquisition.

Ms. Mocatta said at the time, "We are delighted to have completed this assumption of a block of legacy business. Since we acquired Peachtree in November 2018, we have been considering the best way to runoff Peachtree and utilize its potential as a licensed carrier. We worked closely with both the seller and [Florida Office of Insurance Regulation] FL OIR on this transaction and now have a template for further, future transactions. We have several pipeline opportunities and look forward to building Peachtree as an acquirer of legacy business, to the benefit of existing and future policyholders. We are grateful for the support and direction of the FL OIR in this and are looking to expand the existing licenses both geographically and by class."

Protector Forsikring

On July 16, 2019, DARAG also announced that it had entered into a retrospective quota share reinsurance agreement with Protector Forsikring (Protector), a listed Scandinavian insurance company. The vehicle for the transaction was DARAG's German risk insurer, DARAG Deutsche Versicherungs- und Ruckversicherungs-AG.

According to Tom Booth, CEO of DARAG Group, "Scandinavia has always been a core market for DARAG. As we continue with our long-term growth strategy and with our enhanced balance sheet, we have the capital strength and transactional expertise to provide solutions for even the most complex risk portfolios."

One Re, Ltd.

DARAG announced its first UK acquisition on July 18, 2019, when it entered into a sale and purchase agreement with One Re, Ltd. (One Re), a London-based non-life reinsurance company. Subject to regulatory approval, the transaction will be conducted through DARAG's German risk insurer, DARAG Deutsche Versicherungs- und Ruckversicherungs-AG.

One Re provided reinsurance to African-based insurers for industrial property risks and engineering projects in Africa from 2015 to 2018. One Re is solely owned by 54 North, Ltd., and the transaction delivers complete economic and legal finality to the business.

The Underwriter Insurance Company, Ltd.

More recently, on July 22, 2019, DARAG announced that it would acquire The Underwriter Insurance Company, Ltd. (The Underwriter), a UK-based insurer in runoff. The transaction remains subject to regulatory approval and will also be completed through DARAG Deutsche Versicherungs- und Ruckversicherungs-AG.

The Underwriter provided cover for commercial liability risks through insurance intermediaries between 1998 and 2003. Specialty areas included employers liability, professional indemnity, general liability, financial institutions, professional liability, and construction risks policies.

In solvent runoff since 2003, The Underwriter will serve as the primary vehicle for future DARAG acquisitions in the United Kingdom. It also provides DARAG with a UK insurer to enable the company to continue seamlessly trading in the UK market post-Brexit.

Tom Booth said of The Underwriter acquisition, "This transaction provides a simple and efficient solution for DARAG's further expansion into the UK market and full legal and economic finality for The Underwriter shareholders."