CCR confirms plans to sell €200mn stake in CCR Re

French state-owned reinsurer CCR has confirmed plans to offload a €200mn stake in its open market international reinsurer CCR Re by July 2023, in a move designed to fuel the unit’s ambitious target to become a €2bn gross written premium business within five years.

The plan forms part of a series of proposals passed at a meeting on Wednesday by CCR’s board of directors.

CCR is proposing that, by July 2023, a new shareholder will acquire a €200mn stake in CCR Re as part of a capital increase.

It comes after The Insurer reported earlier this year that the French Ministry of the Economy and CCR had appointed investment banks Credit Suisse and Messier to run the sale process.

It is understood that discussions between CCR, the Ministry of Economy and potential investors are now progressing with the sellers open to a range of internal financial options as well as external capital sources such as private equity, pension funds and investment from other international (re)insurers and mutuals.

Sources with knowledge of the process said French banking and insurance cooperative Groupe BPCE – which includes Banque Populaire, Caisse d’Epargne and Natixis – is understood to have entered exploratory talks with the state-backed carrier.

As previously reported, the process is being run in an attempt to diversify the capital base of CCR Re and will help to separate CCR’s open market activities from its public-sector activities. The move is designed to make the unit more competitive across the more than 80 countries in which it operates and provide a wider capacity base from which it can grow its premium base to a desired €2bn by year-end 2027.

CCR chairman Jacques Le Pape said: “We are going to provide CCR Re with the resources it needs to grow and become autonomous. This will allow CCR to strengthen its public-sector activities, at a time when natural disasters are becoming more frequent and more intense.”

To support these strategic initiatives CCR’s board of directors has appointed Edouard Vieillefond as deputy CEO, alongside Bertrand Labilloy, who remains CEO of CCR and chairman and CEO of CCR Re.

The confirmation that CCR plans to offload a stake in its open market international reinsurer comes despite fears that the recent French election result may reduce political support for the move. Sources with knowledge of the process said both political and investor appetite remain strong, with talks expected to gain momentum in the fourth quarter of 2022.

CCR Re was reorganised into a standalone company in 2016 to write open market reinsurance business, including an international portfolio, and does not benefit from a full government guarantee.

CCR Re – which benefits from an A rating and stable outlook from AM Best and S&P – grew its GWP by 30 percent to €843mn in 2021, as the Paris-headquartered carrier continued to expand its share of open market business both in France and internationally.

The reinsurer trimmed its combined ratio to 96.6 percent in 2021, from 103.2 percent a year earlier.

Under the stewardship of chairman and CEO Labilloy and deputy CEO Laurent Montador, CCR Re is executing on a business plan of profitable growth. It took advantage of the stronger market conditions in 2021-22 to accelerate revenue growth last year.