Canada pension board buys insurer Wilton Re for $1.8 bln

Target: Wilton Re Holding Ltd

Price: $1.8 bln

Sponsor: Canada Pension Plan Investment Board (CPPIB)

Sellers: Stone Point Capital, Kelso & Co, Vestar Capital Partners, FFL

The Canada Pension Plan Investment Board (CPPIB) has agreed to buy U.S. life insurance and reinsurance provider Wilton Re Holdings Ltd for $1.8 billion from a group of private equity firms, the first foray by the global deal-maker into the U.S. insurance business.

CPPIB said on March 21 it would acquire Wilton Re, a leading purchaser of closed blocks of life insurance policies, from a group of private equity firms led by Stone Point Capital, Kelso & Co, Vestar Capital Partners and FFL, according to sister news service Reuters. Reinsurers help insurers spread risk in exchange for part of the profit.

“In making a long-term investment in Wilton Re, CPPIB views the company as an ideal platform through which CPPIB can deploy significant follow-on capital at scale in the U.S. life insurance sector,” CPPIB Senior Vice President of Private Investments André Bourbonnais said in a statement.

“Closed-block life insurance is an asset class with attractive risk-adjusted returns, well-suited to our long-term horizon,” he said, noting that CPPIB plans to invest further in the business for many years to come.

Wilton Re has invested more than $1.7 billion in strategic in-force reinsurance and mergers and acquisitions since its inception in 2005, and its chief executive, Chris Stroup, said CPPIB’s deep pockets will allow it to continue to grow.

“Under CPPIB ownership, we anticipate the capital resources necessary to accelerate growth and expand our core In Force Solutions and middle market insurance, and enhance our competitiveness overall,” Stroup said in a statement.

CPPIB, which manages Canada’s national pension fund, has net assets of C$201.5 billion ($179.9 million), making it one of the biggest pension funds in the world.