The HartfordFinancial Services Group Inc. agreed to sell its U.K. P&Crun-off subsidiaries, Downlands Liability Management Ltd. and Hartford FinancialProducts International Ltd., to Catalina Holdings UK Ltd.
The transaction follows the successful completion of a PartVII transfer to combine all of its run-off U.K. insurance business into asingle insurance company, Hartford Financial Products International.
The U.K. run-off businesses primarily consist of U.S.asbestos and environmental liabilities as well as U.K. asbestos liabilities.The Hartford's wholly owned U.K. subsidiary, Excess Insurance Co. Ltd., had previously underwrittenmost of the U.S. asbestos exposure.
The Insurance Insiderreported in earlyJuly that Armour Group HoldingsLtd. emerged as the winner in the auction for Excess Insurance but nodeal had been signed. It reported in September 2015 that The Hartford waspreparing to sell£452 million of its old London market liabilities.
Subject to regulatory approvals and other customary closingconditions, the planned sale is expected to close in the fourth quarter, and isnot projected to result in a material gain or loss, net of tax effects, to TheHartford.
Upon closing, all staff will remain employees of DownlandsLiability Management. Both run-off units will remain headquartered in Worthing,England.
Barclays is providing financial advice to The Hartford, andFreshfields Bruckhaus Deringer LLP is acting as its legal adviser.PricewaterhouseCoopers LLP provided other advisory services to The Hartford.
At March 31, Downlands Liability Management and HartfordFinancial Products International had total assets of £712 million, undiscountedgross reserves of £477 million, undiscounted reserves net of reinsurance of£359 million and shareholders' equity of approximately £223 million.
Catalina Holdings UK is a wholly owned subsidiary ofCatalina Holdings (Bermuda)Ltd., which recently agreed to acquire Allianz SE's U.K. employers' liabilitybook of business.