Mapfre Middlesea announced today that it had signed a Sale of Business Agreement with Allcare Insurance Ltd which will see it take over the latter’s business portfolio for a sum of €1.6 million.
Allcare’s intention to sell its business portfolio to Mapfre Middlesea had been revealed by The Malta Independent back in May.
In a statement issued on the Malta Stock Exchange, Mapfre Middlesea said it had entered into a Sale of Business Agreement with Allcare Insurance Ltd “pursuant to which Allcare agreed to transfer and sell to the company its economic activity constituting a business as a going concern operated on a stand-alone basis. Completion of the transaction is to take place on 31 July 2015.
In terms of this business transfer and subject to the terms, representations, warranties and undertakings set out in the agreement, the general business of insurance in Malta conducted by Allcare, its employees and the intellectual property rights and software owned by or licensed to Allcare are being acquired by Mapfre Middlesea on a going concern basis. Furthermore, the company is assuming by way of novation, Allcare’s rights and obligations arising from contracts entered into by Allcare with third party suppliers, service providers, reinsurers and local statutory bodies in relation to Allcare business.
Allcare and Mapfre Middlesea also entered into a Portfolio Transfer Agreement which forms an integral part of the Sale Business Agreement, pursuant to which Allcare is to transfer to the company the general insurance business portfolio of Allcare as at 1 July 2015 on a going concern basis. As a condition to completion of the transaction, including transfer of the portfolio, the approval of the MFSA is required. The application made to the MFSSA requesting approval of the transfer of the portfolio from Allcare to the company in terms of the PTA is expected to be approved by the MFSA prior to the completion date. With effect from the completion date, Allcare is to cease carrying on general business of insurance in or from Malta.”
Mapfre Middlesea said the total consideration payable by the company to Allcare for the acquisition of the Allcare Business “is composed of a base payment amounting to €1.1 million payable to the company within seven days of the completion date, and a deferred payment of up to a maximum of €500,000, which shall be payable by the company over a three year transitory period commencing on the completion date.”
Through the acquisition of the Allcare Business, the company is to enhance its portfolio of general insurance business, particularly in the Motor, Property and Health classes of business.
“The employees of Allcare who are immediately prior to the Completion Date employed by Allcare and engaged in the Allcare Business are to be transferred to the Mapfre Middlesea. None of the individuals considered key to the running by Allcare of the Allcare Business as at the completion date are being absorbed by the company,” the company said. “Such business will be integrated with the company’s existing business and will be managed in accordance with the internal processes adopted by the company and under the supervision of its management team.”
The acquisition is considered to be a Class 1 transaction and, accordingly, no shareholder approval is required to conclude the transaction.
Mapfre Middlesea Group announced yesterday that it made a pre-tax profit before tax of €15.18 million in the first six months of 2015, compared to €8.21 million in the same period last year. All group companies registered improved results with the main driver being the group’s life operations with MSV Life plc registering higher profits than the comparative period last year, mainly resulting from a one-off saving from renegotiation of the reinsurance treaty.