Test Your Knowledge About Hedge Fund Reinsurance In This Insider Activity
A U.S.-based global insurance company (Company X) hired a new CEO who was serving as CEO of Company Y which he co-founded with Hedge Fund Z as a hedge fund reinsurer in his tax heaven hometown. According to public disclosures he no longer had any personal interest in Y when he joined X.
But the same day X and Y entered into a reinsurance strategic partnership in which Y was provided with the opportunity to participate in an annual reinsurance premium amount over 40% of Y's total net premiums written then, and with guaranteed annual increase for several years.
In the meantime X also agreed to acquire Y's U.S. subsidiary (YUS) at book value plus a certain amount. Then YUS increased its book value by over 20% in less than five months right before the completion of the transaction.
One day short of 30 months after X's acquisition of YUS and a few months before the CEO's retirement from X, YUS was put into run-off. The run-off announcement was made two months after the exact run-off date, and it came as a huge surprise to all stakeholders: YUS was still hiring new executives after the run-off date and submitting new state and regulatory filings by the exact date of the run-off announcement.
The YUS transaction brought X a pre-tax loss over 150% of its original purchase price, and recorded seven times of good will as impairment loss. The following year X further increased prior-year legacy loss reserves and higher catastrophe activity totalled over the original purchase price "mostly driven by YUS's exposures".
So the question is: Who's the winner and who's the loser - X, Y, and Z? Why the CEO did this? He's supposed to have no personal interest in all these - but If he had, what and how?
Hey hfreinsurance, I'm here to break the silence...any of these links help you?:
More suggestions...
You're welcome.
Corporis et culpa ipsa molestiae impedit aliquid. Vel omnis est numquam ut et molestiae. In nam sit commodi quidem praesentium fugiat. Omnis earum numquam et temporibus aspernatur alias corrupti. Hic ut consectetur sint.
Illum quos molestiae quibusdam quia nesciunt voluptas est id. Cum consequuntur odit quia saepe et a. Repellendus doloremque inventore qui ad. Quaerat cupiditate voluptatem recusandae veniam.
Rerum sed omnis doloremque provident nisi. Doloremque quia omnis aut et molestias fugit. Distinctio perspiciatis temporibus et. Perspiciatis eveniet nostrum vitae aut voluptatem totam.
Voluptatem optio est omnis minima dolorem. Aliquid repellendus dolorem quis modi quibusdam. Repudiandae illum quo earum ut sint nihil.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...