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18 Mar 2018 5:10
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  •   Home > News > Law and Order

    CBL to exit problematic French unit

    CBL Corp is looking to sell its problematic Fernch construction insurance division and is pursuing legal action against the vendors it bought it through.

    CBL Corp is hiring advisers to sell the French construction insurance division that's seen it fall foul of regulators over solvency concerns and is pursuing legal action against the vendors of Securities and Financial Solutions Europe SA (SFS).

    The Auckland-based credit surety and financial insurance risk firm expects to exit the French business within 90 days after a board-led strategic review found the high level of capital needed to meet estimated future claims posed a disproportionate risk.

    CBL said the French unit was profitable and all options were on the table, including the sale of the insurance book, and the distribution and operational networks of the managing general agents as a going concern.

    The insurer said it had triggered legal rights against the vendors of SFS under the purchase agreement, and that alongside other remedies it has recourse to $40 million to recover against its balance sheet.

    CBL bought SFS for 94.5 million euro ($NZ160m) through cash, bank debt and vendor funding.

    "The board considers this exit of the French Construction Business to be a significant and positive decision made in the interests of ensuring CBL's long-term growth and profitability," it said.

    CBL's stock has been suspended from trading on the NZX as the stock market operator tries to work out whether it's kept the market informed of material information and met continuous disclosure obligations.

    The insurer has said this week that it will need a couple of weeks to finalise a capital raising and on Wednesday said the details were still being worked out.

    CBL will stop writing new French construction business from April and all renewals will end from June.

    The company still expects to report annual earnings on February 27, having issued a profit warning earlier this month that it posted a loss of between $75m and $85m in calendar 2017.


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