Fortress snaps up struggling reinsurer(2)

Fortress Investment has bought UK-listed reinsurer Alea for £162 million or 93 pence per share – a 65 percent discount on its issue price when Kohlberg Kravis Roberts floated the business in 2003.

US-based alternative asset manager Fortress Investment has agreed to buy Alea, a listed reinsurance company part-owned by US buyout giant Kohlberg Kravis Roberts, for £162 million (€239 million; $320 million).

Fortress said it had agreed to pay 93 pence per share for the struggling reinsurer, which has been listed on the London Stock Exchange since 2003. The bid is 65 percent below Alea’s original offer price of 260 pence per share.

The deal represents a rare disappointment for KKR, which owned the company before its London flotation in 2003 and has retained a stake of about 40 percent.

The company has struggled since its stock market flotation, suffering record losses of $178.9 million in 2005 after storms racked the US coast, and losing its chief executive Mark Ricciardelli last year following a series of profit warnings. However, the company was able to reduce its losses to $0.8 million last year.

Alea chairman John Reeve described Fortress’s offer as “an attractive proposal” and said the sale would bring greater stability to the company.

Fortress recently completed an extremely successful flotation of a portion of its management company on the New York Stock Exchange.