Gefion secures €6m recapitalisation deal

money

The unrated Danish provider has been looking to recapitalise since July when the Danish regulator ordered it not to increase its volumes of business due to its solvency situation.

Gefion Insurance has closed the placement of Solvency II-compliant subordinated notes to a value of €6m (£5.4m) with funds managed by Fermat Capital Management.

The unrated Danish provider stated that the net proceeds from the recapitalisation will be used to strengthen its capital base and support its ongoing business.

The business added that the move follows a similar €10m placement that Gefion and Fermat announced in July 2017.

Partnership
Tonny Anker-Svendsen, Gefion’s chief executive officer, commented: “We are proud that Fermat - one of the leading insurance capital investors - wants to expand its partnership with Gefion at a crucial point in time by investing in the continued development of Gefion.

“Today’s announcement validates our innovative business model and our ability to source capital from the highest-quality investors within the insurance space.

“This transaction is a strong endorsement of Gefion and will support our on-going strategic investor conversations.”

Solvency
Gefion has been looking to recapitalise since the Danish Financial Supervisory Authority (DFSA) ordered it not to increase its volumes of business due to its solvency situation after it concluded an inspection of the business in July 2019.

The Danish regulator had previously ordered the provider to recalculate its solvency ratio, saying it was 105% as of 31 May, instead of the 130% Gefion posted in its solvency report in June.

Gefion was forced to take action earlier this year after its solvency ratio dropped to 72%. This followed a cash injection of €2m from its shareholders in May 2018.

Unrated
Unrated Danish capacity has been in the spotlight since the collapse of Alpha Insurance in 2018. At the time, taxi specialist broker Cover My Cab moved its policyholders from Alpha to Gefion

In December last year, motor and pet provider Qudos also went bankrupt.

Insurance Age also revealed last year that Close Brothers had reassessed its relationship with Gefion and would only write recourse policies for Gefion Insurance-backed products as of 1 November 2018.

In July this year, Premium Credit announced it had stopped financing insurance premiums where Gefion is the underlying insurer.  

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