The U.S. subsidiary of Maiden Holdings Ltd. of Bermuda will acquire GMAC RE, the reinsurance arm of GMAC Insurance, it was announced.
Terms of the purchase by Maiden were not disclosed. The companies said a dedicated U.S. reinsurance group, Maiden Re, will be formed and will be based in Mt. Laurel, N.J.
The firms said in a statement that GMAC RE's experience in reinsurance solutions will be paired with Maiden Re's 25 years in treaty, facultative, and specialty/alternative areas of reinsurance.
The agreement provides Maiden with rights to offer renewal quotations on business currently existing with GMAC RE. Maiden anticipates targeting business that will be underwritten and rated in accordance with its current underwriting guidelines.
Maiden Re, the companies said, will offer the same level of collateral commitment and trust capabilities as GMAC Re, including the security of The Dedicated Financial Trust, an individually-segregated trust not shared with other cedant funds.
The GMAC RE team will transition to Maiden Re and will continue to manage GMAC RE business and serve its customers, the firms said.
GMAC RE customers, it was stated, will benefit from Maiden Holdings' strong balance sheet and the dedicated Maiden Re platform. The combined operations of GMAC RE and Maiden Holdings will create a reinsurer with significant writings.
As part of the agreement, two U.S. licensed and domiciled insurance companies will be transferred to Maiden Holdings following regulatory approval.
Until regulatory approval for the acquisition of the insurance companies is obtained, a GMACI insurance company will continue to write reinsurance and collateralize obligations which Maiden will reinsure on a 100 percent basis.
As the change of control approvals are received, future business will be written directly by Maiden, the firms said.
Following the acquisition, Maiden Holdings, Ltd. said it plans to further strengthen its balance sheet
GMAC Financial Services is a finance company operating in and servicing North America, South America, Europe and Asia-Pacific.
GMAC specializes in automotive finance, real estate finance, insurance, commercial finance and online banking. As of Dec. 31, 2007, the organization had $248 billion in assets and serviced 15 million customers. GMAC's insurance operations were first established in 1925 and now offer a wide range of products to meet the needs of retail consumers, dealers and business partners.
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