Just months after Gerling Global Reinsurance of Australia went into run-off, niche player AssetInsure has purchased the operation for $60 million.

Planning to manage Gerling’s reinsurance run-off and use its assets to set up a new Australian-owned direct insurance company, AssetInsure CEO Peter Wedgwood said the takeover will provide “a boost to the local insurance sector”.  He also intends to keep “key” personnel.

Gerling was put into run-off late last year by its ailing German parent, taking an important player out of the Australian market. Mr Wedgwood said in a statement (he didn’t return calls from Sunrise Exchange News) that “without the acquisition Gerling (Australia) would have continued in a managed run-off by its parent and the assets would have ultimately been repatriated to Germany”.

Mr Wedgwood is founder and CEO of 20-year-old local financial risk insurer Asset Underwriting, which owns AssetInsure with New York-based investment bank Babcock & Brown. B&B specialises in “acquiring, managing, structuring and arranging financing for a target spectrum of big ticket assets, projects and other opportunities around the world”.

Mr Wedgwood is confident the injection of additional capital to the local market will be welcomed. “There is a need for additional capacity in the market that has struggled to fill the void left by the collapse of HIH,” he said.