Catalina Holdings (Bermuda) Ltd is set to add to its run-off portfolio after agreeing to acquire a British subsidiary of Allianz.

The Bermudian firm said its subsidiary, Catalina Holdings UK Ltd, had signed an agreement to acquire AGF Insurance Ltd from AGF Holdings (UK) Ltd.

The terms of the deal were not disclosed. Catalina said it would finance the deal from available resources.

AGF is a UK regulated insurance company incorporated in 1960. It wrote predominantly direct Employers and Public liability insurance in the UK. It ceased writing new business and went into run-off in 1999.

At the end of last year, AGF had total assets of £270 million ($389 million), undiscounted gross reserves of £185 million ($266 million), and pro-forma shareholder equity of £79 million (US$113 million).

Catalina said its total assets, as of December 31, 2015, pro forma for this acquisition, were $3.2 billion.

The transaction, which is expected to close in the third quarter of this year, is subject to approval by the Prudential Regulation Authority, the British insurance regulator.

Chris Fagan, chairman and chief executive officer of Catalina, said: “AGF will be Catalina’s first significant acquisition of UK Employers Liability legacy risk.

“We have been developing our expertise in this class of business over several years and retain an appetite to acquire more of this class and related legacy risk.

“Catalina’s business model combines active asset and liability management with low operating costs and a competitive cost of capital.”

Mr Fagan explained how the capital requirements of the European Union’s new Solvency II insurance regulations were stimulating deal activity in the run-off sector.

“This is attracting an increasing number of portfolios and acquisition in Europe and the US as reinsurers seek to release capital or improve the efficiency of their legacy liabilities.

“Solvency II has had an increasing impact in the build up to its implementation in January this year.”

Since it was founded in 2005, Catalina has acquired or reinsured more than $3.9 billion of non-life insurance and reinsurance liabilities in run-off.

Its major shareholders include funds managed by Apollo Global Management, Ontario Teachers’ Pension Plan and Caisse de depot et placement du Quebec.

Catalina has offices in Bermuda, Denver, Dublin, Hartford, London, New York and Pfaffikon, Switzerland, and employs more than 140 people.