Hedge fund style reinsurer Till Capital seeking to buy Omega Insurance

by Artemis on July 29, 2014

Bermuda domiciled hedge fund style reinsurance and hybrid investment platform Till Capital Ltd., the parent company of reinsurer Resource Re, is seeking to buy Omega Insurance Holdings, Inc. (“Omega”), a Toronto-based insurance provider.

Till Capital emerged after Resource Re Ltd., the first asset manager backed reinsurance firm to join the Multi-Strat Re Ltd., was acquired by Americas Bullion Royalty Corp. The newly combined group changed its name to Till Capital and set out on a mission to operate a reinsurance business with a diversified, hybrid investment strategy on the back-end.

Primarily, Till Capital is in the reinsurance business which gives the firm access to reinsurance premiums, or float, which it then invests in strategies with an emphasis on natural resources. The firm also acquired Kudu Partners, L.P., the hedge fund managed by investor Bill Lupien and investor of Resource Re’s assets, as well as more recently purchasing 10% of alternative asset manager Courant Capital Management LLC.

Now, Till Capital is seeking to add an insurance business in Omega Insurance to its stable of companies. Omega Insurance, which has $40m in assets, offers run-off solutions for Canadian insurance and reinsurance business exiting the market as well as customised insurance, fronting arrangements for those wanting to access the Canadian market and other solutions.

Till Capital has entered into a letter of intent with Omega Insurance Holdings, Inc. and its shareholders, proposing to acquire all of the issued and outstanding shares of Omega and some subsidiaries.

“We are enthusiastic about this accretive transaction which adds the portfolio of Omega’s existing policies and management expertise. The transaction provides us with enhanced capacity to support our future reinsurance operations while continuing to provide outsourced services for foreign insurance carriers in Canada,” commented William M. Sheriff, Till Capital Chairman and CEO. “I look forward to working with Phil Cook who will lead the expansion of Till’s insurance activities. His decades of experience along with his established staff will be valuable additions to our team.”

Phil Cook, Chief Executive Officer of Omega commented; “We look forward to working with Till Capital as we enter the next phase of Omega’s development. Till’s international footprint, along with a proven track record of successful investment strategies, will enable our combined organizations to achieve our corporate objectives while continuing to serve the needs of our policyholders and other stakeholders.”

If the acquisition goes ahead, Omega will become a wholly owned subsidiary of Till Capital and its CEO and CFO will remain in place to manage the business under the Till Capital group.

It’s another interesting acquisition for the Till Capital and Resource Re group. Till Capital operates as a diversified holding company, primarily engaged in reinsurance, supported by its investments in royalties and equity holdings in the resource sector. The premium float generated by reinsurer Resource Re has been the firms main source of assets for investing.

With the addition of Omega Insurance, if the deal is completed, Till Capital will access another source of premium float, particularly from the run-off business it engages in. Run-off business is certainly the kind of long-term capital that Till Capital will want to access in order to invest in its resource focused strategies.

Till Capital remains one of the most interesting emerging hybrid reinsurance-investment business models around, leveraging reinsurance business with a hedge fund style asset side as part of a diversified investment focused holding company. With the addition of an insurance business and run-off, the assets available to manage should grow, increasing the potential upside for its investors.

We expect to see more innovation like this in the reinsurance business, as investors and investment managers find ways to leverage insurance and reinsurance as a source of capital for their investment strategies.

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