Mitsui takes stake in ILS manager New Ocean, invests $100m in funds

by Artemis on October 21, 2016

Japanese conglomerate Mitsui & Co., Ltd. has completed the recent acquisition of a 15% stake in Bermuda domiciled ILS and reinsurance linked asset manager New Ocean Capital Management Limited (New Ocean) and has made a $100 million commitment to the managers funds.

Demonstrating its appetite to enter the ILS space and access reinsurance linked returns, Mitsui has taken a 15% stake in New Ocean, having previously had an investment in New Ocean’s ILS funds.

According to Mitsui, the firm had agreed to acquire 15% of the shares of New Ocean Capital Management Limited from existing shareholders and the acquisition of these shares has recently completed. New Ocean was originally formed in 2013 by global insurance and reinsurance group XL Group Ltd. and private equity specialist Stone Point Capital (SPC).

This gives Mitsui a stake in a growing ILS and reinsurance linked asset management business as a time when Japanese financial services groups are increasingly seeking to diversify more broadly into insurance and reinsurance markets.

As well as taking the 15% stake in the New Ocean management company itself, Mitsui has demonstrated its commitment to the partnership by making a $100 million commitment to New Ocean’s ILS and reinsurance investment funds.

Chris McKeown, CEO of New Ocean, commented on the announcement; “We are delighted to welcome Mitsui as an investor and owner. Mitsui has invested with New Ocean since 2014, and the substantial commitment to our strategies as well as their ownership stake is validation of New Ocean’s unique platform. Mitsui’s commitment to New Ocean provides the ability to draw investor capital, over time, at key renewal dates in the reinsurance calendar, as opportunities present themselves. Mitsui is a bellwether investor with substantial global relations and reach, which we anticipate will bring substantial value to the continued growth of our business.”

This $100 million investment in New Ocean’s funds includes $21 million that Mitsui had already invested in funds managed by New Ocean which will be rolled over. The investment including the additional $79 million will be made during the second half of Mitsui’s fiscal year ending March 2017, through the fiscal year ending March 2018.

New Ocean said that this investment into its private fund platform will be on a multi-year basis, and that the relationship with Mitsui will endeavor to source additional capital by 2020.

Mitsui explained that; “By expanding the New Ocean Capital Management business in partnership with XL and SPC, will offer extra capacity for catastrophic risk to primary insurance companies.”

The arrangement is also going to expand New Ocean’s reach, providing it a platform into Japan where institutional investors are already familiar with ILS funds and reinsurance linked investing.

Mitsui group has an alternative investments subsidiary, Japan Alternative Investment Co., Ltd., and the firm plans to start the sales of funds managed by New Ocean to Japanese investors, broadening its range of alternative investment opportunities.

Craig Wenzel, Head of Alternative Capital at XL, said; “Mitsui’s increased investment in New Ocean reflects the growth and development of the New Ocean platform and it’s gratifying to see such a high caliber corporate investor join the New Ocean family. New Ocean is a cornerstone to XL’s long-term commitment to alternative capital, which will increasingly become more relevant in our business going forward.”

Takashi Nakai, General Manager of Insurance Business Department at Mitsui, added; “We are very excited to increase our investment with New Ocean and partnering with XL, Stone Point, and Management, to help New Ocean grow. We decided to grow our affiliation with New Ocean due to the experience and expertise of its investment team led by Chris McKeown, and its differentiated access to risk, which combines market-facing capabilities with an affiliation with XL and its substantial distribution network. At Mitsui, we are committed to building long-term businesses that will benefit Mitsui and other investors over time. For this reason, we are pleased to join New Ocean as a strategic investor, at a time when we believe ILS / reinsurance will become more appealing to institutional investors in Japan, and across the globe.”

Getting a new anchor investor with the scale and reach of Mitsui onboard will assist New Ocean as it expands further and looks to new territories to bring additional investment inflows into its funds.

The relationship with Mitsui will provide additional working capital, investment capital to grow the funds and access to distribution, as well as a closer relationship with a group with around $96 billion of assets and a diverse business platform, including major shareholders from the financial services and insurance business.

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