Congratulations to Bermudian reinsurer and third-party capital manager RenaissanceRe on becoming the first to complete an acquisition in the recent wave of mergers in the challenging reinsurance market.
The acquisition of Platinum Underwriters Holdings is completed and becomes effective today for RenaissanceRe. Platinum is now a wholly owned subsidiary of RenRe and the integration work on merging the two books of reinsurance business, as well as rationalising the combined firm and workforce can being in earnest.
All the necessary regulatory approvals were received recently and the final hurdle of the approval of Platinum shareholders was received last week.
So Platinum Underwriters Holdings is no more. The firms shares will stop trading today and the shareholders will receive RenRe shares, or have cashed out whichever they elected to do based on the acquisition.
Now the difficult work begins, of merging the two underwriting books while attempting to extract as much efficiency from this acquisition as possible for RenRe. How much of Platinum remains at the end is debatable, it seems likely that the book can be assumed without needing to vastly expand the RenRe cost-base and headcount.
It will be interesting to watch how this influences RenRe’s decisions to share business with third-party investors through its insurance-linked securities (ILS) operations. The property catastrophe portion of the Platinum book would make a very good fit for some of RenRe’s joint ventures or ILS fund operations.
The other side of the Platinum book provides RenRe with greater diversification and here it is likely that staff will need to be retained in order to transition and manage the casualty business effectively.
It will be some time before it can be said whether the acquisition has been successful, but one thing is certain, RenaissanceRe is now a larger reinsurance firm and it will realise efficiencies due to this acquisition of Platinum which might just position it to perform better than others who have yet to take this step.
Also read: Can M&A help reinsurance capital to be as low-cost & efficient as ILS?
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