According to a Wall Street Journal article, prolific Bermudian reinsurance firm and third-party capital manager RenaissanceRe is coming under pressure from an activist investor to put itself up for sale.
Long time shareholder TimesSquare Capital wants RenaissanceRe to initiate a sales process for the reinsurance firm, with the WSJ reporting this call could come in the form of a letter as early as today.
The report says that TimesSquare Capital Management LLC believes RenaissanceRe’s shares are undervalued and that given the recent flurry of reinsurance mergers & acquisitions dealmaking, the firm should look to capitalise on that by achieving a premium for them in a sale.
RenRe would likely attract a lot of interest, given its deep underwriting expertise, diversification since the acquisition of Platinum, leading position in catastrophe risk, longstanding relationships with third-party investors and access to alternative reinsurance capital.
TimesSquare Capital, which has over $19 billion in assets, owns around 2% of RenRe’s shares, the WSJ article states. Sources told the WSJ that the investor may take action imminently to pressure the reinsurance firm to look for a sale.
It’s certain that RenRe would achieve a significant premium if it did come up for sale, given the value of its franchise.
It is one of the best established managers of third-party capital in the reinsurance industry, with the ability to leverage the capital markets to support its underwriting and add efficiency to its capital already in place, something other re/insurers are striving to achieve.
At this stage this remains rumours, but as ever rumours have a funny habit of becoming reality very quickly at this stage in the market cycle.
