Ariel Re targets growth with upsized Berkshire Hathaway backing

Ariel Re, the Bermuda-headquartered international reinsurance company, has announced an upsized commitment from Warren Buffett’s giant conglomerate Berkshire Hathaway, with an investment and quota share arrangement expected to drive further growth.

Ariel Re was taken private from former owner Argo Group in a late 2020 transaction involving major private equity investors Pelican Ventures and J.C. Flowers.

The reinsurance firm already had a strategic arrangement in place with Berkshire Hathaway Inc.’s wholly-owned subsidiary, National Indemnity Company (NICO), but now that has been expanded with a view to supporting continued expansion and growth.

Ariel Re has entered into two transactions with Berkshire Hathaway’s NICO, an investment in newly issued Ariel Re Convertible Notes and an extension of NICO’s underwriting commitment to Ariel Re’s Syndicate 1910, through a multi-year quota share reinsurance agreement.

This provides both working capital and reinsurance capital support, helping Ariel Re to enhance its strategic importance in the global reinsurance marketplace and ramping up its profile in front of major clients.

“This long-term strategic partnership with the Berkshire Hathaway Reinsurance Division will add tremendous value to Ariel Re and our ability to continue investing, innovating and enhancing our client product solutions and services,” explained Jim Stanard, Chairman of Ariel Re. “We plan for Berkshire Hathaway to be our long-term, cornerstone strategic partner as we build and expand Ariel Re’s underwriting capacity with other high-quality, long-term partners.”

Eric Rahe, Managing Director and Co-President of J.C. Flowers & Co., also said, “We are extremely pleased to have a partner of Berkshire Hathaway’s caliber and reinsurance insight endorse the Ariel Re team.”

“We have welcomed the opportunity to work with the Berkshire Hathaway Reinsurance Division team over this past year as a key partner and capital provider,” Ryan Mather, Ariel Re’s Chief Executive Officer said. “Their insights on global macro trends and creative solutions have been very valuable to us and we look forward to working with them for years to come.”

Ariel Re is well-known to leverage external sources of capital and capacity, including its work with third-party reinsurance capital that supports its underwriting, as well as its increasing use of catastrophe bonds for retrocessional support.

Adding a major capital partner in Berkshire Hathaway adds gravitas and weight to the company, which will help it as it pursues its mission to become a premier reinsurance provider.