Ariel Re, a reinsurance unit of Argo Group, is to be acquired by private equity investors and former CEO Ryan Mather will return to run the company, with a focus on leveraging traditional and alternative capital, as well as a property catastrophe leaning.
The acquisition is being sealed in a deal led by Pelican Ventures, an investment company launched by the RenaissanceRe founder Jim Stannard alongside catastrophe modeling pioneer Jayant Khadilkar and others, alongside private equity buyout giant J.C. Flowers & Co.
Pelican Ventures and J.C. Flowers have also agreed terms for an operational partnership with Apollo Syndicate Management Limited to further develop its special purpose arrangement SPA 6133.
This Lloyd’s vehicle is focused on property catastrophe reinsurance into which Pelican Ventures and J.C. Flowers will provide additional capital, operational support and distribution.
Ryan Mather, Ariel Re’s former CEO, return to the company to run the business and will also oversee underwriting for both the Apollo SPA and also Ariel Re’s own Lloyd’s Syndicate 1910.
“Our vision is to make Ariel Re the premier manager of reinsurance risk,” explained Mather. “Our ability to act independently will enable us to provide greater value to customers, bring fresh capital to the marketplace and enable third-party capital providers to benefit from our team’s industry expertise.
“Pairing Ariel Re with SPA 6133 will create significant growth and economies of scale for our franchise, allowing us to be more efficient for our capital providers and effective to our clients. We will continue to work closely with our clients and business partners to offer solutions in these challenging markets.”
Stanard will take on the position of Ariel’s non-executive Chairman, while Khadilkar will act as a special advisor focusing on modeling, analytics and technology.
“Pelican Ventures is excited to be investing in Ariel Re and SPA 6133 and bringing together talented professionals with unparalleled reinsurance market underwriting expertise and risk management analysis skills. With the financial strength and insights of our new ownership group and under the leadership of Ryan Mather, we will pursue our ambition of building a world-class manager of reinsurance risk,” explained Stanard.
Eric Rahe, Managing Director of J.C. Flowers, also said, “We look forward to partnering with Jim, Ryan, Jayant and the rest of the Ariel Re team to continue to build on its outstanding track record and take advantage of the exciting opportunities in the P&C market today.”
Argo CEO Kevin J. Rehnberg commented on the sale, “Ariel Re is well known in the reinsurance market, and we are confident the business will thrive as part of Pelican Ventures.
“Argo Group will continue to focus on specialty insurance lines of business that we expect will result in profitable growth and improved shareholder value,” Rehnberg said. “This transaction aligns with our strategy to simplify the business and streamline operations.”
Ariel Re has leveraged the capital markets within its underwriting for some years now, both through private quota share or sidecar arrangements and other structures.
It appears the company has plans to make use of third-party capital to boost its own reinsurance underwriting capacity, which with the backing of experienced industry executives and plenty of balance-sheet capital from these private equity investors should make for an interesting proposition at the renewals and beyond.