Bermuda-based specialty property and casualty insurance and reinsurance firm Endurance Specialty Holdings Ltd. has now received all the required regulatory approvals for its purchase of fellow Bermudian re/insurer Montpelier Re and the transaction completes today.
Based on other recent reinsurance M&A activity the Endurance acquisition of Montpelier Re has been a quiet one, journalists everywhere will thank the pair for that. Behind the scenes, of course, integration work has been ongoing as the pair bring their business units together and the legal approvals have all been sought.
Now, Endurance has the final required regulatory approvals in place to acquire Montpelier Re and the transaction is scheduled to close later today, 31st July.
With the acquisition of Montpelier Re, Endurance gains access to a property catastrophe reinsurance business with a specialist focus on mid-sized U.S. accounts, an established Lloyd’s of London platform as well as, of course, an introduction to third-party capital management and insurance-linked securities (ILS) with Blue Capital Management.
The established insurance-linked securities (ILS) investment platform and collateralized reinsurance operation, Blue Capital Management, will offer Endurance a London stock exchange listed reinsurance fund, a New York stock exchange listed collateralized reinsurer as well as open-ended funds, managed accounts and private sidecars.
Once the acquisition is complete, Blue Capital Management will be part of a much larger and more diverse platform, with access to new risks and opportunities to channel them to third-party investors. The pairing of Endurance’s specialty operations and Blue Capital’s insurance-linked investment operations could be compelling for investors seeking out a different ILS opportunity.
Blue Capital will add additional flexibility to the larger Endurance’s capital base, offering both retrocessional opportunities as well as the chance to leverage third-party, efficient capital as a complement to its balance-sheet.
Leveraging the third-party capital as a companion for underwriting, or retro-ceding portfolios directly to it, the end results is Endurance plus ILS capital, which should enable the reinsurer to perhaps take a larger stake of some of the markets where ILS has begun to take an increasing share.
It will be interesting to see how the newly enlarged Endurance, with its Lloyd’s and third-party capital platforms, puts those assets to work in the next round of reinsurance renewals.