Fosun International Limited is taking steps to increase the contribution of insurance and reinsurance to its business, bidding to buy the rest of re/insurer Ironshore as it seeks to become an insurance-oriented investment group.
Fosun, the privately owned global investment and asset management conglomerate, wants to follow a Warren Buffett styled approach to business, by making insurance and reinsurance a key part of its overall investment group.
The investment group already holds 20% of Ironshore, having bought the stake for $464m in mid-2014, but the firm wants to take control of the business and has today made an offer to buy the remaining 80% for approximately $1.84 billion.
Ironshore is a strategically sound acquisition for Fosun given the diverse platform that the insurer would offer to the purchaser. Ironshore has operations across the U.S., in Bermuda, Europe as well as at Lloyd’s of London.
The purchase would give Fosun access to a diverse range of specialty property and casualty commercial insurance risks, including specialty property business, a managing agent and access to Lloyd’s with Pembroke and the Bermuda operation which specialises in property risks such as wind and quake covers.
With Ironshore, Fosun will gain access to many markets it already has a stake in, but as sole owner of Ironshore the firm would perhaps be able to expand the business more rapidly, which would accelerate its path to growing the float and becoming an insurance driven investment organisation.
Fosun wants to increase the profit contribution that insurance makes to the organisation, but at the same time to put the assets of the insurance business to work within its investment conglomerate, as it seeks to invest the float in the Berkshire Hathaway or hedge fund reinsurer way.
“The outstanding investment capability of the Group will effectively facilitate Ironshore in managing its total assets amounting to USD6,699.92 million,” Fosun explained in its announcement.
“This Acquisition will bring synergies for both parties in prevention of currency risks, expansion of assets allocation and cooperation in reinsurance business.”
Fosun clearly understand the model that has made Warren Buffett so successful and looks set to try to accumulate premium float in the Buffett way to boost its investments and stimulate growth. Ironshore looks like a smart buy for the firm.