Hudson Structured exits Compre investment as Cinven & BCI acquire legacy specialist

Hudson Structured Capital Management, the investment manager with a reinsurance and insurance-linked securities (ILS) focus, has exited one of its legacy, or run-off sector investments, as specialist Compre has been acquired by private equity firm Cinven and pension benefits investment manager the British Columbia Investment Management Corporation (BCI), providing an exit opportunity.

As we’d previously written about, Hudson Structured had made a £23.2 million investment in Cambridge Topco Limited, an entity owned by UK private equity investor CBPE Capital Ltd. which invested in and acquired Compre back in 2015.

Through a fund entity named HS Santanoni LP, Hudson Structured entered into a subscription agreement with a subsidiary of Cambridge Topco to provide additional capital amounting to £23.2 million for use in the Compre business.

This became a third legacy, or run-off sector investment made by Hudson Structured that we knew about, after the company had participated as a lead investor in a $45.5 million private debt transaction issued for Catalina in 2017 and made a $20 million equity investment in specialist non-life insurance and reinsurance legacy investor and program manager Randall & Quilter (R&Q) Investment Holdings in April 2020.

Now, Hudson Structured has had an opportunity for what is presumably a profitable exit from its holdings in Compre, after the legacy player announced its acquisition today.

Compre said today that Cinven and British Columbia Investment Management Corporation (BCI) have agreed to acquire the business from its existing shareholders CBPE Capital LLP (CBPE), Hudson Structured Capital Management Limited and Compre’s management.

Cinven and BCI both confirm their own appetites for insurance and reinsurance investments, which have been evident before, and will become Compre’s majority shareholders alongside its management team (who remain minority shareholders) led by CEO Will Bridger.

The investors will provide the additional capital required to meet Compre’s ambitious growth plans, the company said today.

Compre CEO Will Bridger commented on the news, “I am delighted to announce that Compre will be working with Cinven and BCI as our new majority shareholders to realise our ambitious plans for the future. Compre has a long history in the legacy market built on a client-centric approach that sets us apart. Our reputation for providing bespoke solutions to our clients and for delivering shareholder value has enabled us to establish a company with tremendous potential that I am privileged to lead. My thanks to the CBPE team for their support since 2015.

“In Cinven and BCI, we have partners that share our values and ethos, and our approach to achieving sustainable growth over the long-term. I very much look forward to working with them and leading Compre in what promises to be an exciting time for our business.”

Luigi Sbrozzi, Partner of Cinven, added, “Cinven is delighted to be investing in Compre alongside BCI. Over the last 30 years Compre has built a proven platform in the highly specialised insurance and reinsurance run-off market, and a reputation amongst its clients for consistently creating and realising value. Compre is extremely well placed to access new growth markets, such as the US and Lloyd’s, and to broaden its client offering further. We look forward to working with Compre’s management team to deliver these growth opportunities, drawing on the deep expertise of the Cinven team in the insurance sector.”

Jim Pittman, Executive Vice President & Global Head, Private Equity, BCI, also said, “We are impressed by the quality of the platform built by Will Bridger and his team and are excited to partner alongside Cinven to support the continued growth of the business. BCI’s investment in Compre follows as a result of our proactive, sector focused origination strategy and relationship building efforts with the company. We look forward to supporting Compre in its development and in turn providing attractive and stable long-term risk-adjusted returns for our pension plan and insurance fund clients.”

Cinven and BCI said that acquiring Compre is seen as an attractive investment opportunity as it has a “high-quality, cash and capital-generative business model, that delivers highly predictable long-term profits, with significant downside protection.”

The investors also cited Compre’s strong and established market position in Europe, as well as its growth and expansion into the U.S. market, in particular through its Bermuda legacy reinsurance platform.

In addition, they noted Compre’s ambitions to enter Lloyd’s, to provide another source of access to risk and the potential to capitalise on the growing need for legacy solutions across the marketplace.

Compre CEO Bridger further explained, “This has been a historic year for Compre. We completed our first US transaction, launched our Bermudian reinsurer and now, subject to regulatory approval, have new shareholders supporting further growth of the business. This was made possible through the commitment of everyone at Compre and our drive and determination for what we do. The legacy market is on an exciting trajectory and, together with our new shareholders, we will be best placed to deliver the ambitious plan we have for Compre.”

The legacy sector has been seen as particularly attractive in the last year and looking ahead perhaps even more so, given some of the opportunities likely to arise in current market conditions.

Hudson Structured may have bought into Compre at a particularly opportune time, given the development of the legacy market this year and also of Compre’s business over recent months, meaning its investment is almost certain to have turned an attractive profit for the investment manager and the investors in its reinsurance funds.