Third Point Re, the Bermuda domiciled reinsurer established with the backing of Thid Point LLC hedge fund owner Dan Loeb, has now filed the paperwork for its expected initial public offering (IPO). The IPO will see Third Point Reinsurance Ltd. seek to raise $250m, or more, in an offering of shares designed to help it grow its underwriting capacity and business.
Third Point Re announced late yesterday that it had filed a registration statement with the Securities and Exchange Commission (SEC) for a proposed initial public offering of its common shares. The documentation shows a ‘proposed maximum aggregate price’ of $250m has been set, but it wouldn’t surprise us if that grew with demand and Third Point Re said that the number of shares and price range has not yet been set, so the $250m is just a placeholder for the document for now.
The IPO for Third Point Re has been expected for a while, with rumours floating around the market since mid-2012. By offering shares to the public, Third Point Re will be able to attract another source of third-party capital into its business, which will help it grow its underwriting capacity and as a result grow the investment capital assets which is fully invested and managed by Dan Loeb’s Third Point LLC hedge fund.
The IPO features a roster of bookrunners and co-managers. J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, BofA Merrill Lynch and Citigroup Global Markets Inc are all acting as bookrunning managers for the offering. Aon Benfield Securities, Inc., Dowling & Partners Securities LLC, Keefe, Bruyette & Woods, Inc., Macquarie Capital (USA) Inc. and Sandler O’Neill + Partners, L.P. are all co-managers for the offering.
Third Point Re launched with $750m of capital, seeded by Loeb’s Third Point hedge fund. It also operates an investment management arm, Third Point Reinsurance Investment Management Ltd., a catastrophe investment fund, the Third Point Reinsurance Opportunities Fund Ltd., which it launched with a partner investment from re/insurer Hiscox and its reinsurer Third Point Re Cat Ltd.
Third Point Re reported revenues of $114.2m in the first quarter of 2013, income of $74.4m, compared to income of just over $94m in 2012. A growing focus on casualty underwriting in recent months shows that the reinsurer wants to differentiate itself from the plethora of catastrophe focused reinsurers. This may help it to attract greater interest as a more diversified investment opportunity.
The IPO will also feature some existing shareholders selling stock, which could be Loeb reducing his holding in the company to enable more third-party capital to enter the business. Current shareholder equity in Third Point Re was reported as just under $945m at the end of March this year.
The IPO filing shows that Third Point Re has ambitions to expand its underwriting reach outside the U.S., with a desire to participate in the reinsurance programs of European, Asian and South American clients in time, although they expect the U.S. to remain the core market. The Third Point Re catastrophe fund invests solely in excess of loss catastrophe reinsurance, where as the reinsurer focuses away from peak peril exposures. The SEC filing shows the catastrophe fund has $94.7m of commitments.
Third Point Re intends to list its shares on the New York Stock Exchange under a ticker symbol of ‘TPRE’. We will update you as news of the closing of this IPO becomes available.
View all of our Artemis Live video interviews and subscribe to our podcast.
All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.
Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.