Specialty reinsurer Third Point Reinsurance (Third Point Re), and re/insurance group Sirius International Insurance, (Sirius), have today announced they have entered into a definitive agreement for Third Point Re and Sirius Group to combine in a cash and stock transaction.
The deal, valued at $788 million on current share values will create a global company with approximately $3.3 billion of tangible capital, to be renamed SiriusPoint Ltd.
Third Point Re will finance the transaction through a combination of cash-on-hand; Third Point Re equity issued to Sirius Group shareholders; Third Point Re equity issued to Daniel S. Loeb, CEO and Chief Investment Officer of Third Point LLC, and currently Third Point Re’s largest individual shareholder, pursuant to an agreement to purchase approximately $50 million worth of SiriusPoint shares at closing; and if necessary, other debt or equity financing. The transaction is expected to be accretive to earnings per share and return on equity in year one following the close.
Third Point Re’s newly named non-executive Chairman of the Board, Siddhartha (Sid) Sankaran, will lead SiriusPoint as Chairman and Chief Executive Officer post-closing.
He has been a member of Third Point Re’s Board since August 2019, is currently the Chief Financial Officer of Oscar Health, and previously served as Chief Financial Officer and Chief Risk Officer of American International Group. Third Point Re’s current CEO, Dan Malloy, will remain a senior underwriting executive of SiriusPoint following the closing.
Mr. Sankaran said: “We are excited to create a powerful new entity that focuses on underwriting first but strives for excellence in its investment results. This transaction further strengthens our reinsurance operations and positions us to enter lines of business with higher risk-adjusted returns to achieve underwriting profitability. Combining with Sirius Group accelerates our continuing objective to deliver consistently strong book value per share growth over the long-term. Our new scale and global platform, diverse franchise, and enhanced financial profile will enable us to provide tremendous value to clients, brokers, and shareholders. I look forward to working with Sirius Group’s terrific and dedicated team.”
The deal is expected to deliver a number of benefits which include:
- Strong global presence and longstanding relationships with clients and brokers, with expanded distribution through Lloyd’s, Bermuda, and the United States
- Refocused underwriting strategies in key U.S. and European (re)insurance markets
- Superior product capabilities and relationships in Accident and Health (A&H), property, liability, and specialty lines
- Key partnerships with managing general underwriters (MGUs) for health and travel
- Financially attractive transaction for shareholders, with accretion to EPS and return on equity expected in year one following the transaction close
- Pro forma tangible capital of approximately $3.3 billion2 and pro forma LTM gross written premiums of $2.5 billion as of June 30, 2020
Third Point LLC’s founder Daniel S. Loeb said, “This transaction fulfils our vision to move Third Point Re up the quality curve by adding diversified insurance lines to our existing business, thus improving returns on capital and reducing insurance volatility, expanding our investment strategy from a single manager model to reduce investment volatility, and creating critical mass to support both internal growth and future acquisitions. I am confident that this transaction will benefit both customers and shareholders of Third Point Re and Sirius.”