The recent IPO by Third Point Reinsurance focused attention on the sentiment of equity investors towards reinsurance stocks. But despite a greater wariness and many investment alternatives, the sector remains attractive to equity investors—just not to the extent it once was.
As the first initial public offering (IPO) by a reinsurance company in quite a while, Third Point Reinsurance, the reinsurance company started by hedge-fund specialist Dan Loeb, was always going to closely watched by the investment community as a kind of litmus test of the sentiment of equity investors towards reinsurance stocks at the moment, especially in the context of so much alternative capacity pouring into the industry.
Perhaps Third Point Reinsurance should not be regarded as a typical example of a reinsurer. Its investment strategy, managed by Loeb’s Third Point LLC, sets it apart from many more conservative players. And its underwriting side, which it describes as opportunistic but disciplined, focuses on lines of business that have historically delivered stable returns.
According to the company’s IPO filing, it plans to use the IPO proceeds to add reinsurance programmes from European, Asian and South American clients, though a majority of its business will continue to be from the US.
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Third Point Insurance, IPO, investment