Third Point Re IPO raises some $276m
Third Point Reinsurance has priced its initial public offering (IPO) of some 22.1 million common shares at $12.50 per share – at the lower end of the proposed end – raising some $276 million.
The IPO by the reinsurance company started by hedge-fund specialist Dan Loeb has been eagerly anticipated by the reinsurance industry. Against a backdrop of a rapidly growing alternative capital base, the deal was viewed by many as a litmus test of the attractiveness of the sector to equity investors.
The fact it priced at the bottom of the range could indicate appetite was not as healthy as anticipated. The company, which uses Loeb’s Third Point LLC to oversee its investment portfolio, has said its investment strategy sets it apart from its peers by deploying capital in both long and short investments across select asset classes, sectors and geographies.
Third Point Reinsurance was incorporated in October 2011 initially raising $784.3 million in equity capital. It began as an underwriter in 2012. The business has been led by John Berger, the former chairman of Alterra Capital Holdings.
According to the company’s original filing, the company intends to increase its geographic exposure by adding reinsurance programmes from European, Asian and South American clients, though a majority of its business will continue to be from the US.
For the year ended December 31, 2012, the company generated net income of $99.4 million, which represented a return on beginning shareholders’ equity attributable to shareholders as of December 31, 2011 of 13 percent.
In 2012, its combined ratio for its property/casualty reinsurance segment was 135.5 percent, reflecting the impact of high general and administrative expenses relative to earned premiums due to the start-up nature of its business, it said.
The offering was made through JP Morgan, Credit Suisse, Morgan Stanley, BofA Merrill Lynch, Citigroup, Aon Benfield Securities, Dowling & Partners Securities LLC, Keefe, Bruyette & Woods, Macquarie Capital, and Sandler O’Neill + Partners.
