Canadian institutions invest $500m in new insurance venture

Caisse de dépôt et placement du Québec (CDPQ) and Ontario Teachers’ Pension Plan have become founding investors in Constellation Insurance with an initial capital investment of $500 million.

Anurag Chandra, founder, chairman and CEO of Constellation, who was formerly CEO of Prosperity Life Insurance Group, said: “Constellation plans to invest in stock and mutual insurers based in North America that are seeking growth capital, stronger ratings, scale efficiencies and equity incentives while maintaining their independent management structure, brand identity, operations and entrepreneurial culture,”

Chandra said Constellation’s target market and value proposition are differentiated from other insurance platforms, which he said focus on asset accumulation or legacy block reinsurance, or have shorter term investment horizons. This incentivises expense reductions and limits investment in organic new business growth, he added.

Stephane Etroy, head of private equity at CDPQ, said: “We believe this new partnership, which allies a unique combination of expertise to a flexible investment horizon, will provide a source of competitive advantage for Constellation.”

Jane Rowe, executive managing director of equities at Ontario Teachers’, noted Charag’s distinctive and successful track record in the insurance sector including acquisitions, demutualisations, turnarounds and rehabilitations.

“As CEO of Prosperity, he built an attractive, high growth insurance platform that generated exceptional investor returns and favorable outcomes for all key stakeholders,” she added. “We expect this partnership with Constellation and CDPQ to create significant value for our stakeholders.”

CDPQ and Ontario Teachers’ are two of North America’s largest institutional investors and together manage over CA$500 billion in net assets as of June 30, 2019.