Third Point Re and Sirius International Insurance Group, both based on Bermuda, have revealed they will merge in a $788 million deal that will create a $3.3 billion company.
The new venture will be renamed SiriusPoint and run by Siddhartha (Sid) Sankaran, who takes the reins as chairman and chief executive. Kip Oberting, Sirius Group's president and CEO, will step down. Third Point Re's current CEO, Dan Malloy, will remain a senior underwriting executive of SiriusPoint.
The deal had been in the pipeline for several months. Sirius launched a process to find a buyer in March this year following concerns last year that its majority owner, China Minsheng Investment Group (CMIG), was facing liquidity issues.
For Third Point Re, backed by US hedge-fund manager Daniel Loeb, this represent an opportunity to add scale to the business and cement a global, diversified footprint.
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 Loeb, CEO of Third Point and 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.
Sankaran, who will take the reins of the venture, has been a member of Third Point Re's board since August 2019. He is also currently the CFO of Oscar Health, and previously served as CFO and chief risk officer of American International Group.
The SiriusPoint Board of Directors will comprise the current Third Point Re Board at the time of closing, with the addition of two new board members: Rachelle Keller from Sirius Group and Peter W. H. Tan from CM Bermuda, Sirius Group's current majority shareholder, and an affiliate of CMIG International Holding.
In addition, Third Point Re's former lead independent director, Steven Fass, will join the company as vice chairman. Fass is also a former CEO of Sirius Group.
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."
Loeb said: "This transaction fulfills 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."
Meyer (Sandy) Frucher, non-executive chairman of the Board of Sirius Group, said: "This strategic business combination is the result of a lot of hard work and the collaborative efforts of the Sirius Group Board, management team and CMIH and is a win-win for both Sirius Group and Third Point Re. I would especially like to acknowledge and thank Kip Oberting and Gene Boxer for their dedication and tireless efforts to ensure the successful resolution and conclusion of the firm's strategic review process."
Tan, Chairman of CMIG International Holding, said: "We think this is a terrific outcome that leaves a better, stronger competitor in the market. We are proud to continue as investors."
Sirius, Third Point, Mergers & Acquisitions, Insurance, Reinsurance, , SiriusPoint, Siddhartha (Sid) Sankaran, Dan Malloy, Bermuda, North America