XL sharpens its focus on third party capital

XL and Stone Point have moved to establish a Bermuda-based ILS and convergence market investment manager.

XL will own a 75 percent stake in the new entity, Stone Point 25 percent.  The company will focus upon ILS and index-based investments as well as acting on behalf of XL-designed traditional reinsurance products. The entity will be backed $135 million of capital from XL and Stone Point, as well as third party capital.

Commenting on the move Mike McGavick said: “Given the combined strength of XL’s 20-plus years of world-class reinsurance underwriting expertise and Stone Point’s proven track record of investment success in the insurance and reinsurance sectors, this initiative fits perfectly with XL’s continuing objective to offer innovative products to our clients and enhance profitability and long term value for shareholders.”

XL and Stone Point are evidently anticipating continued strong interest in the convergence space, with both parties set to leverage existing intellectual capital to deliver superior returns. The move is the latest of a host of ventures into the third party space by Bermuda players who are increasingly playing the role of both facilitator and underwriter within the convergence space.