Third Point Re & Sirius Group To Combine

August 7, 2020 | 0 Comments

Third Point Reinsurance Ltd. and Sirius International Insurance Group, Ltd. have “entered into a definitive agreement to combine in a cash and stock transaction.”

A spokesperson said, “Third Point Reinsurance Ltd. [Third Point Re], a specialty reinsurer, and Sirius International Insurance Group, Ltd. [Sirius Group], a global multi-line insurer and reinsurer, today announced they have entered into a definitive agreement for Third Point Re and Sirius Group to combine in a cash and stock transaction.

“The transformational transaction will create a global company with approximately $3.3 billion of tangible capital,1 to be renamed SiriusPoint Ltd. [SiriusPoint], that will be ideally positioned to pursue a range of significant expansion opportunities in the insurance and reinsurance market.

“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 Daniel S. Loeb, CEO and Chief Investment Officer of Third Point LLC, and currently 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.

“Third Point Re’s newly named non-executive Chairman of the Board, Siddhartha [Sid] Sankaran, a highly experienced insurance industry executive, will lead SiriusPoint as Chairman and Chief Executive Officer post-closing. He has been a member of Third Point Re’s Board since August 2019, is currently the Chief Financial Officer of Oscar Health, and previously served as Chief Financial Officer and Chief Risk Officer of American International Group, Inc. Third Point Re’s current CEO, Dan Malloy, will remain a senior underwriting executive of SiriusPoint following the closing.

Mr. 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.”

“New Strategic Investment Portfolio Partnership with Third Point LLC SiriusPoint will also have a reconstituted strategic partnership with Third Point LLC, under which SiriusPoint will access a range of products managed by Third Point LLC, including its flagship fund strategy, as well as new and existing fixed-income products. Third Point LLC will also help oversee SiriusPoint’s investment portfolio allocation and a diversified range of third-party traditional asset managers to drive enhanced investment returns, while remaining within traditional property/casualty reinsurance investment risk parameters.

“Mr. Sankaran will lead the combined company as Chairman and CEO. Kip Oberting, Sirius Group’s President and CEO, will be stepping down from his role at the transaction close.

“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 Limited, Sirius Group’s current majority shareholder, and an affiliate of CMIG International Holding Pte. Ltd. [together with CM Bermuda Limited, “China Minsheng Investment Group].

“In addition, Third Point Re’s former Lead Independent Director, Steven Fass, will join the company as Vice Chairman. Mr. Fass is also a former Chief Executive Officer of Sirius Group. He will work closely with Mr. Sankaran and senior members of the Sirius Group team in the integration of the businesses.”

Third Point LLC’s founder Daniel S. 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.”

Mr. Tan, Chairman of CMIG International Holding Pte. Ltd., said: “We think this is a terrific outcome that leaves a better, stronger competitor in the market. We are proud to continue as investors.”

“The agreement has been unanimously approved by both companies’ Boards of Directors. It is subject to approval by shareholders of both companies and customary regulatory approvals. Sirius Group’s majority shareholder, CM Bermuda Limited, and its parent company, CMIG International Holding Pte. Ltd., have already entered into a binding agreement to vote in favor of the merger transaction, as has Mr. Loeb, as Third Point Re’s largest individual shareholder. Both parties have agreed to a customary lock-up of their shares following the closing.

“The transaction is expected to be completed during the first quarter of 2021.

Sidley Austin LLP represented publicly traded Sirius International Insurance Group, Ltd. in its combination with Third Point Reinsurance Ltd.

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