Third Point Reinsurance Ltd, a property and casualty insurer and a subsidiary of Third Point LLC, the hedge fund headed by Daniel Loeb aims to raise as much as $370.55 million from its initial public offering (IPO).
Based on its Form S1 filing with the Securities and Exchange Commission (SEC) on Monday, August 5, 2013, Third Point Reinsurance is planning to sell 22.22 million shares and its initial offering price is in the range of $12.50 to $14.50 per share. The reinsurance company said it will be trading under the ticker symbol TPRE on the NYSE.
Third Point Reinsurance plans to sell 21, 524, 492 shares, and shareholders are planning to sell additional 697, 730 shares during the offering. According to the company, it will not receive proceeds from the selling shareholders.
Third Point Reinsurance underwriters
Primary underwriters for the IPO include JP Morgan Chase & Company (NYSE:JPM), Bank of America Corp (NYSE:BAC) Merrill Lynch, Credit Suisse AG (NYSE:CS), Morgan Stanley (NYSE:MS), and Citigroup Inc (NYSE:C). Other underwriters also include Aon Benfield Securities Inc, Macquarie Capital, Dowling and Partners Securities LLC, Keefe, Bruyette, & Woods, and Sandler O’Neill + Partners L.P. According to Third Point Reinsurance, the underwriters may acquire up to 3.33 million shares with the IPO price minus underwriting discounts and commissions.
The market value of Third Point Reinsurance based on the mid-point of its offering price will be approximately $1.4 billion. This is a substantial increase from 2011 when the company had $784.3 million worth of equity.
Third Point Reinsurance owns its investments, which are held in a separate account. Third Point LLC is responsible in managing the investable assets.
Third Point Reinsurance performance
Last year, Third Point Reinsurance reported $99.4 net income, which represents 13% return on equity to shareholders. According to the company, its gross premiums for 2012 were $190.4 million and for the first six months of the current fiscal year were $194.2 million. Total earned premiums in 2012 and first half of 2013 were $96.5 million and 95.8 million, respectively, and investment income for the same periods were 136.4 million and $112.8 million, respectively.
The combined ratio for property and casualty was 129.7% last year. Third Point Reinsurance incurred $10 million underwriting loss in its crop business unit; the loss was due to the impact of severe drought in most of the farm belt in the United States in 2012.
“Our reinsurance strategy is to build a reinsurance portfolio that generates stable underwriting profits, with margins commensurate with the amount of risk assumed, by opportunistically targeting sub-sectors of the market and specific situations where reinsurance capacity and alternatives may be constrained. Our management team has differentiated expertise that allows us to identify profitable reinsurance opportunities. The level of volatility in our reinsurance portfolio will be determined by market conditions but will typically be lower than that of most other reinsurance companies,” according to Third Point Reinsurance.