Dan Loeb’s Third Point has filed for an initial public offering. The papers were filed with the Securities and Exchange Commission today. Third Point Reinsurance Ltd. said it would apply to list common shares on the New York Stock Exchange using the symbol TPRE. Loeb was said to be considering an IPO for his firm’s reinsurance arm in May.
Filing indicates details about the iPO
At this point the filing has little information other than the company name, the exchange it intends to list on and the ticker symbol it intends to use. It also lists the proposed maximum offering price as being $250 million and indicates that the lead firms in the listing are JPMorgan Chase & Co. (NYSE:JPM), Credit Suisse Group AG (NYSE:CS) and Morgan Stanley (NYSE:MS). Of course that maximum amount could change because it is just a placeholder amount used to calculate fees.
Most of the reinsurance arms assets are managed by his hedge fund. According to the filing, money raised through the offering will used to “increase underwriting capacity in order to support the growth of our reinsurance premium writings.”
Walter Schloss isn’t a name many investors will have heard today. Schloss was one of the great value investors who trained under Benjamin Graham and specialized in finding cheap stocks. His track record was outstanding. In Warren Buffett’s 1984 essay, the Super Investors of Graham-and-Doddsville, he noted that between 1956 and 1984, Schloss’s firm returned Read More
History of Loeb’s Third Point reinsurance arm
Dan Loeb started the reinsurance arm of his hedge fund in 2011 with $750 million. A number of other hedge funds also have reinsurance arms. For example, David Einhorn’s Greenlight Capital also has a reinsurance arm of its own, which was set up in 2004. Greenlight’s reinsurance arm had its IPO in 2007.
Reinsurance firms are insurers for insurance companies. Many hedge funds are starting to see the reinsurance business as a good financial bet as natural disasters have been taking their toll on the insurance industry. Reinsurers are a necessity in today’s financial climate where just a single major event has been known to completely wipe out insurance companies.
We should hear more about the IPO after the filing is approved by regulators.