Third Level Re to mix with Sweden’s Sirius in $3.3bn deal

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Third Level Re, the reinsurer based by billionaire hedge fund supervisor Daniel Loeb, has agreed to mix with Swedish rival Sirius in a $3.3bn deal that seeks to mitigate capital dangers amid a possible wave of claims as a result of fallout of the coronavirus pandemic.

As a part of the cash-and-stock transaction, Mr Loeb, who’s Third Level Re’s largest particular person shareholder, has agreed to purchase $50m price of shares within the mixed entity when the deal closes.

“This transaction fulfils our imaginative and prescient to maneuver Third Level Re up the standard curve by including diversified insurance coverage traces to our current enterprise,” Mr Loeb mentioned. He added that the deal would assist increase returns on capital and would assist create “crucial mass to assist each inner progress and future acquisitions”.

The tie-up might be the primary of many within the sector, as insurance coverage executives and dealmakers anticipate coronavirus to additional expedite dealmaking plans to promote non-core enterprise models or purchase property to realize scale.

“The pandemic is intensifying the highlight on the identical structural weaknesses within the insurance coverage sector which have pushed consolidation and different M&A exercise in recent times,” mentioned David Lambert, who heads EY’s world insurance coverage transactions unit. 

Third Level Re will use a mix of money, fairness and debt, if essential, to finance the transaction. Siddhartha Sankaran, who has lately been named as non-executive chairman to Third Level Re’s board, will lead the brand new group, which will probably be renamed SiriusPoint.

Mr Sankaran was beforehand the chief monetary officer and chief threat officer on the US insurance coverage firm AIG. Kip Oberting, Sirius’s chief govt, will step down from his position.

Shareholders in Sirius can have a number of choices they will train, together with the power to obtain $9.50 per share or 0.743 of Third Level Re shares and a contingent worth proper which in two years will assure them fairness and money at a minimal of $13.73 per share. 

China Minsheng Funding Group, which is Sirius’s majority shareholder, has opted for a 3rd choice. The Shanghai-based funding group will obtain $100m in money and roughly 58m Third Level Re shares in addition to a portion of collection A desire shares, warrants and different securities. 

As a part of the settlement, Third Level Re shareholders will probably be shielded from as much as $100m of internet incremental Covid-19 associated losses at Sirius which might be incurred, in sure circumstances, for as much as three years following the closing of the deal.

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