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Amid mixed commentary about market conditions from some of Third Point Reinsurance Ltd.'s peers, it might seem like an odd time for the reinsurance sector's first sizable U.S. initial public offering in six years. But Bermuda-based Third Point Re is not a typical reinsurance company.
Substantially all the investible assets of the reinsurer, which was formed in October 2011 and initially capitalized in December 2011, are managed by Third Point LLC. The company is led by Chairman, CEO and Chief Underwriting Officer John Berger, a three-decade veteran of the insurance industry who previously served as Alterra Capital Holdings Ltd.'s CEO.
"Third Point Re is an investment idea that we've been pursuing for years," Third Point LLC founder and CEO Daniel Loeb said during a recent road-show presentation. "We wanted to combine world-class underwriting with our investment team."
Loeb said finding the right insurance executives had been key to the strategy, and in Berger, Third Point LLC found its aspirational leader. Third Point Re attracted early investments from what the company described as aligned sponsors, including Loeb and his affiliates, Dowling Capital Management LLC, affiliates of Kelso & Co. and Pine Brook Road Partners LLC, and members of management and various other parties.
Third Point LLC will hold Third Point Re's investments in a separate account, but it will essentially manage them on a pari passu basis with its hedge funds. Third Point Re will pay the standard 2% management fee and 20% performance allocation to Third Point LLC in an exclusive relationship with an initial term that runs through 2016.
"It's our money in our account," Berger emphasized during the road show.
From an underwriting perspective, Berger said the reinsurer possesses a deep management bench that will pursue a disciplined and opportunistic approach, focusing on building a reinsurance portfolio that can produce stable underwriting results over time. The company possesses the ability and the capital to "take advantage of...