White Mountains to acquire Lloyds of London underwriter
Insurance firm to buy majority stake in British reinsurance company
The reinsurer – based in Hanover, NH, but officially headquartered in Bermuda – bought a majority stake in Ark Insurance Holdings Ltd., the parent company of Ark Syndicate Management Limited, which underwrites about a half billion in coverage for Lloyds.
To do so, White Mountains agreed to invest as much as $800 million in the 13-year-old British company, which currently underwrites Lloyds’ 4020 and 3902 syndicates, a diversified portfolio of reinsurance and insurance policies, including property, accident and health, energy, marine and political risks. White Mountains’ investment could double Ark’s stamp capacity (gross capacity minus brokerage fees and other expenses) to over $1 billion. Lloyds stamp capacity is about $44 billion.
Under the deal, which is expected to close in January, White Mountains would start by infusing $605 million in capital and buy $41 million worth of shares from the exiting owners, resulting in a 72% ownership stake. If White Mountains chips in another $200 million, its stake would go up to 77%. Arc’s founders Ian Beaton and Nick Bonnar hold most of the rest, a 12.5% stake.
British authorities have to approve of the deal. White Mountains agreed not to compete with Lloyds and to hold on to Ark for at least five years, unless it is able to increase its value 2.5 times.
As of June 30, White Mountains had $4 billion in assets, according to its last quarterly filing. In that quarter alone, the company’s net income was $108 million.