Third Point Reinsurance Ltd. (TPRE), which counts billionaire hedge-fund manager Daniel Loeb as a founding shareholder, raised about $276 million in an initial public offering, pricing the stock at the bottom of the proposed range.
The company and existing owners sold 22.1 million shares yesterday for $12.50 each, according to data compiled by Bloomberg. Earlier it had offered 22.2 million for $12.50 to $14.50. Third Point Re is set to start trading today.
Third Point Re, which relies on Loeb’s Third Point LLC to oversee an investment portfolio valued at more than $900 million at midyear, will use proceeds from the IPO to boost underwriting capacity. Loeb’s money-management style sets Third Point Re apart from peers by diverging from the typical approach of investing mainly in fixed-income, the reinsurer said in regulatory filings.
“Our investment strategy is intended to achieve superior risk-adjusted returns by deploying capital in both long and short investments with favorable risk/reward characteristics across select asset classes, sectors and geographies,” Third Point Re said in filings.
About half of Third Point Re’s investments were in stocks and 40 percent were in bonds as of June 30, according to filings. Arch Capital Group Ltd. (ACGL), Endurance Specialty Holdings Ltd. and Axis Capital Holdings Ltd., which Third Point Re names as competitors, hold most of their portfolios in fixed-maturity securities, filings show.
Greenlight Capital Re Ltd., the reinsurer that funnels its capital to David Einhorn’s Greenlight Capital Inc. hedge fund, holds about 1 percent of its investments in debt securities, according to filings.
Third Point Re posted $100.7 million in net income in the six months through June 30, compared with $99.4 million in all of 2012, as the reinsurer lowered its underwriting costs. The company spent about $1.08 on claims and expenses for every premium dollar it collected in the six months through June 30, down from $1.30 last year, filings show.
Affiliates of private-equity firms Kelso & Co. and Pine Brook Road Partners LLC have some of the largest Third Point Re stakes. Loeb was set to own about 8.5 percent after the offering. Neither Loeb nor the private-equity firms had planned to sell in the IPO.
JPMorgan Chase & Co., Credit Suisse Group AG, Morgan Stanley, Bank of America Corp. and Citigroup Inc. are among the banks that managed Third Point Re’s offering. The stock will list on the New York Stock Exchange under the symbol TPRE.
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