Insurance group Hamilton mulls potential IPO, sale –sources

RenaissanceRe Holdings

07/06/2023 13:51

By Pablo Mayo Cerqueiro and David French
       LONDON/NEW YORK, June 7 (Reuters) - Hamilton Insurance
Group is considering strategic options amid growing momentum for
deals involving insurance and reinsurance companies, people
familiar with the matter told Reuters.
    The Bermuda-based group has been discussing options with
potential advisers, including an initial public offering (IPO)
and a private sale, said the people, who spoke on condition of
anonymity.
    A transaction could value Hamilton at more than $2 billion,
one of the people said. The group reported a book value of
nearly $1.7 billion at the end of December. Listed peers trade
at a premium to their book value.
    Deliberations are preliminary and a transaction may not
materialise, the people said, with one person suggesting that a
deal is more likely to happen after hurricane season ends in
November given the company's underwriting exposure to natural
catastrophes.
    A spokesperson for Hamilton declined to comment.
    The timing of the strategic discussions benefits from a
number of industry tailwinds.
    Investors have shown appetite in the sector, with shares in
Skyward Specialty  SKWD.O  soaring since their New York debut in
January. Reinsurer Everest Re  RE.N  successfully raised about
$1.5 billion to fund growth last month. Bermuda-based Fidelis
Insurance said in April it planned to seek a U.S. IPO.
    Private sales have also returned, most notably the near-$3
billion divestment by AIG of its reinsurance unit Validus Re
last month to RenaissanceRe  RNR.N .
    Insurers have been racking up the premiums they charge to
underwrite commercial risks for some time, providing a boost to
their finances. Global commercial insurance prices rose 4% in
the first quarter of 2023 after 21 consecutive quarters of price
hikes, according to a market index by broker Marsh McLennan
 MMC.N .
    A property and casualty insurer and reinsurer, Hamilton was
established in 2013 and was run by industry veteran Brian
Duperreault until he departed in 2017 to become CEO of American
International Group (AIG)  AIG.N .
    It has since been led by Pina Albo, with Hamilton deriving
the bulk of its revenues from business in the United States
followed by Britain, where it is active in the Lloyd's of London
insurance market.
    Hamilton has a partnership with Two Sigma, whereby the
assets which Hamilton generates are managed by the U.S. hedge
fund. Such asset management arrangements have become commonplace
in insurance in recent years.
    However, a sale could be complicated by Hamilton's
convoluted governance structure, another person added. No one
shareholder in Hamilton owns more than 11% of the group, while
all investors have their voting rights capped at 9.5%, according
to its 2022 financial condition report.
     On the downside, profit in the insurance industry has been
dented by underwriting losses from natural catastrophes, as well
as by losses on investment portfolios amid rising interest
rates.
    But insurers have been taking steps to diversify their
underwriting risks, while losses on investment portfolios are
expected to ease from this year, one of the people added.

 (Reporting by Pablo Mayo Cerqueiro in London and David French
in New York; Editing by Elisa Martinuzzi)
 ((Pablo.MayoCerqueiro@thomsonreuters.com;))