REG-Third Point Investors Ltd: TPIL Announces Outcome of Strategy Review
21/05/2025 07:02
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INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR
PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT
DECISION IN RELATION TO THE ORDINARY SHARES EXCEPT ON THE BASIS OF THE
INFORMATION IN THE PROSPECTUS WHICH IS PROPOSED TO BE PUBLISHED IN DUE COURSE.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
FOR IMMEDIATE RELEASE.
21 May 2025
Third Point Investors Limited
Outcome of Strategy Review and Proposed All-Share Combination
* Proposed all-share combination with Malibu Life Reinsurance SPC to create a
fast-growing, fully capitalised, London-listed, reinsurance operating company
* Transaction unanimously recommended by the Strategy Committee following
conclusion of Strategy Review
* Potential tender offer of at least $75 million to effect rotation of
Shareholders seeking liquidity
Third Point Investors Limited (the "Company") is pleased to announce that it
has entered into a sale and purchase agreement to acquire Malibu Life
Reinsurance SPC ("Malibu"), an established reinsurance platform focused on the
US fixed annuity market (the "Acquisition").
The Company will acquire Malibu from Malibu Life Holdings LLC (the "Seller"),
(which is wholly owned by Third Point Opportunities Master Fund L.P. ("Third
Point Opportunities")) in exchange for the issue of new ordinary shares in the
Company (the "Consideration Shares") on a "NAV for NAV" basis. The Acquisition
is subject to, inter alia, the approval of Shareholders, and the Company will
convene an extraordinary general meeting (the "EGM") at which the Company will
propose resolutions to approve the Acquisition and certain related matters and
to implement the potential tender offer.
Strategic rationale for proposed Acquisition
* The proposed all-share combination of the Company and Malibu on a "NAV for
NAV" basis is expected to create a fast-growing reinsurance operating company,
targeting mid-teens return on equity by the end of 2027
* Malibu is an established annuity reinsurance platform focused on predictable
liabilities within the estimated $1 trillion and growing fixed annuity market
in the United States
* This unique and innovative opportunity facilitates an orderly transition of
the Company's current investment strategy into a fully capitalised,
London-listed, reinsurance operating company
* Malibu is targeting to scale to approximately $5 billion in annual premiums
by the end of 2027(1) through execution of a robust, spread-based business
model and a highly scalable and efficient operating platform
* Malibu's capital needs for this growth strategy will be met by periodic
redemptions from the Master Fund resulting in a pure play operating company
within approximately 18-36 months following completion of the Acquisition
("Completion")
* Significant upfront investment already made by Third Point, LLC and its
affiliates ("Third Point") into Malibu allows the Company to acquire Malibu at
an attractive entry point
* Malibu is led by an experienced executive team including Director, Gary
Dombowsky - co-founder and former CEO of Knighthead Annuity & Life Assurance
Company, who will join the Board as CEO on Completion
* The target mid-teens return on equity of Malibu's business model and the
potential re-rating of the Company's Ordinary Shares over time in line with US
listed life and annuity companies, which tend to trade at or above book value,
creates an attractive investment opportunity for Shareholders
Potential tender offer
* In order to effect an orderly rotation of Ordinary Shareholders who are
seeking to realise part or all of their investment, the Company is considering
a potential tender offer of at least $75 million
* The Company has received conditional commitments from new and existing
investors, including Third Point, for $55 million in aggregate to purchase a
proportion of Ordinary Shares that may be tendered by participating
Shareholders at a price that represents a discount to NAV of 12.5 per cent.
* The Company intends to purchase any additional tendered Ordinary Shares (up
to the maximum value of any potential tender offer)
* The price of any potential tender offer is expected to be by reference to a
discount to NAV of 12.5 per cent.
* In connection with any potential tender offer, Third Point, representing
approximately 25% of issued share capital, has undertaken not to tender its
Ordinary Shares
* Any potential tender offer will be conditional on Shareholder approval of
the Acquisition and certain related proposals and Completion
Acquisition structure
* The Company has agreed to acquire Malibu at its tangible book value in
exchange for the issue of the Consideration Shares to be valued at the
Company's NAV per Share. Malibu has a tangible book value of c.$68 million
(including an adjustment for a $16 million equity investment by Third Point in
Q1 2025)(6). Third Point is expected to contribute a further estimated $15
million of equity capital to Malibu during Q2 2025
* The Acquisition constitutes a reverse takeover under the UK Listing Rules,
with a circular expected to be published in June convening an EGM to seek
required shareholder approvals for the Acquisition and related proposals and
to implement any potential tender offer
* Third Point and the following directors of the Company who hold Ordinary
Shares, Rupert Dorey, Huw Evans and Claire Whittet, have irrevocably
undertaken to vote in favour of the Acquisition and related proposals, in
respect of in aggregate 4,388,923 Ordinary Shares, representing in aggregate
approximately 25.2% of the Company's total voting rights as at the date of
this announcement
* Saba Capital Management Fund L.P. ("Saba Capital Management") has undertaken
to use reasonable endeavours to procure the vote in favour of the Acquisition
and related proposals in respect of the Ordinary Shares beneficially owned by
Saba Capital Management and over which it can exercise voting rights (as at
the date of the announcement, certain investment vehicles advised by Saba
Capital Management have the ability but not the obligation to procure the
exercise of voting rights over 200,814 Ordinary Shares, representing in
aggregate approximately 1.2% of the Company's total voting rights)
* As a result of the reverse takeover, the Company's existing listing of its
ordinary shares in the equity shares (closed-ended investment funds) category
will be cancelled upon Completion and the Company will apply for admission of
its ordinary shares (including the Consideration Shares) to the equity shares
(commercial companies) category to be effective immediately following
Completion, which is expected to occur in during Q3 2025
Rupert Dorey, Chairman of Third Point Investors Limited, said:
"We are delighted to announce the proposed acquisition of Malibu. This is an
innovative and transformational transaction that solves the structural
headwinds impacting the investment trust sector to deliver a unique
proposition for shareholders.
Malibu is a high-potential reinsurance platform with a robust pipeline of
reinsurance and other origination opportunities that will enable it to achieve
scale in the near-term. The business plan for Malibu provides a clear path to
steady, consistent returns, and an improved trading multiple for the Company.
I would like to thank the Strategy Committee for their thorough and diligent
approach which has led to an innovative and compelling transaction that the
Board is pleased to present to Shareholders."
Dimitri Goulandris, Chairman of the Strategy Committee, said:
"Following a comprehensive strategy review and extensive due diligence, the
Strategy Committee is pleased to have been able to find an option that not
only sees the Company evolve over time into a pure-play operating company with
a very attractive, robust and scalable business model, but also, due to strong
support for the transaction from existing and new investors, provides new
capital to assist in rotating out existing Shareholders who are unable or do
not wish to remain invested.
I am delighted to be chairing the new business and look forward to working
with Gary and his team as Malibu executes its plan to deliver strong growth
with attractive unit economics."
Gary Dombowsky, Director of Malibu, added:
"The US fixed annuity market is growing rapidly and there is a structural need
in the sector to provide competitively priced and innovative reinsurance
solutions. As a well-capitalised business backed by a leading global
alternative investment manager, Malibu is strongly positioned to capitalise on
that opportunity. This is a pivotal moment in the business' trajectory and we
look forward to scaling Malibu rapidly to establish it as a key player in the
space."
Webcast
The Company and Malibu will host an investor presentation today at 8.00 a.m.
BST. The presentation will be available at:
https://tpil-strategyreview.open-exchange.net/registration
A presentation detailing the Acquisition will be posted to the Company's
website at https://www.thirdpointlimited.com before the conference call.
Enquiries:
Jefferies International Limited (Financial Adviser to the Company)
Stuart Klein / Carlos Marque / James Umbers Ognjen Rakita / Taha Ahmed / Harry Randall +44 20 7029 8600
Kekst CNC (PR Adviser to the Company)
Richard Campbell Guy Bates Katherine Kilgallen +44 7775 784933 +44 7581 056415 +44 7581 068251
Northern Trust International Fund Administration Services (Guernsey) Limited (Administrator to the Company) +44 1481 745001
This announcement is being made on behalf of the Company by Northern Trust
International Fund Administration Services (Guernsey) Limited, administrator
to the Company.
Outcome of Strategy Review and Proposed All-Share Combination
1. Introduction
On 22 April 2024, the board of directors of the Company (the "Board")
announced the creation of a Strategy Committee (the "Strategy Committee")
tasked with conducting a strategy review to consider how the Company may best
deliver value to shareholders going forward.
Further to the announcements on 11 December 2024 and 3 April 2025, and
following a wide-ranging review of strategic options, the Strategy Committee
has presented its detailed findings and recommendations to the Board who are
today announcing the proposed all-share combination of the Company and Malibu
on a "NAV for NAV" basis, which is expected to create a fast-growing
reinsurance operating company targeting mid-teens return on equity ("ROE") by
the end of 2027.
Malibu is an established annuity reinsurance platform focused on predictable
liabilities within the estimated $1 trillion and growing fixed annuity market
in the United States. This unique and innovative opportunity will facilitate
an orderly transition of the Company's current investment strategy into a
fully capitalised, London-listed, reinsurance operating company.
Malibu has already reinsured approximately $700 million of premium (to the end
of the first quarter of 2025) since inception and has a business plan which
forecasts scaling to approximately $5 billion in annual premiums by the end of
2027(1) through execution of a robust, spread-based business model with hybrid
liability origination and a highly scalable and efficient operating platform.
Malibu's capital needs for this growth strategy will be met by periodic
redemptions from the Company's investment in Third Point Offshore Fund, Ltd
(the "Master Fund") resulting in a pure play operating company within
approximately 18-36 months following Completion.
Malibu is 100% owned by the Seller, which is wholly owned by Third Point
Opportunities and its affiliates, who have already made a significant upfront
investment into the platform allowing the Company to acquire Malibu at an
attractive entry point.
As the Acquisition constitutes a reverse takeover under the UK Listing Rules,
the Acquisition will require approval by the Company's shareholders
("Shareholders"). The Company expects to send a circular to Shareholders in
June (the "Circular") to convene an extraordinary general meeting (the "EGM")
required in order to seek Shareholder approval for the Acquisition and related
proposals and implement any potential tender offer, as described further
below.
The Company's existing listing of its Ordinary Shares in the equity shares
(closed-ended investment funds) category will be cancelled upon Completion.
The Company will apply for re-admission of its Ordinary Shares (including the
Consideration Shares) to the equity shares (commercial companies) category
(the "ESCC Category") to be effective immediately following Completion (the
"Listing Category Change"). In addition, in order to align the Company's
jurisdiction of incorporation with that of Malibu, the Company will also seek
shareholder approval to migrate the Company's place of incorporation from
Guernsey to the Cayman Islands (the "Migration") (see paragraph 16 below).
In order to effect an orderly rotation of Ordinary Shareholders who are
seeking to realise part or all of their investment, the Company is considering
a potential tender offer of at least $75 million.
The Company has received conditional commitments from new and existing
investors, including Third Point, for $55 million in aggregate to purchase a
proportion of Ordinary Shares that may be tendered by participating
Shareholders at a price that represents a discount to NAV of 12.5 per cent.
The Company intends to purchase any additional tendered Ordinary Shares (up to
the maximum value of any potential tender offer) (see paragraph 3 below).
1. Background to and reasons for the Acquisition
On 22 April 2024, in response to the Company's Ordinary Shares trading at a
persistent discount to NAV, the Board announced the creation of a Strategy
Committee tasked with conducting a strategy review to consider how the Company
may best deliver value to Shareholders going forward.
The Strategy Committee was charged with evaluating all possible options,
including M&A opportunities, investment strategy mixes, corporate continuation
votes or further tenders, and other innovative options.
Further to the announcements on 11 December 2024 and 3 April 2025, and
following a wide-ranging review of strategic options, the Strategy Committee
has presented its detailed findings to the Board and recommended the proposed
Acquisition.
The Strategy Committee has conducted extensive due diligence on Malibu and the
wider fixed annuity reinsurance market. As such, the directors of the Company
(the "Directors") believe that the Acquisition offers Shareholders an
opportunity to transform the Company into a fast-growing, fully-capitalised,
London-listed, reinsurance operating company, focusing on simple and
predictable fixed annuity liabilities, funded by redemptions from the
Company's investment in the Master Fund over time as Malibu sources
reinsurance and investment opportunities in accordance with its business plan.
The Directors believe that Malibu offers a unique opportunity for investors to
capitalise on the fast-growing US fixed annuity market targeting mid-teens
return on equity by the end of 2027 alongside the potential for a re-rating of
the Company's Ordinary Shares over time in line with US listed life and
annuity companies which tend to trade at or above book value.
(i) Simple, spread-based business model with a focus
on predictable liabilities and a planned hybrid-origination model, combined
with Third Point's deep multi-asset credit capabilities
Malibu's business model is focused on reinsurance of simple fixed annuities
("FAs") (predominantly multi-year guaranteed annuities ("MYGAs")) and fixed
indexed annuities ("FIAs") within the broader US life and annuity market.
MYGAs and FIAs generally have a predictable risk profile and provide
policyholders guaranteed crediting rates on their invested assets and
potential upside linked to broad equity indices in the case of FIAs.
Malibu in turn invests policyholders' funds through Third Point's asset
management platform into high-quality largely investment grade fixed income
assets to generate investment returns that fund policyholders crediting rates,
Malibu's operating expenses, and Malibu's profits.
Malibu's investment management partnership with Third Point is an important
source of value as Third Point's asset management capabilities are critical
for driving strong returns on investment that are expected to enhance Malibu's
competitiveness by enabling it to offer more competitive treaty terms and
profitability by earning higher returns on deployed capital.
In the second quarter of 2024, Malibu entered into a reinsurance treaty with a
blue-chip US life and reinsurance platform, which has provided approximately
$700 million of premium (to the end of the first quarter of 2025) and is
expected to cover approximately $3 billion in policies reinsured.
In the near term, as part of its growth strategy, Malibu plans to develop a
hybrid approach to origination, whereby Malibu can acquire annuity liabilities
through direct distribution channels by acquiring or building a US-based
direct annuity insurer. This diversified distribution strategy is expected to
enhance Malibu's control over distribution and enable it to source
attractively priced liabilities with greater consistency.
(ii) Malibu has established a highly scalable and
efficient operating model, leveraging the expertise of leading outsourcing
partners
Malibu's operating model is focused on scalability and adaptability and is
currently largely outsourced. Malibu relies on leading partners for key
functions such as actuarial, operations, risk, investment management, and
asset liability management. Malibu is supported by Third Point's existing
insurance capabilities to provide risk management services and industry
relationships to help source additional flow treaty and block reinsurance
transactions and develop a US direct origination business to drive future
growth.
In the near-term as Malibu's platform achieves larger scale, it reserves
flexibility to move the currently outsourced functions in-house, depending on
market conditions and operational needs of Malibu's business. This hybrid
operating model helps enable the Malibu platform to expand to other types of
liabilities in the future, such as pension risk transfer transactions or
registered index-linked annuity products, if market conditions warrant it.
(iii) Opportunity to deploy capital at attractive rates of
return for Shareholders
The Acquisition provides Shareholders with an opportunity to deploy the
Company's capital into Malibu's business within approximately 18-36 months of
Completion to support new opportunities in the fast-growing US retirement
market, with an illustrative target IRR of 15%(2).
Malibu has identified a robust pipeline of growth opportunities, including
flow reinsurance, block reinsurance, and the potential acquisition of a US
annuity origination platform that drive much of the capital needs in the 18-36
months following Completion. These opportunities are supported by a
fast-growing, estimated $1 trillion addressable fixed annuities market in the
United States as sales of fixed annuities reach all-time highs, driving demand
by primary annuities writers for capital relief through reinsurance.
Opportunities to acquire a US annuity origination platform or a large block of
annuities policies could potentially accelerate the capital deployment
timeline and enhance the return profile for Shareholders.
Taking into account the above factors, the Board considers the Acquisition is
in the best interests of the Shareholders of the Company as a whole.
1. Potential tender offer
In order to effect an orderly rotation of Ordinary Shareholders who are
seeking to realise part or all of their investment, the Company is considering
a potential tender offer of at least $75 million.
The Company has received conditional commitments from new and existing
investors, including Third Point, for $55 million in aggregate to purchase a
proportion of Ordinary Shares that may be tendered by participating
Shareholders at a price that represents a discount to NAV of 12.5 per cent.
The Company intends to purchase any additional tendered Ordinary Shares (up to
the maximum value of any potential tender offer).
The price of any potential tender offer is expected to be by reference to a
discount to NAV of 12.5 per cent. Any purchase of tendered Ordinary Shares
based on commitments by new and existing investors (including Third Point and
its affiliates) and any other third-party investor who purchases tendered
Ordinary Shares will be on the same terms and at the same price.
In connection with any potential tender offer, Third Point, representing
approximately 25% of issued share capital, has undertaken not to tender its
Ordinary Shares.
Any potential tender offer will be conditional on Shareholder approval of the
Acquisition and certain related proposals at the EGM and Completion. The terms
of any potential tender offer will be set out in the Circular.
1. Overview of the Acquisition
Consideration structure
Pursuant to the Acquisition, the Company is proposing to acquire 100% of the
shares in Malibu (including shares of its sole segregated portfolio called
Malibu Life Reinsurance SP1) from the Seller in exchange for issuing
Consideration Shares to the Seller on a "NAV for NAV" basis, with the
Consideration Shares being valued at the net asset value per Ordinary Share,
and Malibu being valued at its tangible book value (estimated to be
approximately $68 million(6)), in each case after deduction of transaction
costs and, in the case of Malibu, after addition of amounts paid in respect of
executive search. Such valuation shall be, in each case, estimated as at the
last day of the month during which the final condition to Completion occurs
(the "Calculation Date").
Completion will occur on the tenth business day following the Calculation
Date. Approximately 95% of the Consideration Shares to be issued to the Seller
will be issued on Completion. Following Completion, there will be a true-up
mechanism if either the actual net asset value of the Company or the actual
tangible book value of Malibu, in each case, as at the Calculation Date is
determined or agreed to be different to the estimated net asset value of the
Company or the estimated book value of Malibu, respectively, such that the
Company will issue such number Consideration Shares to the Seller to satisfy
the balance of the consideration due (if any) depending on the outcome of this
true-up mechanism. As the Acquisition is structured for the acquisition of
shares in Malibu in exchange for Ordinary Shares, the purchase price the
Company will pay for Malibu will depend on the ultimate valuation of the
Ordinary Shares and of Malibu, which may fluctuate.
Conditions to Completion
The Acquisition is conditional, inter alia, upon:
* the Seller obtaining prior written approval from the Cayman Islands Monetary
Authority ("CIMA") for the proposed change of control of Malibu by the Company
(and any change of control resulting from the reorganisation related to the
Acquisition), with this condition not being satisfied if conditions apply to
such approval and the Company (acting reasonably) considers that those
conditions are a material impediment to the Company being able to deliver on
the business plan or the investment proposition;
* the receipt of necessary regulatory consents and approvals from the Guernsey
Financial Services Commission (the "GFSC");
* the receipt of a certificate of registration by way of continuation
evidencing the continuation of the Company to the Cayman Islands from the
Cayman Registrar, such that the Company will be registered by way of
continuation as a Cayman Islands exempted company with limited liability
registered in the Cayman Islands;
* the vote in favour of resolutions to approve (i) the Acquisition and (ii)
the Migration, in each case by the requisite majority of Shareholders as
represented in person or by proxy at the EGM;
* compliance by the Company with the requirements for the filing and approval
of a UK prospectus with respect to the Company shares by the UK Financial
Conduct Authority (the "FCA") for admission of the ordinary shares (including
the Consideration Shares) to the equity shares (commercial companies) category
("Admission") and such UK prospectus having been made available to the public
in accordance with the Prospectus Regulation Rules of the FCA;
* Admission occurring not later than 8.00 a.m. on the date of Completion (or
such other day as the Company and Seller agree);
* if in the reasonable opinion of the Company, one is required, the
publication of a supplementary circular in accordance with the UK Listing
Rules;
* the UK Panel on Takeovers and Mergers not having notified that the
Acquisition will result in an obligation on the Seller or any of its
affiliates being required to make an offer in accordance with Rule 9 of the
City Code on Takeovers and Mergers, as amended from time to time (the "UK
Takeover Code"); and
* Daniel S Loeb remaining as the chief executive officer of Third Point, LLC
(except where his removal would not constitute a material impediment to the
Company to execute its business plan or investment proposition in respect of
Malibu).
Subject to the Conditions set out above, Completion is expected to occur in Q3
2025.
Shareholder agreement
The Company has agreed with Third Point and the Seller (together, the "Third
Point Shareholders") the terms of a shareholder agreement (the "Shareholder
Agreement") to be entered into upon Admission, which will regulate the
relationship as between them from Admission and pursuant to which Third Point
will have certain rights in relation to the governance of the Company.
Pursuant to the Shareholder Agreement, Third Point Shareholders may nominate
up to three Directors of the Company (the "Third Point Directors") in
proportion to the percentage of Ordinary Shares held by Third Point as at
Completion that the Third Point Shareholders hold from time to time, subject
at all times to the Third Point Directors representing a minority of the
members of the Board, and may appoint an observer to the Board of the Company,
in each case provided that Third Point Shareholders shall not be entitled to
nominate any Third Point Director or appoint an observer to the Board if the
Third Point Shareholders hold a beneficial interest in 10 per cent. or less of
the issued ordinary share capital from time to time.
The Shareholder Agreement also contains certain Board reserved matters, such
that, for so long as Third Point Shareholders are entitled to nominate at
least one Third Point Director, the Company shall not undertake certain
matters without the prior consent of the majority of the Board, including all
of the Third Point Directors. Such matters include: (i) any amendment or
modification of the terms of, or waiver of material rights under, the
constitutional documents of the Company or any member of its group if such
amendment or modification would adversely affect Third Point and the Seller;
(ii) the issuance of any shares or securities, or the grant of any option or
right to acquire or call for the issue of any shares or securities, whether by
conversion, subscription or otherwise, representing more than 10 per cent. of
the issued Ordinary Shares or any member of its group, or on a non-pre-emptive
or non-pro-rata basis (except for the issuance of shares or securities
pursuant to certain equity incentive schemes for management approved by the
majority of the Board); (iii) the acquisition or sale of the whole or part of
any undertaking or business, except where such acquisition sale is identified
or described in the annual business plan; (iv) any proposal for the winding up
or liquidation of the Company or any member of its group; (v) appointing a new
investment adviser to, or persons performing similar functions (including
sub-advisers) for, the Company or any member of its group; or (vi) removing or
seeking to remove the investment manager or strategic adviser under, or
exercising any right to terminate, the Malibu IMA, except in accordance with
the terms of the IMA Side Letter (each as defined below).
Pursuant to the Shareholder Agreement, the Third Point Shareholders will be
subject to a 12-month lock-up period from the date of Completion in relation
to disposals of their interests in Ordinary Shares, subject to certain
customary exceptions or the prior written consent of the Company.
The Shareholder Agreement may be terminated if the parties agree in writing or
with immediate effect if the Third Point Shareholders cease to hold in
aggregate a beneficial interest in Ordinary Shares representing 10% or more of
the issued ordinary share capital of the Company from time to time or the
Company going into liquidation or commencing a winding-up.
Malibu investment management agreement
Malibu and Third Point have agreed the terms of an amended and restated
investment management agreement (the "Malibu IMA") to be entered into upon
Admission, pursuant to which Third Point will provide Malibu with
discretionary investment management services, subject to the overall
supervision, review and control of the Malibu board and a strategic asset
allocation to be agreed at least annually. Third Point may delegate any or all
of its discretionary investment, advisory and other rights, powers, functions
and obligations under the Malibu IMA to one or more investment advisers (which
may be affiliates of Third Point). The services rendered by Third Point under
the Malibu IMA shall be on fee terms agreed between the parties from time to
time. Third Point shall procure that any fees payable by Malibu to delegates
who are affiliates of Third Point or in respect of any investments into any
comingled funds that are sponsored or managed by Third Point or any of its
affiliates will be subject to customary "most favoured nation" rights related
to fees. The Malibu IMA may be terminated by either party on 90 days' notice,
or with immediate effect upon the breach of the other party or the other party
going into liquidation or commencing winding up.
IMA side letter
The Company and Third Point have agreed the terms of a side letter (the "IMA
Side Letter") to be entered into upon Admission, pursuant to which the Company
agrees that notwithstanding any provision to the contrary in the Malibu IMA or
the SSA, the Company shall procure that these agreements shall have a minimum
initial duration of five years, and shall renew for periods of two years
automatically thereafter. The Company shall also procure that the Malibu IMA
and SSA may only be terminated upon the expiry of the initial term or any
subsequent term, or earlier with 90 days' notice (with the requisite Board
approvals which are set out in the Shareholder Agreement), upon the occurrence
of certain specified cause events or due to consistent under-performance by
Third Point or overcharging of fees by Third Point under the Malibu IMA and
the SSA. The Company and Third Point also agree that the Company shall not be
entitled to redeem its interests in the Master Fund other than for the
purposes of re-investing the redemption proceeds into Malibu and in
circumstances currently permitted under the Malibu IMA.
Strategic services agreement
Malibu and Third Point have agreed terms of an amended and restated strategic
services agreement (the "SSA") to be entered into upon Admission. Under the
SSA, Third Point will provide operational support services (such as finance,
legal, HR and IT support) and strategic support services (such as capital and
risk management, corporate development, pricing and fundraising). The initial
term of the SSA will be one year, but this will automatically renew unless
terminated by either party. Third Point will be paid an annual fee equal to 30
basis points (being 5 basis points in respect of operational and 25 basis
points in respect of strategic support services) of the average month-end
net-asset value of Malibu's investment portfolio for the relevant period
(being all cash and investment assets of Malibu, including without limitation:
(i) the Funds Withheld Account; (ii) the Trust Account and (iii) the General
Account, and excluding, for the avoidance of doubt, goodwill and accruals. For
the avoidance of doubt, insurance related liabilities of Malibu will not be
deducted when calculating the net asset value of Malibu's investment
portfolio), such net asset value to be calculated in accordance with US GAAP
pursuant to the valuation policy of Third Point from time to time. Subject to
the provisions of the IMA Side Letter, the SSA may be terminated by either
party on 90 days' notice, or with immediate effect upon the breach (following
expiry of 30 days following receipt of written notice requiring such breach to
be remedied) of the other party or the other party going into liquidation or
commencing winding up.
1. Information on Malibu and Malibu Life Holdings LLC
Malibu Life Holdings LLC owns 100% of the outstanding equity share capital of
Malibu, a Class B(iii) licensed insurance company in the Cayman Islands, an
important international domicile for reinsuring US-originated insurance risk.
Malibu was incorporated on 1 February 2024 as an exempted company with limited
liability and registered as a segregated portfolio company pursuant to the
Companies Act (as revised) of the Cayman Islands. A segregated portfolio
company is a single legal entity whose assets and liabilities can be allocated
to different segregated portfolios within the company. Malibu currently has
one segregated portfolio containing operations relating to its existing
reinsurance platform.
Malibu focuses on fixed annuity products as they are expected to generate
predictable returns with predictable duration and cash flows, enabling
efficient management of liabilities and investments. Malibu may expand to
other similar products such as pension risk transfer or registered
index-linked annuities in the future if opportunities arise and market
conditions warrant it.
Malibu currently operates a reinsurance-only platform, but as part of its
growth strategy to build a hybrid-origination model, Malibu plans to develop
an US annuity origination platform in the near term, either by acquiring a US
annuity origination platform or acquiring an onshore shell with a licence and
building a platform.
As at the first quarter of 2025, Third Point had contributed approximately $66
million(3) of equity capital to fund Malibu. Third Point is expected to
contribute a further estimated $15 million of equity capital to Malibu during
Q2 2025.
1. Financial summary of Malibu
Set out below is a summary of the audited financial information for Malibu
Life Reinsurance SP1 (the sole segregated portfolio company formed by Malibu
as at the date of this announcement) for the period from 25 April 2024 (date
of formation) to 31 December 2024(4):
For period from 25 April 2024 to 31 December 2024
(audited)
(US$)
Revenue 4,783,426
Net income / (loss) 994,053
As at 31 December 2024, Malibu Life Reinsurance SP1 had total assets of $519.7
million(4) and tangible book value of approximately $51 million(4).
As at 31 December 2024, the audited total assets of Malibu was approximately
$520 million(5) and the audited net income attributable to Malibu was $1
million(5).
1. Information on the Company and reinvestment into Malibu
The Company is an externally managed non-cellular Guernsey company limited by
shares and authorised by the GFSC under the Protection of Investors (Bailiwick
of Guernsey) Law, 2020 as a closed-ended investment scheme with Ordinary
Shares admitted to listing on the equity shares (closed-ended investment
funds) category of the Official List and to trading on the Main Market of the
London Stock Exchange. The Company invests all of its capital (net of
short-term working capital requirements) in shares of the Master Fund. The
Master Fund is a feeder fund to Third Point Offshore Master Fund L.P. (the
"Master Partnership"), an exempted limited partnership under the laws of the
Cayman Islands, of which Third Point Advisors GP LLC., an affiliate of Third
Point, is the general partner. The Master Fund and the Master Partnership have
the same investment objectives, investment strategies and investment
restrictions.
Following Completion, the Company intends to fund Malibu's growth with the net
assets presently invested in shares in the capital of the Master Fund ("Master
Fund Shares"). As and when Malibu requires capital to deploy in its business
as part of its strategy to grow its reinsurance business, the Company would
redeem in line with its current redemption rights or transfer the relevant
portion of its investment in the Master Fund and invest the net cash portion
thereof into Malibu.
It is expected that substantially all of the capital presently invested by the
Company in the Master Fund Shares will be reinvested into Malibu within
approximately 18-36 months of Completion, depending on market opportunities.
1. Financial effects of the Acquisition
The Strategy Committee has conducted extensive due diligence on Malibu to
support the view that the Acquisition has the potential to generate
substantial value for Shareholders given Malibu's scalable operating model,
the strength of its outsourced partners across core functional areas and the
attractive fixed annuity market opportunity.
As at 31 March 2025, Malibu has reinsured approximately $700 million in
premiums requiring approximately $66 million(3) in contributed capital and has
exceeded its original origination plan. Malibu has established a robust
pipeline of potential reinsurance transactions and plans to further supplement
growth through the acquisition or establishment of a US annuity origination
platform. The due diligence carried out indicates that the platform,
capabilities and expertise in place at Malibu today can support deployment of
capital into compelling growth opportunities, which the Directors believe has
the potential to lead to consistent profit generation for Shareholders.
Medium term guidance for the business
Malibu's existing business model is to engage in reinsurance transactions
focused on FIAs and MYGAs. Malibu's existing reinsurance treaty has a planned
liability mix of approximately 71% FIAs and 29% MYGAs, and is expected to
cover approximately $3 billion in policies reinsured.
Malibu is targeting total annual premium of approximately $5 billion by the
end of 2027, which Malibu plans to source from a combination of expected
future premiums from its existing reinsurance treaty, potential new
reinsurance treaties and directly originated policies from a US annuity
origination platform Malibu plans to acquire or build.
Once Malibu's hybrid origination model is established, Malibu's business mix
will be dynamically managed and adjusted as needed to optimise performance
against volume and risk-adjusted return targets. The following illustrative
target business mix is provided for planning purposes and is representative of
Malibu's strategy to target a hybrid origination model combining reinsurance
and direct origination:
* Up to approximately $2.3 billion in aggregate from the existing treaty (in
addition to approximately $700 million premiums received to the end of Q1
2025), which is expected to be received by the end of 2027;
* Malibu winning one new flow reinsurance treaty in each of 2025, 2026 and
2027, each with 3-year effective terms and approximately $1 billion premium
per annum (similar to Malibu's existing treaty and supported by the current
pipeline of potential reinsurance transactions); and
* The acquisition or a build of a US fixed annuity origination platform (with
approximately $1 billion of existing reserves) by the end of 2025, which
scales to originate approximately $2 billion in annual premium by the end of
2027 (an estimated market share of approximately 0.5%).
If Malibu acquires a licenced direct insurance "shell" to enable it to build a
platform organically, this is expected to delay the ramp up to the targeted US
annuity origination volumes of $3.2 billion by one year to the end of 2028.
During this delay, Malibu would aim to originate additional incremental
reinsurance treaties to meet its aggregate volume targets.
This scaling of premium volume by the end of 2027 is expected to require total
funding of approximately $1.1 billlion in the next three years, with an
expected capital mix of approximately 75% equity and approximately 25% debt,
by the end of 2027, facilitating the near-term deployment of the Company's
capital.
Total equity funding is expected to be approximately $610 million, consisting
of approximately $550 million(7) from the Master Fund Shares in addition to
the approximately $66 million(3) capital invested as at 31 March 2025, with
any remainder funded through existing and/or new shareholders. It is expected
that substantially all of the capital presently invested by the Company in the
Master Fund Shares will be reinvested into Malibu within approximately 18-36
months of Completion, depending on market opportunities.
Fixed annuities are capital-intensive products that require upfront capital
investment to scale volumes, as the premium received from policy holders is
less than the sum of statutory reserve requirements, minimum capital
requirements and acquisition costs. Over time, capital investments are
expected to reduce, as retained earnings accumulate and are recycled into new
business.
It is expected that the equity invested in Malibu will generate an
illustrative target IRR of 15%(2) after taking into account the expected 25%
debt financing noted above, with multiple potential sources of upside.
The Strategy Committee, having had the opportunity to discuss with Malibu's
directors and Malibu's actuarial adviser, consider the medium term guidance
for the business set out above to be reasonable, based on:
* Malibu's robust pipeline of potential reinsurance opportunities combined
with precedent examples of US fixed annuity direct origination insurers
entering into reinsurance treaties with, and ceding premium to, unaffiliated
reinsurers;
* Analysis of the cumulative fixed annuity sales by certain existing US fixed
annuity direct origination insurers in the first three years following the
commencement of their US direct origination platform;
* Comparing Malibu's illustrative target sales by the end of 2027 to the sales
volumes in Q4 2024 of the top 30 US fixed annuity direct origination insurers
by sales;
* Malibu's illustrative target IRR of 15%(2) falling within the range of
retail pricing targets based on a proprietary survey of certain industry
participants undertaken by Malibu's actuarial adviser in 2024;
* Detailed analysis undertaken by Malibu's actuarial adviser for Malibu
regarding components of, and benchmarks for, Malibu's cost of funds; and
* Knowledge of Third Point's investment capabilities.
The Strategy Committee presented their findings and recommendation to the
Board, both of which the Board endorsed.
Expansion into further reinsurance treaties
The existing flow reinsurance transaction is to cover up to approximately $3
billion in policies reinsured, and will end by 1 May 2028. As at 1 April 2025,
remaining premium volumes from the existing treaty are expected to be in
aggregate approximately $2.3 billion and be received over the next 3 years by
the end of 2027.
Malibu is targeting entering into one new reinsurance treaty each year from
2025 to 2027, each with a 3-year effective term. It is expected that premium
volumes from new treaties will reach approximately $4.5 billion in aggregate
by the end of 2027. The targeted run-rate annual premium of approximately $1
billion equates to approximately 20% of Malibu's pipeline of potential
reinsurance transactions as of the date of this announcement, which is
expected to continue to grow as Malibu becomes increasingly established. The
terms of the new treaties are expected to be consistent with those of the
existing treaty, with the product mix expected to remain approximately 70%
FIAs and 30% MYGAs.
Acquisition of a US annuity origination platform
Malibu is targeting to start the US annuity origination business in 2026,
through the acquisition of an existing US platform by the end of 2025 or early
2026, or an alternative organic build. If this target timing is achieved,
direct premiums are expected to begin in the first quarter of 2026, with
premiums in aggregate expected to total approximately $3.2 billion by end of
2027 in addition to the volume generated through expected reinsurance
transactions. This estimate assumes the acquired US annuity company will have
approximately $1 billion in existing direct reserves on a US GAAP basis.
As at the date of this announcement, Malibu has identified approximately 25
potential US annuity origination platform acquisition opportunities. These
opportunities are non-mutual/fraternal US fixed annuity writers with less than
$500 million in capital and surplus, and with over 70% of fixed annuity
reserves. The current business plan assumes annuity origination sales to
consist of 70% FIAs and 30% MYGAs.
As an alternative, Malibu may acquire a licenced "shell" direct insurance
origination platform onto which a platform can be built organically. As of the
date of this announcement, Malibu has identified 5 licenced shell acquisition
opportunities. If this route is adopted, it is expected to delay the ramp up
to the targeted US annuity origination volumes of $3.2 billion by one year to
the end of 2028. During this delay, Malibu would aim to originate additional
incremental reinsurance treaties to meet its aggregate volume targets.
Expenses and Taxes
Malibu is expected to incur relatively stable annual maintenance and operating
expenses of approximately 0.3% of total assets. Malibu anticipates being taxed
as a domestic corporation for U.S. federal tax purposes and will be subject to
the 21.0% U.S. federal income tax rate.
Investment portfolio and yield
Target investment portfolio allocation is expected to be approximately 87%
fixed income with a typical credit rating of BBB+, with the remaining
approximately 13% invested in high yield/alternatives/equities. The target for
the fixed income portfolio is to be made up of approximately 30% corporate
assets, approximately 25% structured assets and approximately 30% commercial
mortgage loans, residential whole loans, asset-backed securities, and direct
lending. The optimal target investment portfolio allocation will be assessed
on an ongoing basis and is subject to change based on market conditions and
other factors.
An illustrative expected total net yield, based on known asset prices as of
the date of this announcement, is approximately 6.5 to 7.0%, with an
approximate 5.0 to 5.5% cost of liabilities and operating expenses.
Since Malibu's inception, purchase yields on assets acquired by Third Point
for Malibu were on average approximately 2% higher than prevailing yields for
comparable bonds.
Capital requirements and distributions
Capital invested in Malibu was approximately $66 million(3) as at 31 March
2025. It is expected that substantially all of the capital presently invested
in the Master Fund Shares by the Company will be reinvested into Malibu within
approximately 18 to 36 months of Completion, depending on market
opportunities. Total equity funding is expected to be approximately $610
million, consisting of approximately $550 million from the Master Fund
Shares(7) in addition to the approximately $66 million capital invested as at
31 March 2025, with any remainder funded through existing and/or new
shareholders.
Malibu's target leverage ratio is expected to be 25% with debt interest
expense expected to be approximately 8% based on market interest rates
prevailing at the date of this announcement.
Malibu is currently well capitalised and has a risk-based capital ratio as of
31 December 2024 of approximately 330%, in excess of regulatory and existing
treaty minimums. Malibu's long term target risk-based capital ratio is 350%.
Shareholder returns
The existing reinsurance treaty is expected to deliver an illustrative target
IRR of approximately 15%(2), with illustrative upside from the Company's
Ordinary Shares re-rating to 1.0 times price to book-value.
Malibu is targeting to deliver a mid-teens return on equity by the end of
2027, once it has reached sufficient scale.
1. Malibu management team
Following Completion, Malibu's executive management team will consist of Gary
Dombowsky, Robert Hou and Jeffrey Liddle.
Gary Dombowsky
Gary Dombowsky currently serves as a director of Malibu. Following Admission,
Mr. Dombowsky will serve as the Chief Executive Officer and be a member of the
Board.
Gary Dombowsky has been a resident of the Cayman Islands for 30 years working
in the banking, reinsurance and insurance sectors. Mr. Dombowsky began his
career in corporate credit with RBC Financial Group in locations across Canada
and the Caribbean, before assuming executive-level positions with reinsurance
companies in the Cayman Island, US and Bermuda. Together with Knighthead
Capital Management, LLC., Mr. Dombowsky co-founded Knighthead Annuity & Life
Assurance Company ("Knighthead") and served as its CEO from inception in 2014
to 30 June 2023. Under Mr. Dombowsky's leadership, Knighthead developed a
highly successful, diversified origination model and became a leader in the
direct offshore annuities market, with approximately 70 per cent. market
share. In addition, Knighthead entered the flow reinsurance business in 2017
and before his departure, signed a purchase agreement for a US life insurance
company as part of an expansion strategy to sell annuities in the US. Together
with his colleagues, Mr. Dombowsky drove Knighthead's development to reach
annual new business volume of over $1 billion, approximately $5 billion of
assets and $600 million of available capital, implemented comprehensive
enterprise risk management and operational practices and achieved A category
ratings from multiple rating agencies.
Mr. Dombowsky previously served as co-founder and director of the Cayman
International Reinsurance Companies Association, the industry group formed to
promote the reinsurance industry in the Cayman Islands.
Robert Hou
Robert Hou currently serves and will continue to serve as a director and the
Chief Operating Officer of Malibu following Completion.
Mr. Hou is a managing director at Third Point and serves as its Head of
Insurance Solutions. Mr. Hou's focus is on strategic initiatives including the
launch and ongoing management of Malibu and other liability driven platforms.
Additionally, Mr. Hou develops and manages the asset portfolio allocations for
these strategies and works closely with the credit teams to structure and
originate investments. Prior to joining Third Point, Mr. Hou was a portfolio
manager at Blackstone in the Insurance Solutions business where he worked on
the acquisition and portfolio rotation of acquired blocks and operating
companies. He previously helped on the initial launch of Blackstone Insurance
Solutions, was a member of the Investment Review, Alternative Investments and
Co-Investment Committees, launched the Insurance Dedicated Fund platform and
implemented a multi-asset risk management framework for the Tactical
Opportunities Funds.
Mr. Hou's background includes FIG Investment Banking and Corporate Development
at BlackRock, Deutsche Bank and Merrill Lynch. He holds a B.A. in Economics
from Stanford University.
Jeffrey Liddle
Following Completion, Jeffrey Liddle will serve as Chief Financial Officer. Mr
Liddle joined Third Point in 2013, where he currently serves as Controller.
Prior to joining Third Point, Mr. Liddle was senior auditor at Deloitte. Mr.
Liddle holds a M.S. and B.S. in Accounting from St. John's University
1. Changes to the Board
It is intended that effective upon Completion, the structure of the Board will
change to ensure there is the requisite expertise and experience to oversee a
US-based reinsurance business. Dimitri Goulandris will become Chairman and
Claire Whittet and Huw Evans will retire from the Board shortly following the
EGM, if the Acquisition is approved by Shareholders. The Board would be
strengthened by the appointment to the Board of Gary Dombowsky, director of
Malibu, as CEO, and Josh Targoff and Luana Majdalani as Non-Executive
Directors.
The revised Board will be:
* Dimitri Goulandris*: Independent Non-Executive (Chairman)
* Gary Dombowsky: CEO (nominated by Third Point)
* Josh Targoff: Non-Executive Director (nominated by Third Point)
* Luana Majdalani: Non-Executive Director (nominated by Third Point)
* Liad Meidar*: Independent Non-Executive Director
* Richard Boleat*: Independent Non-Executive Director
* Rupert Dorey*: Independent Non-Executive Director
*Existing non-executive directors of the Company
In addition, Dan Loeb, the managing member and beneficial owner of Third
Point, is expected to be appointed as an observer on the Board from
Completion.
Following completion of the Listing Category Change, the Board intends to
comply with substantially all of the provisions of the UK Corporate Governance
Code, including the process for appointments to the Board, succession
planning, length of service, annual evaluation and the roles of the Audit
Committee, Asset Management Engagement Committee and the Remuneration and
Nomination Committee.
At least half of the Board, excluding the Chairman, will be non-executive
directors whom the Board considers to be independent, each of whom will be
subject to annual re-election at the Company's annual general meeting. The
process for Board appointments, succession planning, remuneration of the Board
and senior executives will be matters reserved for the Remuneration and
Nomination Committee.
Each of the directors will enter into service contracts or letters of
appointment on customary terms in connection with their position on the Board.
Controlling Shareholder
Following Completion, it is expected that Third Point and its affiliates will
hold more than 30 per cent. of the Ordinary Shares and will therefore be a
controlling shareholder of the Company for the purposes of the UK Listing
Rules.
1. Irrevocable undertakings
The Company has received an irrevocable undertaking from Third Point to vote
(or to procure the vote) in favour of the Acquisition and related proposals at
the EGM in respect of the 4,356,423 Ordinary Shares currently registered or
beneficially held in aggregate by Third Point, representing in aggregate
approximately 25.0% of the total voting rights based on the Company's total
voting rights as at the date of this announcement.
The Company has also received irrevocable undertakings from the following
Directors who hold Ordinary Shares Rupert Dorey, Huw Evans and Claire Whittet
to vote (or to procure the vote) in favour of the Acquisition and related
proposals at the EGM in respect of in aggregate 32,500 Ordinary Shares
currently registered or beneficially held in aggregate by them (or persons
closely associated with them), representing in aggregate approximately 0.2% of
the total voting rights based on the Company's total voting rights as at the
date of this announcement.
The Company has received an undertaking from Saba Capital Management to use
reasonable endeavours to procure the vote in favour of the Acquisition and
related proposals at the EGM in respect of such number of Ordinary Shares as
may be beneficially owned by Saba Capital Management and in respect of which
it is entitled to exercise or direct the exercise of voting rights at the
record date of the EGM. As at the date of this announcement, certain
investment vehicles advised by Saba Capital Management have the ability but
not the obligation to procure the exercise of voting rights over 200,814
Ordinary Shares, representing in aggregate approximately 1.2% of the total
voting rights based on the Company's total voting rights as at the date of
this announcement.
1. Proposed Listing Category Change
As the Acquisition is expected to fundamentally change the strategic direction
and nature of the Company's business (which will be part of a different
industry following Completion), it will constitute a reverse takeover
requiring the prior approval of Shareholders for the purposes of the UK
Listing Rules and the Company's existing listing of its Ordinary Shares on the
equity shares (closed-ended investment funds) category of the Official List
will be cancelled upon Completion.
As the Board believes that, following the Acquisition, the Company's future
structure and activities will be more reflective of a reinsurance operating
company as compared to an investment company, the Company intends, conditional
on Shareholders approving the Acquisition, to apply for admission of its
Ordinary Shares (including the Consideration Shares) to the ESCC Category
immediately following Completion.
It is expected that Admission will become effective, and that unconditional
dealings in the Ordinary Shares (including the Consideration Shares) will
commence on the London Stock Exchange, at 8.00 a.m. (London time) immediately
following Completion.
Investors are currently able to directly hold and settle interests in the
Ordinary Shares in CREST. From the effective date of the Migration, the
Ordinary Shares will no longer be eligible to be directly held in
uncertificated form or transferred electronically in CREST. In order for the
Ordinary Shares to be traded on the London Stock Exchange following Migration,
CREST depositary interests representing the underlying Ordinary Shares (the
"Depositary Interests") will be issued on a one-for-one basis to persons who
wish to hold the Ordinary Shares in electronic form within the CREST system.
The Depositary Interests will have the same ISIN as the underlying Ordinary
Shares and do not require a separate admission to trading on the London Stock
Exchange.
A UK prospectus will be published in due course in connection with the
application for admission to the ESCC Category containing details on the
Company and Malibu.
1. Consequence of proposed Listing Category Change
At Completion, the Company will cease to be a "closed-ended investment fund"
for the purposes of UKLR 11 and nor will the Company be an "investment entity"
as defined in the UK Listing Rules. As companies listed under the ESCC
Category are not required to have a published investment policy under the UK
Listing Rules, the Listing Category Change will also result in the removal of
the current investment policy of the Company. In addition, following the
Listing Category Change, the Company will no longer be required to comply with
the UK Listing Rules requirement applicable to closed-ended investment funds
to manage its assets in a way consistent with the objective of spreading
investment risk. The restriction on the Company issuing shares at a discount
to NAV will no longer apply.
The Board will have discretion to make strategic decisions on behalf of the
Company and the capability to act on key strategic matters in the absence of a
recommendation from a person outside the Company's group. In connection with
the Acquisition, the Company will terminate its existing investment management
agreement and will appoint Gary Dombowsky as Chief Executive Officer and an
executive Director to the Board.
On Admission, the Company will satisfy the eligibility criteria under UKLR 3
and UKLR 5 and will have in place a modified version of its current systems
and controls to ensure compliance with all of its obligations, including the
provisions of UKLR 4 to 10 that do not currently apply to the Company, or
currently apply to the Company in modified form, by virtue of its listing on
the closed-ended investment funds category under UKLR 11.
The Company will continue to adhere to the requirements for identifying
significant transactions and related party transactions and assess all
transactions, where relevant. Any significant transactions, including
acquisitions, mergers, and disposals, will continue to undergo thorough
internal review by the Board, with Shareholder approval sought to the extent
this remains necessary (e.g., a reverse takeover). The Company's procedures
for related party transactions will be overseen by the Board and a
sub-committee comprised of independent non-executive directors and any related
party transaction will be subject to the requirements of UKLR 8.2.1R,
including timely disclosures via regulatory news services (RNS) to maintain
transparency as required.
Given the nature of the change to the Company's business described in this
announcement, the Company will apply to the GFSC to surrender its current
authorisation as an authorised closed-ended collective investment scheme with
effect from the date of the Migration.
As a commercial company, rather than a closed-ended investment fund, the
Company is not expected to fall within the scope of the UK AIFMD or the EU
AIFMD and therefore the restrictions imposed by UK AIFMD and EU AIFMD should
no longer apply following Admission, affording the Company potential greater
freedom to market its shares in the UK and EU member states (subject to any
applicable securities law restrictions).
1. Related party transaction
The Acquisition is a related party transaction for the purposes of the UKLR
8.2.1R as the Seller is an affiliate of Third Point, which is itself a related
party of the Company under UKLR 11.5.3R and the Acquisition will exceed 5%
under each of the class tests.
The Board, having been so advised by Jefferies in its capacity as sponsor in
connection with the Acquisition, considers that the terms of the Acquisition
are fair and reasonable as far as the Shareholders are concerned.
1. Cessation of VoteCo and withdrawal of 2027 redemption rights
In connection with the Acquisition, it is expected that all of the redeemable
'B shares' of no par value in the capital of the Company ("B Shares") held by
Third Point Offshore Independent Voting Company Limited ("VoteCo") will be
redeemed immediately prior to but conditional on Completion. Accordingly, from
and after Completion, it is expected that VoteCo will no longer own any B
Shares or be able to exercise any voting rights at general meetings of the
Company.
In addition, the Company's commitment as announced on 1 April 2021 to effect a
redemption offer for Ordinary Shares in 2027 will be eliminated upon
Completion.
1. Migration
The Company is structured as a non-cellular company limited by shares
incorporated under the laws of Guernsey. In consultation with its advisers,
the Board has concluded that it is in the best interests of the Company to
migrate from Guernsey to the Cayman Islands in connection with the
Acquisition, in particular to align with the domicile of Malibu.
The Company therefore proposes to apply to be registered by way of
continuation as an exempted company limited by shares under section 201 of the
Cayman Islands Companies Act (2025 Revision) (the "Cayman Companies Act") and
will obtain the necessary approvals from CIMA in connection with becoming a
controller of an insurance undertaking.
The Board considers that the Migration will facilitate a number of operational
benefits that will arise from the alignment of domicile of the Company and
Malibu following Completion. Efficiencies in the management of the Company
will allow it to obtain the maximum benefit from the Acquisition. Such
benefits include:
* The Board believes that the Cayman Islands have a highly regarded regulatory
regime and for that reason is the domicile of choice for a number of insurance
holding companies.
* Given the Cayman Islands' general acceptance by the investment community
globally and the fact that many large institutional investors operate via
investment vehicles incorporated therein, the Board believes that the move to
the Cayman Islands will give the Company potential added flexibility in the
future and invite further investment.
* Like Guernsey, the Cayman Islands do not impose any form of taxation on
exempted companies and accordingly, the move from Guernsey to the Cayman
Islands should have a neutral effect on the Company's existing tax structure.
* In terms of process, the Migration will be relatively straight-forward and
cost efficient.
* Neither Guernsey nor the Cayman Islands impose withholding tax on dividends
from tax exempt status companies incorporated in those jurisdictions, nor are
transfers of shares in such companies chargeable to capital gains or other
taxes. Therefore, the Migration should not affect the tax position of
Shareholders in receiving dividends or other distributions from the Company or
the tax position of Shareholders buying or selling Ordinary Shares. There are
no applicable double taxation treaties between Guernsey and the Cayman
Islands.
One consequence of the Migration will be that the UK Takeover Code, including
the mandatory bid rule under Rule 9 of the UK Takeover Code, will no longer
apply to the Company. The Company does not intend to voluntarily replicate the
provisions of the UK Takeover Code following the Migration.
1. Risk factors
The success of the Acquisition and the subsequent investment in Malibu and
achieving the illustrative targeted return on equity are dependent on Malibu
achieving its expected growth strategy, which is in turn subject to a number
of risks, including, but not limited to the following:
* Malibu has very limited operating history to evaluate its future performance
and its historical financial information may not be indicative of, or
comparable to, its future results;
* Malibu currently has only one reinsurance treaty and may not successfully
originate any further reinsurance treaties on similar terms, or at all;
* Malibu may fail to secure additional reinsurance treaties on favourable
terms or at all, and such treaties may be delayed;
* Malibu's growth strategy includes the acquisition or build of a US annuity
platform as a second origination channel and Malibu may not be able to acquire
or build such platform, or the costs and timeframe may be more extensive and
longer than planned;
* Malibu is reliant upon certain third-party service providers for certain
operational support services and strategic support services and other
services;
* Malibu's failure to scale up and to transition to a hybrid operating model
could delay and/or limit its growth plan;
* The loss of or the failure to retain key management personnel, or to recruit
qualified executives with substantial relevant experience, could delay or
prevent the Malibu from implementing its business strategy;
* Malibu is subject to general economic and political conditions in the US and
globally, such as economic downturn and capital market volatility;
* Malibu's activities are subject to increases or decreases in market interest
rates;
* Malibu competes with well-established players and may not achieve its growth
strategies if it cannot maintain its market position;
* Malibu relies on Third Point for management of its investment portfolio and
services related to asset and liability management, risk and compliance, with
such management being important to Malibu's profitability; and
* Economic and market conditions may result in significant losses for the
Master Fund and negatively affect the amount of capital available to be
deployed to Malibu.
1. Advisers
Jefferies International Limited is acting as financial adviser and Herbert
Smith Freehills as legal advisers to the Strategy Committee of the Company.
PJT Partners LP is acting as financial adviser, Willkie Farr & Gallagher LLP
as legal adviser, and Oliver Wyman as actuarial adviser to Malibu. Oliver
Wyman is acting as actuarial advisers to Malibu. Latham & Watkins (London) LLP
are acting as legal advisers to Jefferies International Limited (acting in its
capacity as sponsor under the UK Listing Rules).
Sources of information
1. $5 billion annual premium targeted by Malibu by the end of 2027 is based on
the annualised estimated total opportunity size resulting from Malibu's
pipeline of reinsurance opportunities and directly originated policies from a
US annuity origination platform Malibu plans to acquire or build.
1. Illustrative target IRR of 15% assumes a net asset spread of c.1.5% at a 10
times asset leverage, post-tax and taking into account a target leverage ratio
of 25%.
1. $66 million represents the equity capital contributed by Third Point of
$50m as at 31 December 2024, adjusted for $16 million equity investment made
by Third Point in Q1 2025. $50 million has been extracted from the audited
accounts of Malibu Life Reinsurance SP1 for the period from 25 April 2024
(date of formation) to 31 December 2024.
1. Values extracted from the audited accounts of Malibu Life Reinsurance SP1
for the period from 25 April 2024 (date of formation) to 31 December 2024.
1. Aggregated value based on the values extracted from the audited accounts of
Malibu Life Reinsurance SPC for the period from 1 February 2024 (date of
incorporation) to 31 December 2024 and the audited accounts of Malibu Life
Reinsurance SP1 for the period from 25 April 2024 (date of formation) to 31
December 2024.
1. $68 million represents Malibu's tangible book value of $52 million as at 31
December 2024, adjusted for $16 million equity investment made by Third Point
in Q1 2025. $52 million is the aggregated value based on the values extracted
from the audited accounts of Malibu Life Reinsurance SPC for the period from 1
February 2024 (date of incorporation) to 31 December 2024 and the audited
accounts of Malibu Life Reinsurance SP1 for the period from 25 April 2024
(date of formation) to 31 December 2024.
1. Unaudited net asset value of the Company's holding of Master Fund Shares as
at 14 May 2025.
Disclaimer
The information contained in this announcement is for background purposes only
and does not purport to be full or complete. The information in this
announcement is subject to change.
This announcement has been prepared in accordance with English law, the UK
Market Abuse Regulation and the Disclosure Guidance and Transparency Rules and
UK Listing Rules of the FCA. Information disclosed may not be the same as that
which would have been prepared in accordance with the laws of jurisdictions
outside England.
This announcement is not an offer of securities for sale in any jurisdiction
where to do so would be unlawful. The Company and Malibu have not been and
will not be registered as an "investment company" under the US Investment
Company Act of 1940, as amended (the "Investment Company Act") and as such
holders of the securities will not be entitled to the benefits of the
Investment Company Act. The securities referred to herein have not been and
will not be registered under the US Securities Act of 1933, as amended (the
"US Securities Act") or under the securities laws of any state or other
jurisdiction of the United States, and may not be offered or sold, taken up,
resold, transferred or delivered, directly or indirectly, in or into the
United States or to any "U.S. person" as defined in Regulation S under the US
Securities Act ("US Person") other than to "qualified institutional buyers" as
defined in Rule 144A of the US Securities Act who are also "qualified
purchasers" as defined in the Investment Company Act in a transaction exempt
from, or not subject to, the registration requirements of the US Securities
Act and in accordance with any applicable securities laws of any state or
other jurisdiction of the United States. There has been and will be no public
offer of the securities in the United States and the Company is not subject to
the periodic reporting requirements of the US Securities Exchange Act of 1934,
as amended (the "US Exchange Act") and is not required to, and does not, file
any reports with the US Securities and Exchange Commission (the "SEC")
thereunder.
Neither the SEC nor any securities regulatory body of any state or other
jurisdiction of the United States, nor any securities regulatory body of any
other country or political subdivision thereof, has approved or disapproved of
this announcement or the securities discussed herein or passed on the accuracy
or adequacy of the contents of this announcement. Any representation to the
contrary is a criminal offence in the United States.
Any potential tender offer will be made in the US pursuant to an exemption
from certain US tender offer rules and otherwise in accordance with the
requirements of UK legislation. Accordingly, any such potential tender offer
will be subject to disclosure and other procedural requirements, including
with respect to withdrawal rights, that may be different from those applicable
under US domestic tender offer procedures and law.
It may be difficult for US shareholders to enforce certain rights and claims
arising in connection with any potential tender offer under US federal
securities laws since the Company is located outside the US and most of its
officers and directors may reside outside the US. It may not be possible to
sue a non-US company or its officers or directors in a non-US court for
violations of US securities laws. It also may not be possible to compel a
non-US company or its affiliates to subject themselves to a US court's
judgment.
To the extent permitted by applicable law and in accordance with normal UK
market practice and Rule 14e-5(b) of the US Exchange Act, the Company, its
brokers or any of their respective affiliates may from time to time make
certain purchases of, or arrangements to purchase, securities outside the
United States, other than pursuant to any potential tender offer referred to
herein, during the period in which such tender offer remains open for
participation. In order to be excepted from the requirements of Rule 14e-5
under the US Exchange Act by virtue of Rule 14e-5(b)(12) thereunder, such
purchases, or other arrangements, must comply with applicable English law and
regulation, including the UK Listing Rules, and the relevant provisions of the
US Exchange Act. Any information about such purchases, or other arrangements
to purchase, will be reported via a Regulatory Information Service and will be
available on the London Stock Exchange website at
http://www.londonstockexchange.com.
No person has been authorised to give any information or make any
representations with respect to the Acquisition other than the information
contained in this announcement and, if given or made, such information or
representations must not be relied upon as having been authorised by or on
behalf of the Company, the Company's directors, or any other person involved
in the Acquisition. Neither the Company nor any such person takes any
responsibility or liability for, and can provide no assurance as to the
reliability of, any other information that may be given. Subject to the UK
Market Abuse Regulation and the Disclosure Guidance and Transparency Rules and
the UK Listing Rules of the FCA, the delivery of this announcement shall not
create any implication that there has been no change in the affairs of the
Company or Malibu since the date of this announcement or that the information
in this announcement is correct as at any time subsequent to its date.
Jefferies International Limited ("Jefferies"), which is authorised and
regulated by the Financial Conduct Authority in the United Kingdom, is acting
exclusively as the lead financial adviser to the Company and no one else in
connection with the matters set out in this announcement. In connection with
such matters, Jefferies, its affiliates, and its or their respective
directors, officers, employees and agents will not regard any other person as
their client, nor will they be responsible to any other person for providing
the protections afforded to their clients or for providing advice in relation
to the contents of this announcement or any other matter referred to herein.
PJT Partners LP ("PJT Partners") is acting exclusively for Malibu in
connection with the matters set out in this announcement. It is not advising
any other person, nor is it responsible for providing protections afforded to
clients of PJT Partners to any other person, in relation to the contents of
this announcement or any other matter referred to herein.
PJT Partners is a U.S. Securities and Exchange Commission registered
broker-dealer and is a member of the Financial Industry Regulatory Authority
and the Securities Investor Protection Corporation. PJT Partners is
represented in the United Kingdom by PJT Partners (UK) Limited. PJT Partners
(UK) Limited is authorised and regulated by the Financial Conduct Authority
(Ref No. 678983) and is a company registered in England and Wales (No.
9424559). PJT Partners is represented in the European Economic Union by PJT
Partners Park Hill (Spain) A.V., S.A.U., a firm authorized and regulated by
the Comision Nacional del Mercado de Valores. PJT Partners is represented in
Hong Kong by PJT Partners (HK) Limited, authorised and regulated by the
Securities and Futures Commission, and in Australia, by PJT Partners (HK)
Limited, by relying on a passport license approved by the Australia Securities
and Investment Commission. PJT Partners is represented in Japan by PJT
Partners Japan K.K., a registered Type II Financial Instruments Business
Operator (Registration Number: Director of Kanto Local Finance Bureau Kin-sho
No. 3409), authorised and regulated by the Financial Services Agency and the
Kanto Local Finance Bureau. PJT Partners is represented in the United Arab
Emirates, by PJT deNovo Partners Ltd, a Dubai International Financial Center
company regulated by the Dubai Financial Services Authority; and in the
Kingdom of Saudi Arabia, by deNovo Partners Finance, a firm regulated by the
Capital Market Authority. In connection with our capital raising services in
Canada, PJT Partners relies on the international dealer exemption pursuant to
subsection 8.18(2) of National Instrument 31-103 Registration Requirements.
Please see https://pjtpartners.com/regulatory-disclosure for more information.
The contents of this announcement are not to be construed as legal, business
or tax advice and none of the Company, Jefferies or PJT Partners undertakes
any obligation with respect to the recipient thereof. Each shareholder should
consult its own legal adviser, financial adviser or tax adviser for legal,
financial or tax advice respectively.
Forward-looking statements
Certain statements, opinions and/or projections in this announcement are
forward-looking statements. In some cases, these forward looking statements
can be identified by the use of forward looking terminology including terms
such as expects", "anticipates", "targets", "continues", "estimates", "plans",
"intends", "projects", "indicates", "believes", "may", "will", "should",
"would", "could", "outlook", "forecast", "plan", "goal" and similar
expressions or in each case, their negative, or other variations or comparable
terminology, but are not the exclusive means of identifying such statements.
Any statements that are not statements of historical facts are forward-looking
statements. These forward-looking statements reflect the Company's current
expectations concerning future events and speak only as of the date of this
announcement. They involve various risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the
Company, and following Completion, the Company's group, third parties or the
industry to be materially different from any future results, performance or
achievements expressed or implied by such forward looking statements. There
can be no assurance that the results and events contemplated by
forward-looking statements will in fact occur. No statement in this
announcement is intended to be a profit forecast.
The forward-looking statements speak only as at the date of this announcement.
Save as required by the UK Market Abuse Regulation or the Disclosure Guidance
and Transparency Rules or the requirements of the UK Listing Rules of the FCA,
or otherwise arising as a matter of law or regulation, the Company expressly
disclaims any obligation or undertaking to disseminate after publication of
this announcement any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Company's expectations with
regard thereto or any change in events, conditions or circumstances on which
any such statement is based.
Neither the content of the Company's (or any other website) nor the content of
any website accessible from hyperlinks on the Company's website (or any other
website) is incorporated into, or forms part of, this announcement.
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