Daniel Loeb's Third Point Investors in deal to create London-listed insurer
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Billionaire activist Daniel Loeb's Third Point Investors Limited plans to acquire a reinsurance company, in a move that would lead to the creation of a new London-listed insurer for the first time since 2020.
London-listed TPIL said on Wednesday that it would acquire Malibu Life Reinsurance, a Cayman Islands-based life and annuity reinsurer that Loeb's New York-based hedge fund Third Point launched last year. The Guernsey-based closed-end fund plans to acquire Malibu in an all-share deal that values Malibu at about $68mn.
If the deal is approved by shareholders, TPIL said it would acquire Malibu Life Re from another Loeb vehicle in exchange for the issue of new shares, in what amounted to a reverse takeover.
But the stock-for-stock deal has already been hit by opposition from Asset Value Investors Limited, which has a 7 per cent stake in TPIL and which said it planned to vote against the proposal.
AVI, a specialist investor in closed-end funds, said in a statement that the planned transaction 'cemented' Third Point Investors' status as 'the poster child for appalling corporate governance'.
Third Point declined to comment on the statement from AVI.
The UK insurance market has not been immune to the broader dwindling of listings on London's stock market. The takeover would create the first new London-listed insurer created since Bermuda-based reinsurer Conduit Re's initial public offering in late 2020.
Rupert Dorey, chair of TPIL, said in a statement that Malibu Life was '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'.
Saba Capital Management, which had an approximately 1 per cent stake in TPIL, according to TPIL's Wednesday stock exchange filing, said it planned to support the transaction.
Saba founder Boaz Weinstein said in a statement: 'We're pleased to see a board of directors responding to the inherent challenges within the UK investment trust market.'
TPIL said the deal would give UK investors access to the booming US fixed-annuity market, which has been buoyed by broader market volatility.
Athene, the annuity business wholly owned by US private capital group Apollo, has a so-called 'sidecar' reinsurance vehicle in Bermuda that has helped it raise equity capital offshore. JPMorgan said in a recent investor note that the strategy had helped build the insurer into 'the gorilla in the room' in private equity-backed retirement products. Athene earlier this month reported record quarterly inflows of $26bn.
TPIL said that Malibu Life had access to a 'robust pipeline' of deals in the sector, including through a reinsurance agreement with a 'blue-chip' US life reinsurer covering about $3bn of premiums. A market participant familiar with the transaction said the US business was Aspida, which is backed by US private credit group Ares Management. Aspida declined to comment.
The deal comes as reinsurers in the Cayman Islands, where Malibu Life is based, face growing scrutiny from regulators as well as criticism from US- and Bermuda-based rivals.
'Some companies are now looking to pivot to the Cayman Islands, where the regulatory framework is much less robust, capital requirements are much less defined and there's much more flexibility that companies have,' Marty Klein, Athene's senior adviser and former chief financial officer, told investors on a February call. Read More City watchdog raises concerns over £4bn life insurance market
'We don't think that's healthy for the industry. We think it's actually quite detrimental', he added.
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