Daniel Loeb's Third Point To Merge With Fellow Insurance Firm Sirius Group, Create $3.3B Entity

Third Point Reinsurance Ltd TPRE and Sirius International Insurance Group, Ltd SG announced Thursday they had agreed to combine the two insurers in a cash and stock transaction. 

What Happened

The merged entity, named SiriusPoint Ltd., would have a combined tangible capital of $3.3 billion, the companies said in a statement. 

The billionaire hedge fund manager and founder of Third Point, Daniel Loeb, has agreed to purchase $50 million worth of SiriusPoint shares at the time of closing the edal.  Loeb is the largest shareholder of Third Point.

If necessary, the Loeb-led firm will use a mix of cash, equity, and debt to finance the deal. The transaction is expected to be completed by the first quarter next year.

Siddhartha Sankaran, the newly appointed Third Point chairman, will lead the merged companies as Chairman and Chief Executive Officer.

Sirius shareholders could exercise various options with respect to their shares, including chosing to receive $9.50 in cash per share.

China Minsheng Investment Group, the largest shareholder in Sirius, will receive $100 million in cash and 58 million Third Point shares, in addition to Series A preference shares, warrants, and other securities, under one of the options. 

Why It Matters

The merger could be first among the many to come as the coronavirus pandemic pushes insurers to sell non-core businesses or to shop for assets in order to scale up, the Financial Times noted.

Third Point shareholders will be protected from up to $100 million of net incremental COVID-19-related losses incurred by Sirius, in certain circumstances, for up to three years following the deal's closing, the companies said. 

Price Action 

Third Point shares closed nearly 1% higher at $8.23 on Thursday while Sirius shares closed 2.4% lower at $6.98 on the same day.