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Sompo Canopius sold to Centerbridge Partners consortium for $952m

1st September 2017 - Author: Steve Evans

Global specialty insurance and reinsurance firm Sompo Canopius AG has been sold to a consortium of investors led by private equity and credit specialist Centerbridge Partners, L.P. for a $952 million fee, by parent Sompo Holdings.

Sompo Canopius logoThis announcement had been expected and rumours about the potential for a Centerbridge led acquisition were widely discussed in the market in recent weeks.

The consortium of investors includes private investment firm Gallatin Point Capital LLC.

Japanese insurance giant Sompo Holdings had decided to offload the Sompo Canopius business in the wake of its acquisition of Bermudian specialty re/insurer Endurance, as its CEO explains below.

“Following the announcement of the acquisition of Endurance Speciality Holdings in October 2016, we carefully reviewed the potential for Sompo Canopius to be integrated into the new global, commercial business platform, Sompo International. However, it became increasingly clear that the culture and business mix of the two companies were very distinct and that the combination would not necessarily be advantageous to either party,” Kengo Sakurada, President and Group CEO of Sompo Holdings Inc. explained.

The deal is expected to close in the first quarter of 2018 and the sale represents a good profit for Sompo, as it had acquired Sompo Canopius AG for £594 million in 2014.

The Sompo International Lloyd’s of London underwriting business (previously named Endurance at Lloyd’s) will not be affected by the deal.

Sakurada continued; “We are delighted to have reached the agreement announced today with Centerbridge, one which recognises the value inherent in Canopius, and takes full advantage of the strengths of the existing management team. The future of the staff has been a key consideration in this process. We believe having a financial partner such as Centerbridge represents a great opportunity for Canopius to achieve its growth ambitions.

“This transaction returns significant funds to Sompo to pursue our global strategic objectives through Sompo International whilst also providing Canopius with a secure and clear strategic future.”

Michael Watson, Executive Chairman of Canopius, said: “We greatly appreciate all the support that has been given to our company by Sompo during their period of ownership. We are also very grateful that we have been able to pursue this new path for our business. Despite the change in ownership, the deep mutual respect between our two businesses will continue through the collaborative working relationship we will maintain with Sompo as we go forwards.”

Sompo Holdings will now be on the look out to put the cash from this sale to work on future acquisitions which can complement its growing, global insurance and reinsurance platform.

On completion of the sale, Canopius, a top ten insurer at Lloyd’s, will become a standalone re/insurance business led by standing Executive Chairman Michael Watson and Chief Underwriting Officer Mike Duffy.

Watson explained; “I am truly excited to be making this announcement today. This provides us with a golden opportunity to create a world class specialty (re)insurance franchise through harnessing the extraordinary talents of our staff and the acumen and financial resources of new owners Centerbridge. We are grateful to Sompo for their support for our business over the past three years and recognise their generosity in allowing us to chart this new course. Our close business and personal connections with Sompo have existed for many years and we hope to maintain a strong business relationship with them in future.”

Mike Duffy added; “This is a fantastic opportunity for Canopius. We have vastly experienced, leading underwriters with deep knowledge and an obsessive underwriting mentality. They are supported by cutting edge analytics and a first class claims capability, giving us a superb platform to drive growth at the right time. We will continue to focus on those classes where we add value to our clients and brokers and seek profitable diversification through the recruitment of new teams and entry into new classes. I believe we represent a very attractive home for industry leading talent who will thrive in an environment where performance and accountability is rewarded and an independent mind-set is valued.”

Ben Langworthy, Senior Managing Director at Centerbridge, also said; “We are very pleased to announce the acquisition and greatly look forward to working with Michael Watson and all the team at Canopius. We believe that Canopius’ expertise and successful track record in the global insurance market offers a compelling proposition in the insurance space. Canopius is an established and high quality global (re)insurer, offering skilled underwriting, excellent risk management and a truly open-minded approach. Our aim will be to support continuity of the management team and business to build on the very impressive success achieved to date.”

Sompo Holdings Inc. was advised on the sale by Macquarie Capital and GC Securities, both acting as financial advisers, and Mishcon de Reya LLP as its legal adviser.

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