Reinsurer will only float when conditions are favourable
Third Point Re chief executive John Berger is making sure his firm is ready for stock market flotation when the time is right.
While he acknowledges conditions are currently unfavourable, and the start-up does not yet have a couple of years’ profitable development to show prospective investors, Berger sees little sense in holding back on preparations for an initial public officering (IPO).
“We’re preparing from day one for it,” Berger told Global Reinsurance. “We have all the compliance efforts, which are enormous, well underway.” He says a worst-case scenario is the conditions being right but the company still having nine months of work to prepare for flotation. “When and if the time comes, we want to be ready to go.”
He adds that a worst-case scenario would be having the right conditions to float but still needing to put in nine months’ preparation before being able to do so. “When and if the time comes, we want to be ready to go,” he says.
As well as running the company and keeping a firm eye on discipline in his additional role as Third Point Re’s chief underwriting officer, Berger is spending his time meeting with equity analysts and potential investors in preparation for the eventual IPO.
“We are starting to spend more time with analysts and their investors,” he says. “These are the people that potentially are interested in us at IPO time and subsequently, so we periodically meet with those people.”
Third Point Re started writing on 2 January this year. While it has $800m of surplus, it aims to write a modest amount of premium – $150m – in its first year. This both because of a lack of profitable opportunities and Third Point Re’s cautious underwriting approach.
The company is eschewing property-catastrophe risk and writing a more conservative portfolio of reinsurance risks to balance its relatively risky investment strategy. Hedge fund Third Point is managing the reinsurer’s investment portfolio.