ANV Holdings chief executive Matt Fairfield believes there will inevitably be rival bidders for Flagstone Re.
ANV registered an interest in Flagstone prior to Validus Re having a $600m cash and stock bid accepted last month, but has since dropped that interest. Fairfield, who is in Monte Carlo this week, told Global Reinsurance that competitors would be attracted because of the small cash component of the deal.
“I sent David Brown an email congratulating him on the deal and I think he was happy,” he said. “I wish [Validus chief executive] Mr Ed Noonan all the best. He said he would be prepared to fight for it and I guess that is what he might have to do. Other people are certainly going to put more cash in.”
One thing in Validus’s favour was approval of the deal from Flagstone’s two main shareholders Trilantic Partners and Lightyear Capital, he said. ANV recently completed its acquisition of Flagstone’s Lloyd’s of London platform and Fairfield believes Lloyd’s will be able to utilise ANV’s resources and experience in its own business plan.
On a wider scale, Fairfield said the impact of the euro zone sovereign debt crisis would be significant on the market, with capital being eroded. Moreover, the implementation of Solvency II was already taking up a lot of time and money, he said.
“What will it take for the market and rates to change? Maybe it will happen when the stakeholders in our ecosystem realise that what we are doing is unsustainable and perhaps is the death knell for our business. “It will be almost like the moment when Noah built the Ark.”