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White Mountains Insurance Group Ltd. on Thursday said it has agreed to invest fresh capital in and acquire a 72% stake in Ark Insurance Holdings Ltd., parent company of Lloyd’s of London insurer Ark Syndicate Management Ltd.
The deal comes as Ark, which has $500 million of stamp capacity, is poised to take advantage of the hardening property casualty insurance market, the Bermuda-based insurer said in a statement.
The transaction, which is expected to close in January 2021, will see White Mountains contribute $605 million of equity capital to Ark, at a pre-money valuation of $300 million, and purchase $41 million of shares from existing owners, the statement said.
White Mountains will also commit to contribute up to an additional $200 million of equity capital to Ark in 2021, the statement said.
Total post-closing capitalization will exceed $800 million, rising to $1 billion if the additional $200 million is contributed in full, White Mountains said.
At close, White Mountains will own 72% of Ark, or 77% if the additional $200 million is invested, on a basic shares outstanding basis, the statement said. The remaining shares will be owned by management rollover shareholders.
In the future management rollover shareholders could earn additional shares in the company if and to the extent that White Mountains achieves certain multiple of invested capital return thresholds, the statement said.
With White Mountains’ capital injection, Ark plans to grow its business, increasing aligned capacity at its Lloyd’s syndicates to 100%, increasing its overall stamp capacity and converting its existing Bermuda reinsurance entity into a Class 4 reinsurer.
It will also expand by hiring underwriters in the London and Bermuda markets, the statement said.
Ark was founded in 2007 by industry executives Ian Beaton and Nick Bonnar and manages the underwriting of syndicates 4020 and 3902 at Lloyd’s.