XL Group and private equity firm Stone Point Capital LLC announced the formation of a new Bermuda-based company to act as an investment manager in insurance-linked securities and other reinsurance capital markets products on Thursday.
XL has a 75 percent ownership stake in the company and funds managed by Stone Point have the remaining 25 percent.
When operations are fully commenced, the focus of the company will be on ILS and index-linked products as well as on XL-designed reinsurance products, XL said in a statement.
The parties intend to invest up to an aggregate of $135 million in funds to be formed, alongside potential third-party investors.
The new company will offer investors access to both reinsurance capital markets products and more traditional reinsurance opportunities, including certain risks currently written by XL.
XL Chief Executive Officer Mike McGavick said the initiative fits with XL’s continuing objective to offer innovative products to clients, while enhancing profitability and long-term value for XL shareholders.
Charles A. Davis, Stone Point’s Chief Executive Officer, noted that Stone Point’s relationship with XL dates back to 1986 when our team assisted with the formation of the company.
“We believe that the convergence of the traditional insurance and reinsurance markets, and the capital markets will continue,” Davis said, adding that the initiative is designed to offer third-party investors an opportunity to invest in this asset class in partnership with an experienced reinsurance underwriter.
Sources: XL Group, Stone Point Capital LLC