Oaktree Capital Group LLC is among investors backing a Bermuda insurance venture that’s seeking to raise $2 billion with plans for an initial public offering within five years.
Fidelis Insurance Holdings Ltd. is led by Richard Brindle, the former chief executive officer of Lancashire Holdings Ltd., according to a document from New York-based Goldman Sachs Group Inc. pitching the venture to investors. Founding investors including Crestview Partners, Pine Brook and Howard Marks’s Oaktree are expected to buy a quarter of Fidelis’s common equity, the document shows.
Fidelis is seeking to distinguish itself as a company that can profit when prices for commercial or specialty coverage are high while increasing its focus on investing in other periods. The company is also highlighting its flexibility to pick who will oversee its investments, in comparison with rivals set up by hedge fund managers like Dan Loeb or David Einhorn.
Brindle’s operation can “capitalize on opportunities that neither the traditional insurance model nor the hedge fund reinsurance model effectively capture,” according to the document. Fidelis, working with Goldman Sachs to select investing strategies, has the “ability to dynamically adjust hedge fund allocations” and remove or add managers.
Investors will have the potential to exit through an IPO in three to five years if market conditions permit, Goldman Sachs said in the presentation. The announcement of four mergers in the industry within the past year could help the venture as insurance buyers seek to spread their risks, according to the document. Also, the company may have the opportunity to recruit industry veterans who are displaced by consolidation.
Fidelis “expects to pay low corporate income tax,” according to the pitch document, which was previously reported by Artemis and Insurance Insider. The company acknowledged tax-related risks. The U.S. Internal Revenue Service has been weighing whether to tighten regulations for offshore operations that allow investment managers favorable treatment on funds that are tied to reinsurance.
Founding investors including Oaktree previously backed London-based Lancashire, which was led by Brindle until last year. Investors in the insurer more than quadrupled their money from the company’s IPO under Brindle in 2005 through March of last year.