International investment firm TowerBrook Capital Partners and private equity firm Further Global Capital agreed to acquire 100 percent of the common stock of specialty insurer ProSight Global for $ 586 million in cash.
The deal, announced last Friday, means the specialty insurer will continue as a private company. ProSight went public in July 2019.
The acquisition is expected to close in the third quarter of 2021, subject to customary closing conditions, including receipt of required regulatory approvals. Another closing condition is the completion of a reinsurance transaction with Enstar that will serve to reposition ProSight's capital to support future growth, the acquirers said.
AM Best explained in a separate statement that the reinsurance of the majority of ProSight's existing reserves includes a transfer of a lossy from the ground portfolio of discontinued employee benefits and redundant employee benefit lines and unfavorable development coverage on ProSight's diversified mix of general liability classes of company.
ProSight will provide net loss reserves of approximately $ 500 million and Enstar's subsidiary will provide an additional aggregate limit of $ 250 million. AM Best said it expects the transaction to initially reduce ProSight Specialty Group's leverage. The rating agency added that it would review the credit ratings of members of ProSight Specialty Group – New York Marine and General Insurance Co., and its wholly owned subsidiaries, Gotham Insurance Co. and Southwest Marine and General Insurance Co. – does not change. result of the acquisition.
The New Jersey-based ProSight website indicates that the group's current financial level rating is “A-”.
When the acquisition agreement is finalized, Jonathan Ritz will become ProSight's new CEO, while current president and CEO, Larry Hannon, will continue to serve as president. In previous roles, Ritz was president of Aspen Insurance Holdings Limited, chief operating officer of Validus Holdings Limited and CEO of Validus Specialty.
Under the terms of the deal, ProSight shareholders will receive $ 12.85 per common share, representing a 42 percent premium over the stock's closing price on September 23, 2020, the last trading day prior to media reports of a potential acquisition by TowerBrook .
TowerBrook will acquire a majority stake in ProSight, with Further Global as a major co-minority investor.
Investors said the deal for ProSight is the result of a focused approach to the insurance market. For TowerBrook, the acquisition is in line with an investment strategy to support strong management teams operating in emerging markets and builds on a long history of investment in insurance and financial services. For Further Global, the investment in ProSight is a continuation of clients' successful track record of investing in the insurance and reinsurance industry over the past 22 years, the statement said.
“TowerBrook and Further Global will work with ProSight's management team to build an enduring specialty insurance franchise,” they said.
Founded in 2009, ProSight writes a diverse mix of admitted and unauthorized specialty industries in all 50 states.
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