Watford Holdings Ltd. and its wholly owned subsidiary Watford Re Ltd.
(“Watford” or the “Company”), a newly formed, Bermuda-based multi-line
reinsurer, announced today that Watford Re has completed a $1.13 billion
capital raise. The initial capitalization comprises $907 million in
common equity, including a $100 million investment by a subsidiary of
Arch Capital Group Ltd. (“Arch”), and $226 million in preference shares.
Watford is a Class 4 insurer licensed by the Bermuda Monetary Authority
and has received a financial strength rating of A- from A.M. Best
Company.
Watford intends to combine a diversified reinsurance business with a
disciplined investment strategy comprised primarily of non-investment
grade credit assets, which it believes will generate attractive
risk-adjusted returns for its shareholders over the long term. The
Company’s reinsurance business will be managed by Arch Underwriters Ltd.
(“Arch Underwriters”), a newly formed subsidiary of Arch, and its assets
will be managed by Highbridge Principal Strategies, LLC (“HPS”), a
subsidiary of J.P. Morgan Asset Management.
John Rathgeber, a 30-year reinsurance industry veteran who was most
recently the Vice Chairman of Arch Worldwide Reinsurance Group, will
serve as Chief Executive Officer (CEO) of Watford. Jon Levy will serve
as Chief Risk Officer and Roderick Romeo will serve as Chief Financial
Officer. Watford’s Board of Directors comprises experienced insurance
and finance executives and will be led by Walter Harris, who will serve
as Chairman of the Board. Mr. Harris, who has more than 30 years of
experience in the insurance industry, currently serves as the Senior
Advisor and Vice Chairman Emeritus of Alliant Insurance Services and is
a Director on the Board of Loews Corporation.
“We believe our unique strategy will enable us to address an unmet need
in the reinsurance marketplace today,” said Mr. Rathgeber. “We are
thrilled to partner with Arch and Highbridge, two leading institutions
within their respective fields. Our management team is focused on
providing our clients a high level of service, creative reinsurance
solutions and prompt claims payment.”
Arch Underwriters will manage Watford’s reinsurance portfolio under a
long-term services agreement. Arch Underwriters is a subsidiary of Arch,
a publicly traded company (NASDAQ: ACGL) and a leading insurance and
reinsurance company with $6.55 billion in capital as of December 31,
2013. Marc Grandisson, Chairman and CEO of Arch Worldwide Reinsurance
and Mortgage Groups, and Nicolas Papadopoulo, Chairman and CEO of Arch
Reinsurance Ltd., have joined Watford’s Board of Directors.
“Our partnership with Watford is driven by the opportunity we see to
underwrite attractive medium- to long-tail, multi-line business,” said
Mr. Grandisson. “We look forward to working with Watford to serve the
reinsurance needs of its clients and build long-term value for its
shareholders.”
HPS will manage Watford’s investment portfolio through a long-term
investment management agreement. Founded in 2007 by CEO Scott Kapnick,
HPS has approximately $19 billion in assets under management as of March
2014, predominantly in non-investment grade corporate credit.
Purnima Puri, Managing Director of HPS, said: “We believe that
non-investment grade credit complements Watford’s reinsurance strategy
and we are proud to partner with Arch and Watford.”
J.P. Morgan Securities LLC served as the exclusive capital structuring
advisor and Clifford Chance US LLP served as outside counsel for
Watford. Cahill Gordon & Reindel LLP served as outside counsel for Arch,
and Fried, Frank, Harris, Shriver and Jacobson LLP served as outside
counsel for HPS.
For more information about Watford and to contact the Company, please
visit www.watfordre.com.
Copyright Business Wire 2014