RenRe O’Donnell puts money where his mouth is: $2.5m into Validus Re deal

The CEO of reinsurer  RenaissanceRe, Kevin O’Donnell (pictured), will slap down $2.5 million from his own pocket for new shares in his firm’s pending capital increase in a sign of confidence that the  group’s acquisition of AIG’s treaty reinsurance operations is a money-maker.

“To demonstrate my conviction that this transaction will deliver material value to our shareholders, I plan to invest $2.5 million of my own personal funds in the public equity offering we are currently conducting,” O’Donnell told analysts following the announcement of the acquisition.

RenaissanceRe struck terms with AIG for a nearly $3 billion purchase of AIG’s reinsurance operations, chiefly Validus Re, exclusive of 95% of existing reserve development, plus the ILS manager AlphaCat and renewal rights to the treaty reinsurance book at unit Talbots.

RenaissanceRe will be paying $2.985 billion, including $2.735 billion in cash and $250 million in new equity. To fund the cash outlay, RenaissanceRe is running a public offering of 6.3 million new shares plus unspecified new debt. At the $195 share price seen after the Tuesday market open and if underwriters buy up their bonus options, the issue would bring upwards of $1.4 billion in gross proceeds.

O’Donnell last reported holdings of just under 289,000 shares, a fractional 0.66% stake. A $2.5 million outlay in the SPO priced to match the Tuesday open would still bring a notable dilution of his stake, at 0.2% of the plotted SPO volume.

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