White Mountains to buy majority stake in Lloyd's insurer Ark with up to $1bn investment

Bermuda-based White Mountains Insurance Group is acquiring a majority stake in Ark Insurance Holdings while investing fresh capital to support the Lloyd's insurer's expansion plans in the hardening property/casualty market.

Ark manages syndicates 4020 and 3902 at Lloyd's, which underwrite a diversified portfolio of insurance and reinsurance, including property, accident & health, energy, marine and political risks.

White Mountains will contribute $605 million of equity capital to Ark, at a pre-money valuation of $300 million and will also purchase $41 million of shares from existing owners.

The insurer will also commit to contribute up to an additional $200 million of equity capital to Ark in 2021.

The total post-closing capitalisation will exceed $800 million, or $1 billion if the additional $200 million is contributed in full.

At closing, White Mountains will have 72 percent ownership of Ark, or 77 percent if the additional $200 million is contributed in full.

All shares outstanding not owned by White Mountains will be owned by management rollover shareholders, primarily Ark's co-founders Ian Beaton and Nick Bonnar.

The Bermuda-based insurer believes that Ark's Lloyd's platform is well positioned to take advantage of the hardening market in property & casualty insurance.

With White Mountains' capital, Ark plans to grow its business substantially by increasing aligned capacity at its Lloyd's syndicates to 100 percent, and growing its overall stamp capacity, which is currently around $500 million.

The Lloyd's insurer also seeks to convert its existing Bermuda reinsurance entity into a Class 4 reinsurer and hire talented underwriters in the London and Bermuda markets.

Manning Rountree, chief executive of White Mountains, said: "Ian, Nick and the rest of the Ark team have built a high-quality insurance business that puts underwriting first. We are delighted to partner with them, and we are excited about the market opportunity in front of us."

Ian Beaton, chief executive of Ark, added: "We are delighted to have found the right capital partner in White Mountains, an institution with a long track record of successful insurance partnerships. We look forward to a fruitful relationship."

White Mountains expects the transaction to close in January 2021.