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Shareholder urges RenRe to sell itself

Shares of Bermudian reinsurer RenaissanceRe gained today after an institutional shareholder publicly urged the company to put itself up for sale.

TimesSquare Capital Management revealed that it had pressed the reinsurer's board of directors for “an immediate review of strategic alternatives, including an exploration of a potential sale of the company”.

RenRe responded this afternoon, saying that its board “understands, and is committed to, its fiduciary duties to act in the best interests of all shareholders”.

As of 2:57pm Bermuda time, RenRe's shares were trading at $138.75, up by 4.78 per cent for the day on higher than normal volume.

The industry has seen a wave of deals in recent years with acquirers tending to pay handsome premiums over book value.

TimesSquare, which manages more than $19 billion in assets, has an approximately 2 per cent stake in RenRe, having been invested in the company since 2008.

In its letter to the RenRe board, TimesSquare stated: “We believe there are a number of potential acquirers that would covet RenRe's dominant and unique position in third party capital management, as well as the company's proven track record of superior underwriting, risk management and tangible book value per share growth.

“Our opinion is that an active competitive sale process for the company should be launched, which would likely yield a significant control premium over the current share price.

“To this end, we are requesting that the Board immediately commences a review of strategic alternatives, including an exploration of the sale of the company, in order to maximise value for shareholders.”

RenRe itself acquired fellow Bermudian reinsurer Platinum in 2015 in a deal worth about $1.9 billion.

TimesSquare highlighted the takeovers of XL Group, Validus Holdings, Ironshore and Endurance as examples where acquirers paid a substantial premium over book value.

The asset manager said the growing presence of alternative capital had caused a “structural transformation” in the property-catastrophe reinsurance market, which had “dampened” pricing response to large-scale events.

“Further, as the industry environment evolves, we have diminished conviction that RenRe's share price will appropriately reflect intrinsic value,” TimesSquare added.

The reinsurer issued a statement today saying that its chairman and chief executive had separately met with representatives of TimesSquare in recent months.

“We have considered fully TimesSquare's views and have shared them with our board,” the statement added.

“Our board understands, and is committed to, its fiduciary duties to act in the best interests of all shareholders.

“Our board and management team continuously focus on enhancing shareholder value through execution of the company's strategic plan.

“We will maintain an open and active dialogue with all of our shareholders as we continue to work to enhance shareholder value.”

RenRe celebrated its 25th anniversary this year and is the only one of the wave of companies set up in the wake of Hurricane Andrew to survive as a stand-alone company.

Shareholder pressure: RenaissanceRe is coming under pressure from shareholder TimesSquare to put itself up for sale (File photograph)

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Published October 02, 2018 at 3:21 pm (Updated October 02, 2018 at 4:00 pm)

Shareholder urges RenRe to sell itself

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