Business Context and Reporting Period
This Form 8-K, dated January 6, 2017, reports a strategic corporate event for Arch Capital Group Ltd. (ACGL). The filing details the launch of Premia Reinsurance Ltd. ("Premia Re"), a newly formed multi-line Bermuda reinsurance company co-sponsored by ACGL and Kelso & Co.
Key Financial Metrics and Capital Structure
The filing outlines the initial capitalization of Premia Holdings Ltd. ("Premia"), the parent company of Premia Re:
- Total Common Equity: $400.0 million
- Unsecured Senior Debt: $110.0 million
- ACGL Investment: Arch Reinsurance Ltd. (ARL) and certain co-investors contributed $100.0 million, acquiring approximately 25% of Premia's common equity and warrants.
- Kelso Investment: Affiliates of Kelso and co-investors contributed $300.0 million, acquiring the remaining 75% of common equity and warrants.
The filing does not provide revenue, profit, cash flow, or margin data for Premia Re as it is a newly formed entity. ACGL's consolidated financial metrics are not included in this specific report.
Material Changes and Strategic Operations
Premia Re is licensed as a Class 4 insurer by the Bermuda Monetary Authority. Its strategy focuses on reinsuring or acquiring companies and reserve portfolios in the non-life property and casualty insurance and reinsurance run-off market. Key operational arrangements include:
- Reinsurance Treaty: ARL will provide a 25% whole account quota share reinsurance treaty on business written by Premia Re.
- Support Services: Another ACGL subsidiary will provide administrative and support services to Premia for a specified period.
Management, Governance, and Outlook
Leadership for Premia Re has been appointed as follows:
- CEO: William O'Farrell (previously Chief Reinsurance Officer at Chubb Ltd.)
- CFO: Scott Maries
- Board of Directors: A seven-person board includes Nicolas Papadopoulo (CEO of ACGL's Reinsurance Group) and Maamoun Rajeh (CEO of ARL).
The filing does not contain specific financial guidance, risk factors, or contingencies beyond the standard operational risks inherent in the reinsurance run-off market.
Investor Verification Checklist
- Verify the terms of the 25% whole account quota share reinsurance treaty between ARL and Premia Re.
- Confirm the duration and scope of administrative support services provided by ACGL subsidiaries.
- Review the specific acquisition targets or reserve portfolios Premia Re intends to pursue in the run-off market.
- Monitor the utilization of the $110.0 million unsecured senior debt facility.