Catlin Westgen Group Limited Announces $532 Million Capital Raising.
Capital raising allows expansion of underwriting at Lloyd's and launch of Catlin Insurance Company Limited
Catlin Westgen Group Limited ("CWGL" or the "Company") today announced the raising of $532 million of new capital (the "Transaction"). The Transaction consists of the subscription for $482 million of new equity capital and the provision of a $50 million term loan facility. The equity capital, in the form of convertible preferred stock, is being provided by a consortium of private equity investors led by Capital Z Financial Services Fund II, LP ("Capital Z"), J.P. Morgan Corsair II Capital Partners ("Corsair") and The Cypress Group L.L.C ("Cypress"). The term loan facility is being provided by JPMorgan Chase Bank. This capital infusion will allow the Company to capitalise on the significant opportunities it sees in the insurance and reinsurance markets.
The Transaction will allow CWGL to increase its underwriting capacity at Lloyd's through Syndicate 2003, its dedicated corporate syndicate. Additionally, CWGL will begin underwriting through its Bermudan insurance company, Catlin Insurance Company Limited ("CICL"). This will provide the Company with additional underwriting flexibility and permit the development of innovative products to meet emerging client needs. Approval has been granted by the Bermuda Supervisor of Insurance for CICL to upgrade its existing Class 3 license to Class 4. CWGL envisages continuing to write a balanced range of business through its Lloyd's, Bermuda and other platforms, including energy and industrial, reinsurance, marine, professional indemnity and financial institution business.
A rating is pending from a major international rating agency.
The Company and its subsidiaries will continue to be managed by the same team that has successfully developed its strong franchise and track record over the past eighteen years. Nicholas B. Paumgarten, the Corsair Director, will serve as interim Chairman of the Company's Board of Directors until an independent non-executive Chairman is appointed. Other representatives of the new investors in the Company will also join the CWGL Board.
The Transaction was led by Capital Z (investing $100 million), Corsair (investing $125 million) and Cypress (investing $125 million). Other investors, whose participation is subject to regulatory approval, are investing a total of $107 million. These investors are Centre Partners Management LLC, Charlesbank Capital Partners LLC and Conning Capital Partners. Western General Insurance Ltd. ("Western General"), the holder of 65 per cent of CWGL's equity prior to the Transaction, will roll over its current investment as part of the transaction and will also increase its cash investment in CWGL by $25 million. CWGL management will also be rolling over their shares in the Company.
Commenting on the Transaction, Stephen Catlin, CEO of the Company, said: "This capital raising gives CWGL the capital strength to meet the growing needs of our worldwide client base and to capitalise on the many opportunities we see in the market today. I am excited about the prospects it offers for our clients, staff and shareholders and look forward to building on the Company's 18-year track record of success."
Mark Gormley of Capital Z said: "This transaction represents a tremendous opportunity to capitalise on the favourable conditions in the insurance industry by combining $532 million of fresh capital with an experienced, successful management team. We are excited by this opportunity and look forward to working with the Catlin team to continue the development of the business."
Nick Paumgarten of Corsair commented: "CWGL is a quality business with a strong management team and an excellent market reputation. We believe that its development of alternative trading platforms in Bermuda and elsewhere will allow the Company to leverage its excellent infrastructure and relationships to service customers in the global marketplace, during a period of unprecedented change in the worldwide specialty insurance sector."
William Spiegel of Cypress remarked: "The Catlin team is one of the most active and capable management teams in the Lloyd's market. This transaction will provide CWGL with a very strong foundation which, when combined with CWGL's team of highly experienced underwriters and strong client and broker relationships, will allow the Company to take advantage of the near-term conditions in the global insurance market and the Lloyd's market in particular. CWGL is now also well positioned to develop the scale and capital strength to be a long-term leader in its sector of the insurance industry, and we look forward to working with the CWGL team in the years ahead."
Peter Rackley of Western General said: "Western General has been very pleased with the results of its seven year investment in Catlin and looks forward to its continuing involvement with the company. We are convinced that this transaction offers significant benefits to the company's shareholders, management and customers, and have therefore decided to increase our cash investment in Catlin as part of this capital raising."
J.P. Morgan plc, a subsidiary of J.P. Morgan Chase & Co., acted as the Company's exclusive placement agent in relation to the Transaction. J.P. Morgan plc and Lehman Brothers Europe Limited acted as the Company's financial advisors in relation to the Transaction.
J.P. Morgan plc, which is regulated by the Financial Services Authority, is acting exclusively for Catlin Westgen Group Limited and no one else in connection with the Transaction and will not be responsible to anyone other than Catlin Westgen Group Limited for providing the protections afforded to customers of J.P. Morgan plc or for giving advice in relation to the Transaction.
Lehman Brothers Europe Limited, which is regulated by the Financial Services Authority, is acting exclusively for Catlin Westgen Group Limited and no one else in connection with the Transaction and will not be responsible to anyone other than Catlin Westgen Group Limited for providing the protections afforded to customers of Lehman Brothers Europe Limited orfor giving advice in relation to the Transaction.
This press release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration pursuant to the Securities Act of 1933.
Notes to Editors
The Transaction has met with the unanimous support of the Lloyd's Members' Agents representing the capital providers to Syndicate 1003. It also allows Catlin to increase its managed Lloyd's capacity from pound sterling350 million to pound sterling537 million (including Qualifying Quota Shares, the majority of which are written by CICL).
Information on Catlin Westgen Group Limited
Catlin Westgen Group Limited is a Bermuda-based insurance group with operations in a number of locations worldwide. Subsidiaries of CWGL operate at Lloyd's as manager of syndicates 1003 and 2003, and as sole capital provider to Syndicate 2003. CWGL has a presence in Bermuda through its subsidiary Catlin Insurance Company Limited, which was established in 2000 and will begin underwriting following the Transaction. Other subsidiaries of CWGL in the U.S., Scotland, Singapore and Malaysia source business for the syndicates in Lloyd's and CICL in Bermuda.
Information on Capital Z
The Capital Z Financial Services Fund II, LP ("CZF II") is a $1.84 billion private equity fund that focuses exclusively on investments in the financial services industry. Since 1990, CZF II and its predecessor funds have invested in excess of $2 billion in approximately 50 transactions, making it the largest, specialized private equity investor focused on the financial services industry. Founded in 1998, CZF II is run by seven partners with offices in New York and London.
Information on Corsair
JP Morgan Corsair II Capital Partners, L.P. is a $1 billion private equity fund managed by JPMorgan and dedicated to investments in global financial institutions including banks, speciality finance, and insurance companies. Corsair II has been JPMorgan's primary non-strategic investment vehicle in the financial services sector since 1993. One of Corsair's core investment philosophies is to provide capital to financial institutions with strong prospects that are at critical stages in their corporate lives. Recent Corsair investments include: Axis Specialty Limited, Koram Bank, and Uniao de Bancos Brasileiros S.A. (Unibanco).
Information on Cypress
The Cypress Group L.L.C. manages two private equity funds with more than $3.5 billion in commitments. Cypress invests in privately negotiated transactions, targeting operating businesses and investing with management to foster continued growth. Investments made by Cypress include Cinemark, Inc.; AMTROL, Inc.; Williams Scottsman, Inc.; WESCO International, Inc.; ClubCorp, Inc.; Danka Business Systems PLC; MedPointe Inc.; and Montpelier Re Holdings Ltd.
Information on Western General
Western General Insurance Ltd. was incorporated in 1980 under the Laws of Bermuda and is a wholly-owned subsidiary of Western International Financial Group Ltd. Western General is engaged in the insurance and reinsurance of worldwide property and casualty risks and equity investments in insurance related companies including Catlin Westgen Group Limited and Max Re Capital Ltd.
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