Willkie represented Lloyd’s insurer Ark in its definitive agreement with White Mountains.
On October 1, Bermuda-domiciled financial services holding company White Mountains Insurance Group, Ltd. announced it entered into a definitive agreement to invest fresh capital in and to acquire a majority stake in Ark Insurance Holdings Ltd, the parent company of Ark Syndicate Management Limited. The transaction will provide Ark with increased underwriting capacity, which will allow it to capitalize on improving rates across the (re)insurance sector both within Lloyd’s and in Bermuda. Willkie represented Ark in the transaction.
White Mountains will contribute $605 million of equity capital to Ark, at a pre-money valuation of $300 million, increasing to $450 million based on performance and will purchase $41 million of shares from Ark’s existing shareholders. In addition, White Mountains has also committed to fund up to an additional $200 million of equity capital to Ark in 2021. In total, White Mountains post-closing capitalization will exceed $800 million (and will exceed $1 billion if the additional $200 million is contributed in full.)
At closing, White Mountains will own 72% of Ark on a basic shares outstanding basis (63% on a fully-diluted, fully-converted basis, taking account of a sweat equity plan for the go-forward Ark management team). White Mountains expects the transaction to close in January 2021.
Ark is a leading Lloyd's platform well positioned to take advantage of the hardening market in property & casualty insurance. Ark manages the underwriting of syndicates 4020 and 3902 at Lloyd's. The syndicates underwrite a diversified and balanced portfolio of reinsurance and insurance, including property, accident & health, energy, marine and political risks. Ark currently has approximately $500 million of stamp capacity. With White Mountains' capital, Ark plans to grow its business substantially by (i) increasing aligned capacity at its Lloyd's syndicates to 100%, (ii) increasing overall stamp capacity, (iii) converting Ark's existing Bermuda reinsurance entity into a Class 4 reinsurer and (iv) hiring talented underwriters in the London and Bermuda markets.
The Willkie team was led by London partner Andrew Tromans with assistance from associates David Griffiths, Claire Miles, Nicole Kapu-Leyland, Oliver Johnson and Ida Nizankowska-Polus.
