Chubb Corp and Stone Point LLC to create new reinsurer

Chubb Corporation [NYSE: CB] is teaming up with private equity firm Stone Point Capital LLC to start a new global reinsurance company named Harbor Point Limited.
Harbor Point, which is to be based in Bermuda, is expected to have an initial capitalization of about $1.5 billion, Chubb announced in a news release. Going forward, it is expected that Harbor Point will write a diverse portfolio of both property and casualty reinsurance products.
“It’s clear there are dislocations in the reinsurance marketplace as a result of recent catastrophe experience, among other issues,” John D. Finnegan, the president and CEO of Chubb, says. “This transaction offers Chubb an outstanding opportunity to leverage its position in that marketplace in a way that should achieve the greatest opportunity for significant upside capital appreciation.”
Chubb, along with Trident III LP a private equity fund managed by Stone Point Capital will be the lead investors in Harbor Point.
The Chubb Re management team, led by Chubb Re’s current CEO, John Berger, will manage Harbor Point. Stephen Friedman, a senior advisor to Stone Point Capital, will serve as the non-executive chairman of Harbor Point. Friedman is the former chair of Goldman, Sachs & Co.
As part of the transaction, Chubb will transfer to Harbor Point its continuing reinsurance business and certain related assets, including renewal rights effective January 1, 2006.
Harbor Point will not assume the reinsurance liabilities of Chubb relating to reinsurance contracts started before Dec. 31, 2005. Chubb will retain those liabilities and the related assets and reserves.
The closing of the transaction is subject to customary closing conditions, as well as the condition that $1.1 billion be raised from investors other than Chubb and Trident III. The closing is expected to occur by the end of November. Harbor Point will then commence underwriting upon receipt of necessary regulatory approvals.