Canadian Underwriter

Hyperion deal shows pension fund to be bullish on insurance

December 7, 2017   by Canadian Underwriter

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With its fourth major insurance acquisition in 18 months, the manager of Quebec’s public pension funds was looking for exposure to markets in Asia and Latin America, a Caisse de dépôt et placement du Québec spokesman told Canadian Underwriter Wednesday.

Caisse, which already has an ownership stake in Sedgwick Claims Management Services Inc., announced Dec. 4 it plans to acquire a significant minority of London-based Hyperion Insurance Group for more than $400 million.

Hyperion owns brokerage RKH Specialty, RKH Reinsurance Broker and Howden Broking Group Limited, which has offices in 30 countries and whose offerings include marine, commercial specialty and professional liability.

With offices in more than 37 countries, Hyperion brings Caisse “exposure to a diversified set of markets,” including Asia and Latin America, which are “two priority markets” for Caisse, a Caisse spokesman wrote Wednesday in an email to Canadian Underwriter.

Hyperion is led by founder and CEO David Howden, who “plans on remaining at the helm of the company, which to us, was very important,” the Caisse spokesman added.

Caisse “will deliver valuable insight to help direct our future plans, whilst remaining supportive of our independence,” Howden stated in a press release.

The Caisse deal with Hyperion is subject to anti-trust and regulatory filings. The Caisse spokesperson said Caisse is not disclosing what percentage of Hyperion voting shares it will own but that Caisse is “very comfortable” with its “governance rights. “

Other public pension plans investing in insurance include the Ontario Municipal Employee Retirement System (OMERS), which owns a significant minority of Allied World Assurance Company Holdings AG, a Zug, Switzerland-based reinsurer and commercial primary insurer that has a Canadian branch. Allied World is majority-owned by Toronto-based Fairfax Financial Holdings Ltd. (the corporate owner of Northbridge and OdysseyRe), which closed its acquisition of Allied World July 6, 2017.

OMERS is “expanding and exploring partnerships with others in the insurance sector to look for opportunities globally,” the retirement system’s head of insurance investments strategy, Sharon Ludlow, told Canadian Underwriter earlier.

The Canada Pension Plan Investment Board announced in 2016 it agreed to buy Ascot Underwriting Holdings Ltd. from American International Group Inc.

Caisse has made a number of significant moves in the insurance space over the last couple of years. “We have clearly made the insurance industry a focus of ours — this is our fourth global insurance investment in the last 18 months or so,” the Caisse spokesperson said Wednesday.

Caisse invested US$500-million in Sedgwick about a year ago; Sedgwick announced Dec. 6 that it has agreed to buy Cunningham Lindsey.

In 2016, Caisse acquired 44% of Australia-based Greenstone, whose holdings include the Choosi insurance comparison website.

And earlier this year Caisse announced it is one buyer of USI Insurance Services LLC from Toronto private equity firm Onex, which was founded by Gerry Schwartz. The other owner of USI is private equity firm KKR. Valhalla, N.Y.-based USI placed 11th worldwide in 2014 by Finaccord Ltd., on a list of commercial brokerages, ranked by non-life P&C broking revenues.

With the Greenstone deal in Australia, Sedgwick and USI in the United States, and now Hyperion in Europe, Caise has invested more than $3 billion in the insurance sector.