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Crestview, CVC and Pine Brook invest $650m in Fidelis

Private equity club deal marks latest investment in insurance sector

Crestview Partners, CVC Capital Partners and Pine Brook have invested $650 million in Fidelis Insurance Holdings Ltd, according to a statement from Fidelis.

The club of New York-based firms has bought preferred and common equity in the Bermuda-based company. Individual investors, family offices and institutions contributed a further $850 million, raising the newly formed insurer and reinsurer's total equity capital to $1.5 billion.

Crestview, CVC and Pine Brook have appointed former Lancashire Holdings executives Richard Brindle as chief executive and Neil McConachie as chief underwriting officer and chief financial officer. Edward Russell will serve as chief investment officer.

“I backed Richard Brindle and Neil McConachie as a founding investor in Lancashire Holdings, and sat on the board from Lancashire's formation through 2014,” Pine Brook managing director William Spiegel told Private Equity International . “Richard and Neil are a formidable team whose insurance record, focus on risk management and creativity make them unparalleled insurance executives, and we are privileged to be partnering with them for a second time in the formation of Fidelis.”

Speigal said that Pine Brook finds the simplicity of the Fidelis business model very appealing. Insurance companies should be looking to generate the highest growth in book value per share, and that means companies should be focused on both investments and underwriting, not just one or the other, he said.

Fidelis, which has secured a rating of A- from insurance rating firm A.M. Best, will underwrite a book of insurance and reinsurance business across the property, energy, marine and aviation risk categories. In addition, the company will work with Goldman Sachs' Alternative Investments & Manager Selection Group in respect to the management of its insurance portfolio.

“Fidelis will pursue a total return strategy by tactically shifting capital and risk between insurance and investments to maximize our return on equity across market cycles,” Brindle said in the statement.

The deal follows another substantial investment in Nassau Reinsurance Group by San Francisco private equity firm Golden Gate Capital last month, as reported by PEI.

Clifford Chance's US office acted as legal advisers to Fidelis, while PricewaterhouseCoopers and Goldman Sachs acted as its financial advisors. Goldman also served as placement agent for the capital raise.

Law firm Skadden, Arps, Slate, Meagher & Flom advised Crestview Partners and Pine Brook, while Cadwalader, Wickersham & Taft LLP was counsel to CVC, which was also advised by AON Securities and KPMG.