Private Equity News & Analysis

MMC regroups as Stone Point

The private equity arm of beleaguered insurer and professional services conglomerate Marsh & McLennan has spun out to form an independent, called Stone Point Capital, with more than $2bn in capital under management.

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Marsh & McLennan Companies today announced private equity subsidiary MMC Capital had completed its management spinout to form an independent firm called Stone Point Capital.

Marsh is currently under regulatory scrutiny for what the US Securities and Exchange Commission calls “related-party transactions” between the parent company and its former private equity arm. In addition, New York Attorney General Eliot Spitzer has sued the corporation as part a sweeping attack on supposed “bid rigging” in the US insurance industry.

Stone Point, based in Greenwich, Connecticut, will continue to be led by chief executive officer Charles Davis. The firm will continue to invest in the insurance and financial services sectors, according to a press release.

Stone Point will managed private equity assets valued at roughly $2 billion, including the $1.1 billion (€894 million) Trident III fund, raised in 2003. The subsidiary raised its first partnership in 1994.

In the statement, Davis said Trident’s limited partners “voted overwhelmingly in favor” of the management spinout. Michael Cherkasky, president and CEO of Marsh, said in a statement: “We believe this new structure will remove any appearance of conflict. . . [Marsh] will remain the largest investor in the Trident Funds but will not participate in the investment decisions or management of Stone Point or the Trident Funds.”

For most of its history, MMC Capital described its relationship with senior Marsh executives as a competitive advantage.

Turmoil at another financial services giant – AIG – has led to changes in its private equity subsidiary. Earlier this month two senior executives of AIG Capital Partners were fired after agitating to lead a spinout of the group.

In related news, Stephen Friedman, a senior principal of MMC Capital from 1998 to 2002, has rejoined Stone Point after serving as assistant to President Bush for economic policy.

The outgoing staff of MMC Capital will receive a $3.3 million partial-year bonus, according to the release.

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