Stone Point, Lightyear back major insurance deals

In separate insurance deals, former Marsh affiliate Stone Point has led the capitalisation of a new reinsurance platform with $1.5bn, while Lightyear has acquired an insurance division from White Mountains Insurance Group.

Two major insurance deals were announced today by private equity firms.

In the first deal, Greenwich, Connecticut-based Stone Point Capital announced it has submitted a binding offer to acquire the business of AXA Re, a subsidiary of the French-based financial protection and asset management services provider AXA Group. AXA Re manages the group’s reinsurance activities and includes several subsidiaries.

Other lead investors in the consortium, which has formed Paris Re Holdings Limited to acquire the interests, include Hellman & Friedman, Vestar Capital Partners, Crestview Capital Partners, ABN Amro and New Mountain Capital. Paris Re will have an initial capitalisation of approximately $1.5 billion to assume the ongoing business of AXA Re.

Stone Point Capital, which manages Marsh & McLennan’s Trident Funds, has about $3 billion in assets under management. Prior to its formation in 2005, the principles of the firm headed MMC Capital, Marsh & McLennan’s private equity business.

Last October Stone Point entered into a deal with The Chubb Corporation to form a Bermuda-based reinsurer, Harbor Point Limited, which acquired the ongoing business of Chubb Re, Chubb’s reinsurance subsidiary.

Reinsurance companies provide backup coverage for the property casualty insurance industry. Many suffered heavy losses after Hurricanes Katrina and Rita battered the Gulf Coast, however some, including AXA Re, were still able to make a profit.

In separate news, New York-based Lightyear Capital said today it is leading an investor group that will acquire a majority stake in Sirius America Insurance Co. from White Mountains Insurance Group.

As part of the transaction, White Mountains will acquire an equity interest of approximately 18 percent in the acquiring entity.

Other investors in the group include Lehman Brothers Merchant Banking and AlpInvest Partners. The value of the transaction was not disclosed.

Delaware-based Sirius is a primary underwriter of program specialty insurance, in which carriers work closely with agents to underwrite specialty insurance for corporations and properties.

White Mountains acquired Sirius in 2004 as part of its acquisition of the Sirius group. The Bermuda-based financial services holding company said in February that it had taken $91 million in losses from hurricane claims in the fourth quarter.

Lightyear was involved in another insurance deal with Lehman Brothers in February, when the two firms were joined by hedge fund West End Capital in launching Flagstone Reinsurance Holdings Limited, a Bermuda-based global reinsurance company capitalized with more than $715 million.

In May of 2005 Lightyear made another purchase in insurance underwriting when it acquired the NAU Group, which specializes in the sale and underwriting of crop insurance business in the Midwestern United States and California.