Third Point moves to create London-listed reinsurer via Malibu deal

Deal could face shareholder opposition due to major concerns

Third Point moves to create London-listed reinsurer via Malibu deal

Reinsurance News

By Kenneth Araullo

Third Point Investors Ltd. has entered into a sale and purchase agreement to acquire Malibu Life Reinsurance SPC, a life and annuity reinsurer, in a transaction intended to form a fully capitalized, London-listed reinsurance entity. 

The acquisition will be executed through an all-share combination with Third Point issuing new ordinary shares in exchange for ownership of Malibu, which is currently held by Malibu Life Holdings LLC. 

The deal, which still requires approval from Third Point shareholders at an extraordinary general meeting expected in June, was unanimously recommended by the firm’s strategy committee. If approved, it would create a reinsurance operating company targeting mid-teen returns on equity by 2027. 

According to a statement by Third Point, Malibu aims to grow its annual premiums to approximately US$5 billion by that time, leveraging a spread-based business model and a scalable operational platform. 

Third Point LLC has previous experience in reinsurance through its establishment of Third Point Re in 2011. That venture eventually merged with Sirius Group to form SiriusPoint, marking an earlier phase in the asset manager’s expansion into the insurance sector. 

Third Point expansion plans 

Malibu director Gary Dombowsky (pictured above) said the proposed combination represents a significant step and will position the company to expand its presence in the reinsurance sector. 

“The US fixed annuity market is growing rapidly and there is a structural need in the sector to provide competitively priced and innovative reinsurance solutions,” he said. 

Dombowsky said Malibu is structured to respond to these needs through its capital backing and investment management support from Third Point. 

Malibu’s tangible book value stands at approximately US$68 million, factoring in a US$16 million equity investment made by Third Point in the first quarter of this year. The transaction qualifies as a reverse takeover under UK listing regulations, which mandates shareholder approval and additional disclosures. 

Third Point LLC initially launched Malibu Life Reinsurance SPC in 2023 as a Cayman Islands-based reinsurer focused on asset-intensive reinsurance. The firm announced last year that Malibu had entered a quota share flow treaty with a US annuity provider to reinsure US$3 billion in annuity products. 

Brewing shareholder opposition 

However, the proposed merger has drawn criticism from activist investor Asset Value Investors (AVI), manager of the £1.3 billion AVI Global Trust. 

AVI, which holds a 7.1% stake in Third Point Investors Ltd., issued a public statement opposing the deal, labeling it a continuation of what it described as poor corporate governance practices. 

AVI also raised concerns over the performance of Third Point’s prior reinsurance ventures, pointing to a total shareholder return of less than 4% annually since the launch of Third Point Reinsurance in 2013. 

The investment manager criticized the absence of a shareholder exit offer at net asset value and expressed disapproval over the governance structure, including the dual role of the chairman of the strategy committee in both recommending the deal and leading the new combined business. 

That individual, Dimitri Goulandris, who led the strategy review culminating in the merger proposal, is expected to chair the newly combined entity. AVI and other critics have flagged this as a potential conflict of interest that could influence corporate decision-making going forward. 

Perhaps expecting the opposition, Third Point is also reportedly considering a US$75 million tender offer. The firm has received conditional commitments totaling US$55 million from new and existing investors at a 12.5% discount. 

This discount compares to the trust’s current average discount of approximately 18%, offering some liquidity to dissenting investors. 

What are your thoughts on this story? Please feel free to share your comments below. 

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