Last week, the Bermudian carrier filed its draft registration statement for its proposed IPO to the US Securities and Exchange Commission (SEC).
Hamilton has not yet confirmed the number of common shares on offer nor the price range for the IPO.
The confidential IPO registration followed news reports in June about Hamilton’s strategic process, which included a potential public float or full sale of the business.
A potential valuation of the business could be somewhere in excess of 1.1x book value, or around $2bn, as this publication has discussed.
As noted in June, Hamilton faces the challenge that its greatest strength in delivering returns to investors is also its Achilles heel in telling an attractive story to equity markets.
In contrast to the other total return carriers, Hamilton’s affiliated hedge fund Two Sigma has delivered on its promise of managing the carrier’s float to deliver outsized investment returns.
But the centrality of the hedge fund to value creation undercuts the firm’s financial results because the model is perceived as toxic, with Third Point Re, Greenlight Re and Watford Re all underperforming.
Hamilton’s IPO will follow a string of other insurance firms that began trading publicly earlier this year such as Skyward Specialty and Fidelis’ balance sheet unit, or that recently set the IPO wheel in motion like Accelerant.
Yesterday, this publication revealed that Apollo-owned specialty carrier Aspen held a beauty parade last week as it lines up banks to advise on an IPO in the first half of 2024.
Sources said the roughly $2.7bn book value business is likely to target a valuation of 1.5x book or above – pointing to a valuation in excess of $4bn. The (re)insurer is expected to appoint lead IPO banks later this month.
In Hamilton’s case, the business is likely to face a challenge in securing a meaningful premium to book value given Two Sigma’s involvement.
Relevant context of a potential valuation of the business was provided by White Mountains’ interest in acquiring the Bermudian last year.
According to sources, White Mountains put a letter together in summer 2022 detailing an indicative offer to buy the carrier with a bid in the region of 1.05x-1.1x book. The board’s appetite to sell was tested by a credible bidder in a worse reinsurance operating environment, and it felt comfortable deferring a deal.
Barclays declined to comment. Hamilton and Morgan Stanley did not respond to a request for comment.
