(Reuters) – A consortium led by insurer Arch Capital Group Ltd. has made an offer of about $ 500 million to acquire the reinsurance company Watford Holdings Ltd., people familiar with the matter said on Tuesday.
The bid comes more than a year after Watford went public. Since then, its shares have lost about a third of their value when investors questioned the company's ability to generate sufficient return on investment to cover its expenses appropriately when paying out insurance. Activist investor Capital Returns Management LLC demanded in May that Watford be sold.
Arch has partnered with private equity firms to offer about $ 26 per share for Watford, sources said. Watford shares closed trading in New York on Tuesday at $ 1
Watford has retained investment bank Morgan Stanley to review the offer and decide on the next step, the sources added.
Sources warned that no deal is safe and asked. not identified because the case is confidential. A representative of Arch Capital declined to comment. Watford Holdings and Morgan Stanley did not immediately respond to a request for comment.
Bermuda-based Watford offers property and non-life insurance and reinsurance services. Formed in 2014, it outsources its subscription business to Arch Capital, while much of its investment management is conducted by the hedge fund HPS Investment Partners under long-term contracts.
Arch Capital is Watford's largest shareholder with a 12.6% stake, according to Refinitiv Eikon data.