A reinsurance firm's stock soars
By Rick Daysog
on word the company is
being purchased
Star-BulletinBishop Estate's stake in a Bermuda-based insurance company jumped $19 million today on news that the company was being bought by its largest shareholder.
Mid Ocean Ltd., a Bermuda-based reinsurance company, said Exel Ltd., which now owns about 26 percent of the company, plans to pay about $2.2 billion in stock, or roughly $80 per share, for Mid Ocean shares that it doesn't already own.
Bishop Estate is the fourth largest shareholder in Mid Ocean with 1.86 million shares, or 5.16 percent, of the company's 36.1 million outstanding shares.
Based on Exel's offering price, Bishop Estate's holding in Mid Ocean would be worth $147.9 million, a gain of about $116.9 million from the estate's initial $31 million in Mid Ocean in 1992.
Shares of Mid Ocean rose $10.371/2, or 16 percent, to close at $73.69 on the New York Stock Exchange today.
"This is truly a home run," Bishop Estate trustee and former Mid Ocean director Henry Peters said today.
"These two companies are the creme de la creme in the catastrophic insurance arena."
Peters said the estate has not yet decided whether it will sell its Mid Ocean shares or retain a stake in Exel.
Under the merger, Exel also announced a $500 million stock repurchase plan associated with the purchase, which is expected to close in mid-summer. The deal is subject to approval of shareholders of both companies, as well as certain regulatory approvals.
The Mid Ocean transaction is just one of several mergers and public offerings that the estate has taken part in during the last several years.
The estate owns about 4.1 percent of Saks Fifth Avenue, which went public in May 1996. The estate's holdings in Saks rose about $24 million on the day of the public offering before falling back recently.
The estate has also expressed an interest in a public offering of the investment banker Goldman Sachs & Co.
The estate owns about 10 percent of Goldman Sachs, Wall Street's most profitable investment firm, and a public offering would likely generate hundreds of millions of dollars for the estate.
Peters noted that the estate's investment in Mid Ocean will go a long way in financing the operations of Kamehameha Schools, which is financed and operated by the estate.
Bishop Estate initially invested in Mid Ocean in 1992 with partners J.P. Morgan & Co., Marsh & McClenna Co. and Texas deal-maker Richard Rainwater.
The company later went public in 1993 with Bishop Estate retaining a 5.36 percent stake.
Exel, also a Hamilton, Bermuda-based insurer, sells directors' and officers' liability insurance and other commercial policies.
The company said it will issue about 27 million shares to buy the remainder of Mid Ocean.
The Star-Bulletin reported earlier this month that Bishop Estate trustee Peters stepped down as a director of Mid Ocean, citing time constraints. Peters' role at Mid Ocean has come under scrutiny of the state attorney general's office in its ongoing probe of the charitable trust.
Bloomberg News contributed to this report. See also: Bishop land deal prompts inquiry
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