DEAL OF THE WEEK – WELLINGTON RE

Simmons & Simmons' strategy of forging close relationships with its financial adviser clients to gain entry into largescale transactions is paying off.
The firm landed a role through its connection with corporate advisory firm Hawkpoint on Lloyd's of London syndicate Wellington Underwriting's launch of Wellington Re, a UK-based FSA-authorised insurance company.
Head of corporate finance Stuart Evans led the Simmons side of the deal, acting for three of the members' agents for the unaligned members of syndicate 2020, Anton Private Capital, CBS Private Capital and SOC Private Capital.
It is the first time the firm has acted for members' agents. Consent had to be sought to avoid a potential conflict of interest. “The members' agents had to approve the deal under the Lloyd's regulations,” said Evans. Corporate partners Jane Newman and Tim Field, along with head of tax Edward Troup, assisted Evans.
Wellington Re will focus on property and casualty reinsurance – a US term for non-life insurance – which includes property, earthquake and storm damage, together with commercial insurance.
The transaction, which was signed on 28 May 2002, is expected to complete before July once regulatory conditions have been cleared and FSA authorisation is granted. Wellington Re is expected to be the largest independent reinsurance company in the UK. Wellington Underwriting is looking to move into what it sees as more profitable areas and has abandoned the professional indemnity market (The Lawyer, 3 June 2001).
The transaction took just two weeks to sign, although it had been mooted on two occasions – once at the end of last year and again in March 2002. Simmons came in on the second week.
Wellington Underwriting was advised by a Lovells team and headed up by corporate finance partner John Davidson and private equity partner Alison Hampton. The £448m of raised capital was provided by a syndicate of investors, with Clifford Chance partners Adam Signy and Tim Page playing a lead role in acting for the consortium. The private equity investors were led by New York-based Blackstone Group – advised by Simpson Thacher & Bartlett and Candover. Other investors included CSFB Private Equity, advised by Weil, Gotshal & Manges' London and New York offices, Montpelier Re, 3i, Phoenix Equity Partners, Lexicon and Wellington Re Management.
The transaction marks a migration of business from Lloyd's to a new company to create a new capacity for underwriting.
“What is unique about the deal is that you often see insurance companies do similar things, but not in the UK,” said Lovells' Davidson.
“New Bermuda ventures have been set up after 11 September. Wellington has decided that London is the best place to be,” he added.