White Mountains Insurance Group (NYSE:WTM) entered into a definitive agreement to invest fresh capital in and to acquire a majority interest in Ark Insurance Holdings, ultimate parent company of Ark Syndicate Management.

White Mountains will contribute $605M of equity capital to Ark, at a pre-money valuation of $300M; also will purchase $41M of shares from existing owners.

Total post-closing capitalization will exceed $800M.

In 2021, White Mountains will commit to contribute up to an additional $200M of equity capital.

Transaction expected to close in January 2021 when White Mountains will own 72% (77% if additional $200M invested) of Ark on a basic shares outstanding basis; remaining will be owned by management rollover shareholders.

In the future, management rollover shareholders could earn additional shares in the company if and to the extent that White Mountains achieves certain multiple of invested capital return thresholds.

Ark is a leading Lloyd’s platform, managing underwriting of syndicates 4020 and 3902, well positioned to take advantage of the hardening market in property & casualty insurance; currently has ~$500M of stamp capacity.

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