Ironshore Inc., the insurer purchased by Chinese conglomerate Fosun International Ltd. last year, filed for an initial public offering in the U.S. after a ratings firm cited concerns about the parent firm’s financial strength.
The company filed with an initial offering size of $100 million, an amount used to calculate fees that will change. Fosun will receive all of the proceeds from the offering, the filing shows.
Ratings firm A.M Best announced a review of Ironshore in December and last month assigned a negative outlook on the company because of “the drag related to the credit profile and high debt leverage measures of Ironshore’s ultimate parent.” For insurance companies, downgrades can make it harder to win customers.
“Ratings are an important factor in the competitive position of insurance companies, and a downgrade of our financial strength ratings or a negative watch/outlook could severely limit or prevent us from writing new and renewal insurance policies,” the company said in the filing Friday.
The insurer said it will manage the business to maintain its rating.
Ironshore provides specialty commercial insurance coverage, protecting policyholders against environmental and political risks and offering liability coverage to corporate executives and health-care providers.
The company previously filed to go public in 2014. Last year, Fosun — the investment arm of China’s biggest closely held conglomerate, led by billionaire Chairman Guo Guangchang — announced its plans for a $1.84 billion merger with Ironshore by buying the shares it didn’t already own.
That transaction is still under review by the Committee on Foreign Investment in the U.S., according to the filing. The final results of the review and impact of any outcome to Ironshore are uncertain.
Fosun also considered pursuing a sale of Ironshore, a person familiar with the matter said earlier this year. In June, the parent company submitted an application seeking approval for a proposed spinoff and U.S. listing of the business, according to a filing in Hong Kong.
Ironshore was founded in December 2006 with more than $1 billion in private equity backing. Two years later, Chief Executive Officer Kevin Kelley and President Shaun Kelly joined the property-and-casualty insurer from American International Group Inc.
Ironshore’s revenue fell 2 percent in 2015 to $1.6 billion, according to the filing. The company posted net income of $57.8 million last year, down 32 percent from 2014.
At the end of last year, the company had a book value of $13.98 a share. Before the IPO, Ironshore had a total of 140.7 million outstanding shares, all owned by Fosun.
Bank of America Corp.’s Merrill Lynch, Citigroup Inc., JPMorgan Chase & Co. and UBS Group AG are leading the offering.
–With assistance from Sonali Basak.
- A.M. Best Removes Ironshore from ‘Under Review’ Status
- China’s Fosun to List U.S. Insurer Ironshore ‘As Soon as Possible’: Reuters
- U.S. Treasury Unit Reviews Fosun’s Acquisition of Ironshore
- China’s Fosun Weighs IPO for Ironshore, Just 4 Months After Acquiring Insurer
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