Start-Up Constellation Holdings Has $500M from Canadian Investors to Invest in Insurers

October 24, 2019

Constellation Insurance Holdings, founded by industry veteran Anurag Chandra, former CEO of Prosperity Life Insurance Group, has partnered with Canadian institutional investors, Caisse de dépôt et placement du Québec (CDPQ) and Ontario Teachers’ Pension Plan, raising US$500 million in initial capital from them as founding investors.

New York City-headquartered Constellation will focus on property and casualty (P&C) and life insurer acquisitions and demutualizations.

“Constellation plans to invest in stock and mutual insurers based in North America that are seeking growth capital, stronger ratings, scale efficiencies and equity incentives while maintaining their independent management structure, brand identity, operations and entrepreneurial culture,” said Chandra, founder, chairman and CEO of Constellation.

According to Chandra, his firm’s focus will differ from other insurance platforms that “focus on either asset accumulation, legacy block reinsurance or have shorter term investment horizons, which incentivize substantial expense reductions and limit investments in organic new business growth.”

Quebec City-based CDPQ and Toronto-based Ontario Teachers’ are two of North America’s largest institutional investors, managing a combined total of more than CA$500 billion (US$382 billion) in net assets as of June 30, 2019.

Stephane Etroy, executive vice president and head of Private Equity at CDPQ, said the new partnership will provide a “source of competitive advantage” for Constellation.

“We expect this partnership with Constellation and CDPQ to create significant value for our stakeholders,” said Jane Rowe, executive managing director, Equities, at Ontario Teachers’.

Constellation founder Chandra resigned as CEO of Prosperity Life on June 30, 2019, after a five year tenure, when he led the company’s “turnaround and strategic transformation,” according to an announcement from Prosperity at the time. Previously, he was executive vice president and chief operating officer at Allstate Financial, Allstate’s life insurance, retirement and voluntary benefits business.

Prior to that, he served as executive vice president and chief operating officer at HealthMarkets, an individual health insurance company where he helped lead its turnaround, according to a statement from Prosperity in 2014 when he joined the company.

CDPQ is no stranger to insurance investments. CDPQ manages funds primarily for public and parapublic pension and insurance plans. It invests globally in major financial markets, private equity, infrastructure and real estate. In 2017, along with global investment firm KKR, it acquired USI Insurance Services (USI), a U.S. insurance brokerage headquartered in Valhalla, N.Y., in a deal valued at US$4.3 billion. It also acquired a minority stake in Hyperion Insurance Group for US$400 million in 2017.

The Ontario Teachers’ Pension Plan is an investor in BroadStreet Partners Inc., which is active in acquiring insurance agencies. In 2016, the Ontario Teachers’ Pension Plan sold its interest in the Dutch specialty insurance company ANV Holdings B.V. and its Lloyd’s affiliates for $218.7 million in cash to AmTrust Financial Services.

Source: CDPQ and Ontario Teachers’ Pension Plan

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