Billionaire Investor Ross Interested in Reinsurance Sector, Waiting on Pricing

Billionaire investor Wilbur Ross said he is keen to invest more in insurance, a sector he has been active in for more than a decade, but is biding his time until pricing fundamentals improve.

Ross, on the sidelines of an insurance conference in New York, told Reuters he is especially interested in the reinsurance sector but would like to see improvement in the rates carriers charge for coverage.

Insurance pricing tends to rise after an event that leads to large claims on the industry’s capital, and decline when underwriting losses are minimal. Currently, rates are expected to increase, with the industry having been hit in 2008 by large hurricane losses and poor investment performance.

Ross said he would like to see the industry’s big pricing swings tamed. “There has to be more stability in the rates,” he said.

The veteran turnaround specialist first invested in insurance — a Korean life insurer — in 1998 and later made numerous investments in property-catastrophe reinsurers, including Montpelier Re, a Bermuda-based firm.

More recently, he has built a stake in Assured Guaranty , a bond insurer that has seen its stock price hammered amid the credit crunch despite strong underwriting results.

Ross, the founder of New York-based private equity firm WL Ross & Co., said U.S. municipal bond buyers are now doing the bulk of their business with Assured. The firm has captured 80 percent market share, he said.

A newer bond insurer formed in late 2007 by Warren Buffett’s Berkshire Hathaway is the other company most active in the market.

Assured has largely escaped the credit problems that crippled rivals Ambac and MBIA by avoiding insuring repackaged subprime mortgages. It is expected to soon seal its acquisition of Belgian lender Dexia’s U.S. bond insurance unit, Financial Security Assurance (FSA).

“FSA is forecast to be quite accretive” for Assured, said Ross, speaking to a gathering of insurance-linked securities specialists.

Shares of Assured earlier this month hit a 52-week low of $2.70, down 90 percent since Ross announced his intention to purchase a minority stake. The shares have rallied since but were down more than 9 percent on Thursday at $5.70 on the New York Stock Exchange.

(Reporting by Lilla Zuill; editing by John Wallace)