Acappella launching third-party capital re/insurance fund manager

by Artemis on January 6, 2015

London-based Acappella Group Holdings Ltd. launched as an insurance and reinsurance holdings company this week, with one of its businesses a fund manager for third-party capital investments into insurance and reinsurance risks.

Acappella launches with a plan to operate three businesses, one as an MGA to leverage underwriting specialisms, another as a Lloyd’s managing agency to service syndicates and a third as a third-party re/insurance capital fund manager, to bring new and alternative sources of capital to the London insurance and reinsurance market.

Acappella Group Holdings was funded by broker Willis Group and Bermuda insurance business Ironshore, with the aim of bringing underwriting together with capital markets financing, analytics and broad distribution capabilities. Jason Howard, ex-CEO of Faber Global is CEO of Acappella. Howard previously worked on Willis’ Hendiatris venture into the insurance-linked investments space, so has a pedigree and interest in ILS and investments, although Hendiatris never got off the ground, likely due to the difficulty of establishing a fund management business within a broker.

The first piece of the Acappella business is a UK-based MGA which will focus on niche underwriting classes and bringing capacity to the market through its specialist underwriting teams.

The second is a Lloyd’s managing agency, which will provide a full service to syndicates at Lloyd’s. The managing agent will be is subject to Lloyd’s approval.

The third prong of the Acappella business is of most interest to Artemis, the third-party capital fund manager, which has been established as a London-based fund manager and aims to manage the investment of third-party investor capital into insurance underwriting businesses, subject to regulatory approval.

Jason Howard, CEO of Acappella, commented on the launch; “I am tremendously excited to announce the launch of Acappella Group Holdings. We are building a group with underwriting, capital and distribution elements combined to create a highly progressive and unique market platform.”

Acappella clearly aims to capitalise on the interest that third-party investors have in the insurance and reinsurance business currently. Whether this will result in insurance-linked securities (ILS) fund management activities, something more akin to a fund at Lloyd’s, or even a fund that acts as a sidecar for syndicates at Lloyd’s is not yet clear. However its activities and base in the London market will make it attractive to investors from the ILS space who are seeking other ways to access the returns of insurance and reinsurance business.

“We represent a revolution in the partnership between capital and risk by building closer strategic and financial links with our distribution networks. Our businesses will create significant new direct revenue streams and provide new underwriting capital, skills and expertise in the specialty market place,” Howard continued.

With a mix of capital and fund management, underwriting and syndicate servicing, Acappella could offer a very compelling proposition to the insurance-linked investor base. It will be interesting to see how the model develops and exactly what kind of funds it decides to launch.

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