Nephila backs Volante, as it aims to be a global MGA for alt capital

ILS fund manager Nephila Capital has made an equity investment in newly launched multi-class and multi-territory managing general agent platform Volante Global Limited (Volante), a firm that has ambitions to help alternative capital investors broaden their reach.

Volante has been launched with the ambition of becoming a best-in-class global underwriting and distribution MGA platform.

The firm has been founded by ex-Group CEO and CUO of DUAL International Ltd. Talbir Bains, who believes that Volante can become a conduit to risk for alternative capital providers, helping to broaden their reach outside of the typical U.S. property catastrophe space.

Volante is a UK headquartered MGA and it will launch and begin trading during the first-quarter of 2018, subject to Lloyd’s Coverholder approvals. The firm targets underwriting specialist portfolios of insurance and reinsurance business, including but not limited to lines such as; property and casualty, professional and financial lines, motor, space & aviation and marine & energy.

Volante is setting up an international network of underwriting teams, which will be located in key markets and territories, enabling it to deliver local service with a global perspective, culture and ethos.

It’s easy to see why such a strategy, of locally accessing global risks through an integrated distribution network, would be attractive for Nephila Capital to back and other alternative capital providers to partner with.

Volante has secured a principal equity investment from ILS fund manager Nephila Capital, and founder and CEO Talbir Bains commented, “We are honoured to be partnering with Nephila as our principal investor, and it is an absolute privilege to be working with them on this very exciting new venture.”

He continued, “We are delighted to be launching a new and unique underwriting business, following investment from Nephila Capital and capacity support from our panel of A+ and AA+ rated Carriers, intermediated by Aon Benfield.

“Volante will deploy upper quartile underwriting capabilities dovetailed with local and specialist distribution strength, supported by an optimised operational platform. All of this will be highly enabled by a leading-edge, in-house Technology Centre which resides at the origin of our business, driving an innovative and disruptive research & development approach to deliver fully bespoke, cost-effective product and distribution solutions.”

“Our mission is to create sustainable, balanced portfolios of business, each developed by empowered underwriting teams composed of leading practitioners in their particular market specialties – they share the same entrepreneurial spirit that pervades our Volante culture. Our objective is to achieve superior underwriting and financial margin with zero compromise on delivering target returns to our sponsoring Carriers and Investor, driven by a philosophy of Group culture predicated on transparency, empowerment and accountability,” he continued.

Key hires to the Volante executive team include; Jim Donnet, Chief Financial Officer (formerly MD in the FIG investment banking teams of KBW, FPK and ABN AMRO); Damian McNamara, Chief Distribution Officer (formerly Head of International Business Development at Artex and Kane and experienced in insurance-linked securities (ILS) and collateralised reinsurance business) and Adrian Williams, Chief Legal Officer (formerly General Counsel (EMEA) at Swiss Re and Head of Legal for QBE European Operations). Other key hires including a Chief Actuarial Officer and an Underwriting & Franchise Director are expected to be announced in the future.

Volante is set to launch with the Edison Motor underwriting team, an MGA which will offer a range of niche motor insurance products, and be led by some of the most experienced underwriters in the UK commercial motor insurance sector. Edison Motor will begin writing business from February 2018.

Volante will launch Horizon Managing Agency AG (Horizon) in early 2018 as well, a property and casualty reinsurance MGA underwriting Continental European business and led by Eric Gutierrez, previously the CEO of European Reinsurance at Sompo Canopius and ACE Tempest Re. Horizon will offer capacity across property catastrophe excess of loss, property catastrophe aggregate excess of loss and property per risk excess of loss business.

Bains said that reinsurance broker Aon Benfield’s support had been instrumental in getting Volante to launch, “Volante is immensely grateful to Dominic Christian and his teams at Aon Benfield for the privilege of the truly outstanding client focus and intermediary support provided by the firm. Stephen Drewitt and the team at Macfarlanes were equally tremendous and exemplary in providing legal support to secure the agreement between Volante and Nephila.”

For ILS manager Nephila Capital, backing Volante as a principal equity investor may provide it with access to be a capacity provider to new areas of risk where it has historically only sourced business through the traditional reinsurance renewal cycle.

By working with Volante run MGA’s, Nephila and other alternative capital providers could tap into underwriting expertise in regions of the world and lines of re/insurance business where ILS penetration has been very low to-date.

Volante could be the link between the alternative capital markets and global insurance distribution that investors have been seeking, Bains said.

He told Artemis, “Volante recognises significant opportunity to bring extensive and significant distribution channels to alternative capital – capital which historically has primarily operated in the short-tail US/Bermuda space. Volante as an International MGA can provide a link between the alternative capital markets and the international distribution arena, and will seek to do so at traditional carrier profitability hurdle rates.

“The licensing requirement is the clear and current challenge for alternative capital. However, Volante’s approach will be to work with traditional capital to bring critical underwriting oversight with global licensing capabilities, and thus enabling alternative capital to sidecar with the traditional capital market.”

That will be an incredibly attractive prospect to ILS investors and managers, if Volante can enable them to access business that previously has been either hard or impossible to access directly.

Partnerships with global distribution platforms like Volante could help ILS investors and fund managers to break further away from the traditional cycle of reinsurance renewals, instead backing globally and line of business diverse pools of risk created by the Volante underwriting teams. An attractive prospect for any ILS specialists.

Volante is also focused on working incredibly closely with capital providers and risk carriers, Bain explained, “Volante intends to underwrite for its Carriers as a virtual division of them. We are setting our foundations and framework to operate as a Company or Syndicate underwriting institution, with full adherence to Lloyd’s Minimum Standards from day one – with full actuarial, risk and claims management functions enabling our trading discipline and rating adequacy. Our binder agreements and our incentive structures for underwriters are underpinned by formulae predicated on Carrier COR profitability. Sustainability and generosity of capacity is a by-product of the profit we as an MGA deliver to our Carriers.”

“This purist underwriting foundation is enabled by Volante’s Technology Centre at the heart of the business, which is structured to deliver an optimised trading platform, maximise automation of pre-bind and post-bind processes, and augment local risk data with third party ‘population’ data to give improved pricing adequacy and longevity. The market, rightly, cites renewal business as more profitable than new business in current stretched pricing conditions. For us to deliver the right long-term solutions to our Assured’s, we need to supplement risk-level data with wider economic data to insulate against shock losses which frustratingly disturb the equilibrium of pricing that our Assureds seek for their own balance-sheet stability,” he continued.

Bain clearly has a vision for the future of underwriting and how the value-chain from risk-to-capital in insurance and reinsurance should be set up.

It will resonate with many ILS specialists, including no doubt its principal investor Nephila which always aims to make the value-chain more efficient.

Join us in New York in February 2018 for our next ILS conference