AJG’s Artex buys Hexagon Insurance PCC to add to ILS capabilities

Arthur J. Gallagher & Co.’s insurance management unit Artex Risk Solutions is clearly serious about building out its insurance-linked securities (ILS) management capabilities, having just announced the acquisition of Guernsey-domiciled Hexagon Insurance PCC Ltd.

The announcement comes hot on the heels of the confirmation that Artex acquired the Kane insurance-linked securities (ILS) and insurance or reinsurance management and administration business, which was announced formally last week.

The Hexagon PCC platform is used by a number of the world’s leading ILS investment managers, as they transact and transform reinsurance risks on a fully collateralised basis using its protected cells.

Artex said it has “entered into a definitive agreement to acquire the cores of Guernsey-domiciled Hexagon Insurance PCC Ltd and its subsidiaries.” All regulatory approvals have been received for the transaction and the acquisition is expected to close on the 31st of March 2016.

Hexagon is part of the Robus Group, and exclusively provides PCC facilities to the ILS industry. The acquisition includes Hexagon PCC’s three subsidiaries, Axe Insurance PCC Ltd., Septagon Insurance PCC Ltd. and Hexagon ICC Ltd.

“Hexagon’s expertise and legacy of innovation is well-known in the alternative capital segment of our industry. This merger, in addition to the recently announced acquisition of Kane’s ILS and structured transaction administration services, positions us as a leading player in this field. We are excited to welcome Justin Wallen and Ben Dunning to the Artex family,” commented Nick Heys, CEO of Artex’s International operations.

David McManus, President of Artex Risk Solutions added; “Hexagon’s widely recognized European ILS expertise combined with Kane’s stature in the Bermuda and Cayman markets, instantly establishes Artex as a leading global ILS services provider with scale, depth and diversity that few, if any, can match. As we continue to expand, Artex is committed to lead innovation across the full range of alternative risk management solutions in order to better match our clients’ and business referral partners’ developing needs.”

With these two acquisitions, of Kane’s ILS business and now Hexagon’s PCC operations, Artex has jumped straight into the heart of the ILS market, with both acquired firms having strong footholds in the space.

The fact Hexagon was being offered for sale was no secret, it has been a market rumour for some months, but it is perhaps unexpected that Artex has shown such a strong appetite for getting into the ILS space and that other, established ILS management players, have allowed it to do so (although of course we do not know what competition there may have been for either acquisition).

Artex will be pleased with the platform it is building out, with the Hexagon PCC operations a good complement for the ILS operations acquired from Kane.