AGILE Risk Partners, a specialist technology-focused direct & facultative (D&F) property risk underwriting start-up that brings diversified capital to its deals, told Artemis it has deployed an initial $50 million from a $250 million allocation to distressed areas of the market.
AGILE targets what it calls “special situation” insurance and reinsurance opportunities for investors and capital providers it works with, which are areas of the market where capital is either required, constrained, or a particular return opportunity has emerged.
Its latest allocations saw the company allocating $50 million to a number of collateralised facultative reinsurance (ILS) deals, working with transformer Horseshoe Re.
As a result, AGILE now has five deals in its maiden ILS strategy, which it calls ‘Special R/I Situations’.
James Poole, Founder of AGILE Risk Partners, told us, “We can allocate to risk Special Situations worldwide, but the major focus hereto has been on insurable risk in the US.
“The first 5 deals have seen our team working with captives, re/insurers, Lloyd’s syndicates, and their brokers, to point capital at high-rate-on-line participations in primary areas of cedants’ risk-transfer arrangements.”
The AGILE strategy is structured around primary layers of risk, akin to “junior tranches”, but with a focus on direct and facultative risks, AGILE’s strategy has strong differentiation in the ILS market.
“We look at the first layers in excess of original policy deductibles, that respond to claims,” Poole said.
Adding that, “We’ve got some way to go yet, sure, but our Capital Partners are delighted with the MOIC (multiple of invested capital) that we’re delivering so far, and they have reflected this in extensions to the scope of the Special Situations that we can allocate capital to.”
Poole recognises the important role of the Lloyd’s market in direct and facultative insurance or reinsurance circles, so believes the recent announcement of the London Bridge 2 ILS structure could be an opportunity for his firm.
“If you combine our proof-of-concept, with Lloyd’s of London’s recent announcement (at the recent Artemis ILS London event) that Lloyd’s has successfully driven substantive Regulatory change that looks likely to support massive growth in ILS business onshore, then you can appreciate that we’re pretty excited about the growth ahead for the kinds of ILS arrangements that we’re working on,” he said.
Poole has two targets for AGILE right now. One is sourcing more capital, as with now $50 million of an initial $250 million commitment drawn-down and the range of special opportunities in re/insurance expanding, he believes they can deploy more capital into attractive deals at this time.
“We’re speaking to Capital Partners that are interested in allocating capital to our second strategy that will see cedants benefitting from transfer of their risk to fully-cash collateralised cells, where our binomial model points at 2x MOIC (net of all fees and expenses), and the real claims data suggests returns look more like 2.2x (net of all fees and expenses),” he said.
Another area of focus is on infrastructure, as Poole wants to find the best way to match capital with these special situation re/insurance opportunities.
“We’re making inquiry with Lloyd’s, London Bridge Risk and various market-participants to enable us to build a model that tells us whether the best route ahead is to partner with an existing syndicate—and Managing Agent—or invest in a proprietary syndicate ourselves,” Poole explained.