AJ Gallagher takes 100% ownership of reinsurance broker Capsicum Re

Broking and service group Arthur J. Gallagher  & Co. (AJG) has now taken 100% ownership of Capsicum Re, the specialty reinsurance broking joint venture that it had established alongside sector veterans Grahame “Chily” Chilton and Rupert Swallow.

In November, the pair announced that ongoing talks had resulted in agreed terms to move forwards with AJG’s buying out of the rest of Capsicum Re (it already had a one-third stake), adding a wholly owned global reinsurance broking unit to the Gallagher stable.

Now that arrangement has been completed, with AJG taking 100% ownership of Capsicum Reinsurance Brokers LLP as of January 1st 2020.

Grahame Chilton and Rupert Swallow launched Capsicum Re through a strategic partnership with Gallagher in 2013.

Since then the reinsurance broker has become the 5th largest in the world, with over 150 employees and offices in the UK, US, Bermuda and South America.

There are no changes at the top, as Rupert Swallow will continue to lead Capsicum Re as CEO.

In the role he will report to Simon Matson, CEO of Gallagher’s UK Broking & Underwriting division.

Meanwhile, Grahame Chilton has now re-joined Gallagher in a new leadership role covering the firm’s global property & casualty broking business.

In addition, Simon Behagg remains COO of Capsicum Re.

“We’ve considered Grahame and Rupert to be trusted partners ever since we embarked on our Capsicum Re co-venture six years ago,” J. Patrick Gallagher Jr., Chairman, President and CEO commented on the news. “Given their excellent market reputation and strong track record, we didn’t hesitate to back their business model and their vision for creating a market-leading reinsurance broker. We are delighted to now move forward to the next chapter of Capsicum Re’s story as an integral part of our global brokerage operations and we welcome Grahame back into an active leadership role.”

Rupert Swallow, CEO of Capsicum Re, added, “I am incredibly proud of all that our Capsicum Re team has achieved in just five full years of trading. 2020 will be another key year of development for us, as we look to expand our US presence while ensuring our clients remain front and centre. The US is the largest reinsurance market globally, and being part of Gallagher provides us with access to one of the industry’s largest global brokers and its extensive US network. Gallagher has been beside us through every step of the journey, since our inception, so this deal is the natural evolution of our relationship. It is an exciting time for us; we have great relationships across the Gallagher group and I look forward to working with Simon and his team.”

Grahame Chilton, Chairman of Capsicum Re, also said, “When Rupert, Raja and I put the flag in the ground with our partner Gallagher to establish a transactionally focused reinsurance broker that would be dedicated to clients, partners and team members, we believed but many doubted it could be done. Well, six years later with belief, innovation and the hard work of the entire Capsicum Re team we have become a truly trusted advocate of our clients, offering unparalleled levels of service, which — when combined with transactional expertise and bespoke analytics — has seen the delivery of truly creative products. The partnership has delivered almost to the dollar the exact financial forecast of the original business plan. None of this could have been achieved without the tremendous support of our customers and the extraordinary support of our partner Gallagher.”

Simon Matson, CEO of Gallagher’s UK Broking & Underwriting division, commented, “The acquisition of Capsicum Re provides the perfect complement to our existing wholesale and retail insurance broking divisions here in the UK. The impressive speed at which the business has grown and established itself over its first five years of trading is testament to the entrepreneurial spirit, depth of experience and innovative approach of its leadership team and sector specialists. We’re very much looking forward to working even more closely with our reinsurance colleagues to the benefit of our respective clients.”

Capsicum Re has developed a position in the reinsurance market as a true alternative to the larger brokers, also positioning itself  as a capital agnostic broker, with access to insurance-linked securities (ILS) backed capacity for its ceding clients.

The company has practices specialising in ILS focused areas of the market including, retrocession, collateralised reinsurance, weather risk transfer, industry loss warrants (ILW’s), parametric products and more.

AJG also recently made another acquisitions of particular relevance to the ILS market, when its Artex Risk Solutions unit acquired Horseshoe.