Specialty insurance and reinsurance player Brit Ltd. has become the first to successfully register and get licensed a multi-use collateralised reinsurance PCC vehicle in the UK, with the launch of Sussex Capital UK PCC Limited.
The vehicle will allow Brit and its Sussex Capital insurance-linked securities (ILS) and third-party reinsurance capital management unit to underwrite reinsurance and retrocession on a fully-collateralised basis for multiple cedents within a single UK domiciled company structure.
It’s another milestone for the UK’s ILS ambitions, as now that a multi-arrangement insurance special purpose vehicle has been successfully registered to act as a transformer, it’s expected that others will be too.
We’re aware of a number of insurance managers who are applying to register their own M-ISPV’s in the UK, as well as some of the London based ILS fund managers.
Brit’s Sussex Capital unit launched at the beginning of 2018, underwriting direct collateralised property catastrophe reinsurance and offering collateralised reinsurance to Brit’s Property Treaty portfolio, through its Sussex Re reinsurance vehicle.
The Sussex Capital unit, which features an open-ended ILS fund and underwrites collateralised reinsurance through Bermuda special purpose insurance vehicle Sussex Re had raised $102.5 million from investors for Sussex’s 2018 underwriting year.
The addition of a UK domiciled collateralised reinsurance underwriting vehicle means Brit can now more easily offer protection options to clients that might prefer their transaction located within the UK, which may be attractive to some Lloyd’s syndicates.
Alongside the re/insurers sidecar vehicle Versutus, the firm has been increasing its fee income earned from managing third-party capital thanks to the addition of Sussex Capital as a strategy and now adding a UK underwriting vehicle that can serve multiple cedents will assist in further expanding the income driven by third-party capital activities at Brit.
The UK domiciled Sussex Capital UK vehicle will focus on underwriting property catastrophe coverage funded by capital under the management of Sussex Capital’s Bermuda domiciled ILS funds and through Brit’s distribution network in the London market.
It is the first UK domiciled multi-arrangement insurance special purpose vehicle (mISPV), registered and licensed under the UK’s Risk Transformation Regulations.
Matthew Wilson, CEO, Brit, stated, “I am both excited and proud to announce the launch of Sussex Capital UK, a landmark development in the emerging ILS market here in the UK. Sussex Capital UK further enhances Brit’s client and broker proposition and positions Brit extremely well to support growth in the UK’s ILS market as demand evolves over time.”
Mark Allan, CFO, Brit, commented, “Sussex Capital UK extends Brit’s ILS capability into the UK, further enhancing optionality and access to property catastrophe risk for our investors over the long term. We are excited to be at the forefront in supporting the London Market’s ILS ambitions and would like to thank the UK regulators for their commitment and responsiveness through the application process.”
GC Securities, the capital markets arm of reinsurance broker Guy Carpenter, acted as an advisor to Brit throughout the application process for the licensing of the mISPV.