Capsicum Re, the specialty reinsurance brokerage established as a joint-venture between broking and service group Arthur J. Gallagher (AJG) alongside sector veterans Grahame “Chily” Chilton and Rupert Swallow, is set to move to 100% AJG ownership after terms were agreed.
Late yesterday, 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, adding a global reinsurance broking unit to the Gallagher stable.
AJG announced that it had agreed on the details for heads of terms to take forwards the transaction that is necessary to buy-out 100% ownership of reinsurance specialist brokerage Capsicum Re.
This deal had been expected, as the original establishment of Capsicum Re had left AJG with the ability to increase its stake towards full ownership, but the time frame for that to be agreed was due to run out before the end of this month, we understand.
The heads of terms between AJG and full-service reinsurance brokerage Capsicum Reinsurance Brokers LLP have been signed and now the increase in ownership can proceed, although no time scale has been given.
Capsicum Re said that it was pleased to have agreed the terms and move closer towards AJG ownership.
The parties are now expected to continue their exclusive negotiation, while the actual completion of any transaction remains subject to approvals and execution of agreements, the pair of companies said.
Capsicum Re has developed a position in the reinsurance market as a true alternative to larger brokers and has also established itself as a capital agnostic broker, with access to insurance-linked securities (ILS) backed capacity for its 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.
When Capsicum Re was formed it took on the old AJG Re reinsurance broking team and the group now looks set to return to full AJG ownership, with all the benefits of continuing to be positioned within the expanding AJG world.
AJG has recently made another acquisitions of particular relevance to the ILS market, when its Artex Risk Solutions unit acquired Horseshoe.