Coalition launches $300m Ferian Re to provide third-party cyber risk capital

Coalition, a leading technology-focused cyber insurance company, has announced the launch of a Class 3B Bermuda based reinsurance company called Ferian Re Ltd. which is backed by third-party capital and will act as a kind of sidecar-like source of capacity to support its cyber insurance programs.

Ferian Re is launched with initial capitalisation of roughly $300 million, backed by an investor group led by funds managed by BDT Capital Partners, LLC, an affiliate of BDT & Company, LLC.

BDT & Company is a merchant bank that works with family- and founder-led businesses to pursue their strategic and financial objectives.

Minority investors in Ferian Re include The Pritzker Organization, a sophisticated family office type investor, among other global investors with long-term investment horizons, Coalition explained today.

In conjunction with its launch, Ferian Re is committing to participate in Coalition’s cyber insurance programs alongside leading global insurance and reinsurance groups, including Allianz Group, Arch Insurance North America, and Swiss Re Corporate Solutions.

“Coalition has pioneered a new model of risk management with Active Insurance, which has resulted in continued strong performance and market-leading loss ratios,” explained Dan Jester, President and Co-Chief Investment Officer of BDT Capital Partners.

“With the formation of Ferian Re, we are excited to provide a tailor-made capital solution to support Coalition as it scales to be one of the largest cyber insurance providers globally.

“This investment reflects BDT’s differentiated focus on providing patient capital to family- and founder-led companies to support their long-term success.”

“The rapid growth of the cyber insurance industry has outpaced the supply of reinsurance capital. We’re excited for Ferian Re to bring alternative capital to the market and introduce a reinsurer with deep expertise in cyber,” added Joshua Motta, founder and CEO of Coalition.

“Our partnership with BDT Capital Partners and other strategic, long-term investors will help address this supply and demand imbalance and support our long-term growth ambitions.”

This is a great example of leveraging a reinsurance or ILS-like infrastructure to channel capital from third-party investors to support performant portfolios of cyber insurance risk.

Coalition has a unique approach, as a kind of active underwriter of cyber risks using its coverage and capacity alongside proactive cybersecurity tools to help businesses manage and mitigate cyber risk.

It’s encouraging to see the company looking to a structure that plays a similar role to a reinsurance sidecar to bring new capacity to its cyber programs.