According to Novae Group plc, its launch of the “ground-breaking” special purpose Lloyd’s of London syndicate 6129 in partnership with ILS investment manager Securis Investment Partners has driven growth in U.S. E&S property business for the re/insurer.
The special purpose syndicate was launched by Novae in partnership with specialist insurance linked securities (ILS) and reinsurance investments manager Securis in late 2015.
Capitalised fully by investor funds under Securis’ management, the unique Syndicate 6129 was the first ILS-backed Lloyd’s SPS that is class-specific, so focused on a single line of business, and U.S. excess & surplus lines property insurance business is also a unique feature of the SPS.
SPS 6129 went live at the start of 2016, with stamp capacity of US$75 million to put to work and by the end of the first quarter Novae called it a “significant contributor” to its growth.
Now, another quarter in and after the first six months of operation, SPS 6129 is again hailed by Novae as driving the majority of its growth in property lines, with the new E&S business making a “significant contribution” to the re/insurers property unit.
“Growth was strongest in direct property classes, most notably within US property facilities. This unit benefitted particularly from the strategic partnership with Securis Investment Partners LLP, with Special Purpose Syndicate 6129 (“SPS 6129”) making a significant contribution to growth in the first half of the year.
“The majority of the growth in the division was in US property excess and surplus lines business, which benefited from the successful launch of the ground-breaking special purpose syndicate with Securis Investment Partners LLP (“SPS 6129″),” Novae explained in its Q2 2016 results this morning.
The SPS 6129 venture also benefited Novae’s results through the increased use of proportional reinsurance, which helped to improve the attritional loss ratio in the property unit compared to a year earlier, despite continued pressure on pricing, the company explained.
The launch of the U.S. E&S property focused SPS alongside Securis has helped Novae to better navigate the challenging marketplace, counterbalancing the impact of a pull-back in some other lines of business such as agriculture reinsurance and the property per risk account.
One of the benefits of partnering with third-party or ILS capital providers, like Securis, is the additional capital, which is often more efficient, providing an avenue for growth, expansion, diversification, and a counterbalance to areas where re/insurers are contracting.
This is the sensible way to partner with ILS fund managers and third-party capital, on complementary areas where either the efficiency of ILS capital is key, or the additional capacity can bring something attractive to the ILS investors while providing growth opportunities and a larger footprint for the traditional insurance or reinsurance partner.
The symbiotic nature of the Novae and Securis seems to be demonstrating this admirably so far.