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HSCM & Cornell to acquire high net-worth insurtech Vault from Allied World


Hudson Structured Capital Management Ltd., the insurance-linked securities (ILS), reinsurance and transportation investment firm, has increased its stake in specialist tech-focused provider of personal insurance to high-net-worth clients Vault, participating in an acquisition of the company from owner Allied World.

vault-insurance-logoHudson Structured, which enters into insurance and reinsurance investment business as HSCM Bermuda, had been an early investor in Vault, taking a stake in the firm which operates structured as a Reciprocal Insurance Exchange, a fully licensed managing general agent (MGA) and an excess and surplus (E&S) lines insurer, in collaboration with Allied World Assurance Company Holdings back in 2017.

Vault launched as an insurtech with ambitions to address the demands of the high net-worth personal insurance market and has experienced fast growth since.

Now Hudson Structured has increased its stake in the high net-worth player, by participating alongside private investment firm Cornell Capital LLC in a full acquisition of Vault from its owners.

Hudson Structured and Cornell Capital have entered into an agreement to acquire Vault Holdings, LLC.

“We were a founding investor in Vault, and our additional investment is a testament to our confidence in the Company’s business model,” explained Michael Millette, Founder and Managing Partner of Hudson Structured Capital Management Ltd. “We are eager to build on the impressive growth and momentum that we have achieved together over the past three years.”

Vault offers insurance protection and services for high-value homes, art, jewellery, and personal excess liability coverage, leveraging technology to enable these coverages to be packaged under one transaction via an online platform, offering fast quote and binding.

Scott Carmilani, Co-Founder of Vault and the former Chairman and CEO of Allied World Assurance Company Holdings, Ltd, will stay on and serve as Chairman of Vault’s Board.

Vault’s leadership team, led by Co-Founder and CEO Charles Williamson, who was formerly the CEO of Tower Hill Insurance Group, will continue to run the business after the acquisition.

“The market demand for premium personal insurance is growing rapidly,” Carmilani said. “There are more than 12 million U.S. households in our target market, up from 6.8 million in 2009, and nearly 80% of them do not currently utilize the services of a high-net-worth insurance specialist, presenting Vault with a large addressable market. With the investment by Cornell Capital and HSCM, we see significant growth potential for Vault in the underserved high-net-worth insurance market.”

“I’m extremely confident in Vault’s future and the balance-sheet flexibility this transaction provides,” added Williamson. “By leveraging Cornell Capital and HSCM’s deep industry expertise, operational capabilities, and capital resources, Vault is poised to unlock additional growth opportunities.”

“In less than three years, Vault has progressed from a dynamic startup to a fast-growing disruptor,” Henry Cornell, Founder and Senior Partner of investor Cornell Capital also said. “Our team brings significant experience partnering with and growing leading insurance companies, and we look forward to working closely with Scott, Charles, and the Vault team to execute on our shared vision for continued growth. Moving forward, Vault has the potential to become an even stronger, more nimble competitor, capable of reshaping the sector, attracting and retaining top talent, and achieving market leadership in high-net-worth personal insurance.”

Allied World, which is part of Fairfax Financial, is expected to retain an indirect minority interest of 10% in Vault and will support the transition through an administrative services agreement and also the provision of reinsurance support.

“We are very pleased to complete this transaction with Cornell Capital and HSCM Bermuda,” Prem Watsa, Chairman and CEO of Fairfax said. “We are also very grateful to Scott for all of his contributions to the Fairfax Insurance Group, especially at Allied World, a company which he led from being a start-up to becoming an industry leading and highly successful worldwide insurance and reinsurance business. We wish Scott all the very best.”

The acquisition is expected to close in Q1 2021, on receipt of all necessary regulatory approvals and Vault expects to hold onto its  “A-” (strong) rating from A.M. Best Company, Inc.

TigerRisk Capital Markets & Advisory provided financial advisory services to Cornell Capital, HSCM and Vault in connection with the acquisition, while Debevoise & Plimpton LLP is serving as legal advisor to Cornell Capital and HSCM.

The investment reflects just the latest example of Hudson Structured’s broad insurance and reinsurance investment strategy, as it seeks out insurance-linked returns from across the balance-sheet and range of market access points.

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