One of the leading Japanese trading and business investment firms operating globally, Itochu Corporation, are getting into reinsurance underwriting by investing in Antares Syndicate 1274 managed by Antares Managing Agency Ltd at Lloyd’s of London. Interestingly, Itochu were an equity investor in insurance-linked securities fund manager Juniperus Capital, having invested in it back in December 2009, so this is not the first time they’ve shown interest in reinsurance as an investment or asset class.
Itochu have a number of interests in the insurance broking sector around the globe, including holding a Lloyd’s broker license, but their reinsurance underwriting experience had been gained solely through Juniperus Capital we believe. Itochu are said to have sold that stake in Juniperus to Aquiline Capital in January 2012. Juniperus are now Pillar Capital after rebranding and receiving investments from new partners.
Itochu Corporation clearly see an opportunity to profit in the reinsurance underwriting space, by providing capital to back Antares Syndicate 1274 and the underwriting of their reinsurance. They also seek to use this Lloyd’s venture as a way to increase their own reinsurance underwriting skills and Antares will receive one employee on a full-time secondment from Itochu Corporation from Spring 2013.
This is the first time a Japanese non-financial company has participated in Lloyd’s of London as part of an underwriting business. They will underwrite reinsurance directly from Antares Syndicate 1274 which will help them to gain experience in reinsurance underwriting techniques and industry know-how. Itochu said that this will facilitate a full launch and expansion of their insurance underwriting business in the future, so it sounds like the investment in Antares is a step towards Itochu launching their own underwriting syndicate or agency at Lloyd’s.
The aim for Itochu is to begin to capitalise on the growth of insurance and reinsurance in Asia and around the globe, leveraging their own insurance brokerage businesses and seeking to capitalise on the premiums and attractive investment opportunities in reinsurance.
A spokesperson from Itochu Corporation said; “Our investment in Antares marks an important strategic step for Itochu Corporation as it expands its insurance activity. We have been impressed with the significant underwriting talent at Antares, with their extremely strong technical capability and with the company’s growth ambitions. We look forward to a long-term and mutually beneficial relationship”.
Stephen Redmond, Chief Executive of Antares Managing Agency Ltd., commented; “We are delighted to have forged an alliance with Itochu Corporation enabling them to participate in our coveted Lloyd’s business. Their financial strength, distribution base, and network of associated businesses make them an ideal partner for Antares as we look to meet our future insurance, and reinsurance targets. We look forward to further developing the relationship with Itochu Corporation in 2013, and beyond.”
Itochu Corporation clearly see reinsurance as a valuable area to diversify their business into. It’s interesting to see them investing and seeking to get more involved at Lloyd’s, with many observers having forecast an increase in private investments into Lloyd’s this corporate investment bucks that trend. It makes a lot of sense for Itochu to use the Lloyd’s reinsurance market as a proving ground for their aspirations to grow their own involvement in the reinsurance space. With reinsurance-linked investments attractive to many institutional investors and funds right now getting a foothold in the market is a good way to ensure you can capitalise on that interest in years to come. This deal shows that third-party capital continues to flow into the reinsurance space in many forms.