Kestrel launched by Ledbetter’s as value-chain efficiency program specialist

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Terry Ledbetter and Luke Ledbetter, formerly of fronting and program service insurance specialist State National Companies, are back with a new venture, having launched Kestrel Group as a program specialist with a focus on bringing greater efficiency to the insurance and reinsurance market value chain.

Kestrel Group logoThe Ledbetter’s build a company and structure with State National that made the best use of access to risk origination relationships and efficient reinsurance capital, perhaps best-evidenced with their work with insurance-linked securities (ILS) managers such as Nephila Capital.

State National was eventually sold to Markel, as that company called it the “perfect conduit to reinsurance capital” and then added the long-time ILS manager partner Nephila Capital to its stable as well, calling the three ventures together a “game changer”.

Now, the Ledbetter’s are back and have launched Kestrel Group, seeking to once again make the risk-to-capital value chain more efficient and shorter, by connecting programs of insurance business more directly with reinsurance capacity.

Kestrel Group will act as the exclusive producer for four A.M. Best “A-” rated (Excellent) insurance carriers.

These carriers are widely licensed across the United States and have broad admitted and surplus lines capabilities, Kestrel explained.

The new venture aims to “strategically enhance innovation across the insurance value chain,” believing its structure will support that.

By bringing reinsurance capital to originators and underwriters, through a platform of rated carriers that largely pass through the risk and retain little of it, the Ledbetter’s hope to position Kestrel Group as a key entity in the value chain that can support other companies to grow their businesses.

Terry Ledbetter, Executive Chairman of Kestrel Group, commented on the launch of the company, “We are proud to announce the formation of Kestrel Group, with an innovative structure which will further enhance efficiencies in the insurance value chain.

“Previously at State National, we focused on the creation of a bridge between distribution and capacity. Kestrel Group will build on that extensive expertise, strong track record of success and deep relationships throughout the industry to create significant benefit for our clients.”

Kestrel has put together a team that includes the State National founders and brings deep industry relationships and extensive knowledge of the program business space and how to operate programs more efficiently.

The senior team has a track record of writing profitable program business and managing relationships with regulators and rating agencies.

Luke Ledbetter, Kestrel Group’s President and Chief Executive Officer, explained “The core of our business is listening to the needs of clients in structuring transactions which lead to long term partnerships. Terry and I have spent our careers focused on these efforts and we find great satisfaction in building relationships and structuring solutions to benefit all parties.

“We are excited about the opportunity to once again serve program managers, MGAs, reinsurers and reinsurance brokers through the Kestrel Group.”

Kestrel will offer admitted and surplus lines capacity working with a range of capital partners, including AmTrust Financial Services, which is the only named partner so far.

The program business and fronting space has become increasingly busy over the last few years, since State National became part of Markel.

Program specialists have received high valuations and become attractive businesses for private equity investment, but the best among them and the most attractive tend to have a passion for connecting risk as directly as possible to efficient sources of reinsurance capital, including the ILS fund market and capital market investors.

It will be interesting to see how Kestrel differs to State National and whether the Ledbetter’s can repeat their successes with this new venture.

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