Schinnerer Group, the underwriting manager and managing general agent arm of insurance and reinsurance broking giant Marsh, is targeting the property catastrophe risks arena with the acquisition of catastrophe focused underwriting manager ICAT (International Catastrophe Insurance Managers LLC) from the Paraline Group.
Schinnerer said that it has agreed the acquisition for an undisclosed sum with Bermuda domiciled insurance and reinsurance holding company Paraline and the deal should be closed by the end of this year.
ICAT underwrites U.S. property risks, both homeowner and commercial, in catastrophe exposed regions on behalf of the Paraline owned Lloyd’s of London Syndicate 4242 and other re/insurers, operating in all U.S. hurricane and U.S. earthquake exposed states.
Schinnerer does already underwrite in many of these areas, but does not have a specialist property catastrophe unit, hence the acquisition of ICAT complements its own property underwriting through its Victor O. Schinnerer & Company subsidiary, which of course works with the largest ILS fund manager Nephila Capital on the Alternus facility.
Schinnerer said that, “ICAT complements Schinnerer’s existing services and solutions for middle market, small commercial and residential clients.”
Additionally, the acquisition brings Schinnerer a claims team focused on property catastrophe business, in ICAT’s claims and third party administrator subsidiary Boulder Claims, which the firm said would enhance its services to clients.
“The insurance market for catastrophe-exposed small commercial property is underserved with opportunity for expansion,” explained Christopher Schaper, CEO of The Schinnerer Group. “ICAT delivers integrated and seamless value to clients through a highly automated and efficient underwriting platform with proven capabilities.”
ICAT targets underwriting business along the Gulf and Atlantic coasts, Hawaii and all earthquake exposed states of the U.S., sourcing its business through retail agents and wholesale brokers. ICAT will continue to have a relationship with Syndicate 4242 at Lloyd’s, its associated Special Purpose Arrangement 6123 and a number of other leading insurance carriers, the announcement says, suggesting that ICAT will remain the underwriter for Paraline’s Lloyd’s activities.
Gregory Butler, CEO of ICAT, said; “We are excited about the strategic value for our customers and the additional opportunities for the ICAT team by joining The Schinnerer Group. The success we have achieved over the past few years reflects our passion to deliver industry-leading products and solutions to homeowners and business owners around the country.
“Not only does this focus remain unchanged, but our new relationship with Schinnerer allows us to continue providing our broker relationships with a growing suite of innovative solutions for their customers’ catastrophe needs.”
Bruce Schnitzer, Chairman of Paraline, added; “We are confident that ICAT will fit well with the Schinnerer organization as both have a proud history of growth and disciplined underwriting that has produced excellent results for a stable group of capacity providers.
“We have the highest regard for the ICAT leadership team and staff, who have been wonderful partners with us over the seven years of our joint ownership. And, we are very much looking forward to continuing the long-standing strategic relationship between ICAT and our Syndicate 4242 at Lloyd’s.”
Schaper continued; “Today, more than ever, clients require us to deliver innovative solutions and ICAT will bring new capabilities to The Schinnerer Group. I am delighted to welcome Gregory Butler and his well-regarded team to Schinnerer.”
It’s an interesting acquisition and positions Schinnerer with a much stronger focus on catastrophe exposed property insurance risks, which readers will know are an increasing focus for sources of alternative reinsurance capital and the insurance-linked securities (ILS) industry.
Schinnerer already commands property programs of significant scale, works directly with ILS fund manager Nephila Capital on the Alternus facility, which sees around 10% of its property business backed by Nephila’s funds, and now has enhanced access to property catastrophe risks which is exactly the target of the Nephila strategy.
Hence this acquisition of ICAT could play into the Alternus strategy, as it would make sense for that approach to enhance the ICAT underwriting expertise by adding greater capital efficiency to the capacity backing those property catastrophe insurance programs.
Additionally, ICAT Syndicate 4242 recently sponsored its first catastrophe bond, the aptly named (given ICAT’s headquarter location) $164.5 million Buffalo Re Ltd. (Series 2017-1) catastrophe bond.
As part of the Schinnerer Group, ICAT could find it has enhanced and broader access to underwrite new risks for the Paraline owned syndicate at Lloyd’s, resulting in a greater chance of further cat bonds being issued as a way to back some of the business in future.
As getting closer to the source of catastrophe risk becomes increasingly important, in a market where margins are pressured, the acquisition of ICAT will help Schinnerer and Marsh offer more of this risk on a more direct basis to reinsurance and risk capital providers, including of course the ILS and third-party capital space.