London headquartered specialist insurance linked securities (ILS) and reinsurance investments manager Securis Investment Partners has teamed up with specialist Lloyd’s of London insurer Novae Group plc to launch a new special purpose syndicate focused on U.S. E&S property business.
Capitalised fully by funds under management at ILS manager Securis Investment Partners, Syndicate 6129 has received all Lloyd’s approvals and will go-live on 1st January 2016 with a stamp capacity of US$75 million.
It’s the first such venture to be class specific, rather than featuring a quota share of a syndicates business and also unique is the focus on U.S. excess & surplus lines property insurance business, with most ILS related Lloyd’s ventures focused on catastrophe or specialty lines.
Syndicate 6129 represents an “evolution” of a relationship that already existed between Securis and Novae, with some of Novae’s U.S. insurance facilities business ceded to Securis funds on a collateralised basis.
With SPS 6129 the pair aim to expand the portfolio of U.S. facilities business underwritten and ceded through to Securis investors, through a combination of tapping into Novae’s existing income stream and through access to new insurance or reinsurance business generated by both parties.
Rob Procter, CEO of Securis, explained the importance of this launch and the partnership with Novae; “This is an important development for Securis – which helps further build our Lloyd’s and specialty presence. We are delighted to be working with Novae, one of the premier Lloyd’s franchises, and with whom we have had a strong relationship for a number of years. SPS6129 will allow us to support risks in the US primary business, as well as various in specialty lines risks.
“This helps facilitate support from alternative capital in areas of the insurance market other than pure property catastrophe exposed programmes – where the impact of ILS has been felt most keenly to date. The principal beneficiaries will be our investors – who can now support our Lloyd’s and specialty activities either directly through our LCM Fund, or can participate via a number of our products which become better diversified and differentiated as a result.”
Matthew Fosh, CEO of Novae Group, added; “Our Property division is growing across all insurance classes and we see a significant opportunity to build upon this in the E&S Property market. This collaboration with Securis allows us to harness new capital in a variety of forms, and demonstrates the success of our partnership to date. We have worked with Securis for a number of years and the innovative structure of Syndicate 6129 enables us to broaden the scope of business we can write, bringing more business to the London market and demonstrating that we can offer exciting new opportunities to innovative industry investors.”
So the partnership on special purpose Lloyd’s syndicate 6129 brings benefits to both sides, with Securis able to tap into new sources of property lines and specialty business for its ILS funds and third-party investors, while Novae can benefit from additional capacity and quality collateralised funding to grow its own footprint in the space.
Securis Investment Partners has almost $3.4 billion of third-party ILS and reinsurance related assets under management, making it one of the largest in the space today. The ILS manager already accesses the Lloyd’s market for its investors through funds at Lloyd’s structures, but this is the first SPS or syndicate type arrangement for the firm.
Access to Lloyd’s business, through the relationship and full capitalisation of an SPS syndicate is one thing, but also potentially transformational for Securis is the direct access to U.S. E&S property business, a class that will provide diversification and also allow the manager to direct its third-party capital more closely to the ultimate source of risk in the primary space, extracting more of the potential premium return.
Neil Strong, Head of Non Life at Securis, told Artemis; “Securis and Novae have enjoyed a longstanding relationship and the depth of personal connectivity between the organisations ensures a strong alignment of core values.
“Within Securis this new initiative adds another opportunity for us to originate and source the very best investment opportunities for our investors. The Lloyd’s SPS allows us to utilise our existing knowledge, framework and capital structure to ensure an efficient and beneficial risk transfer.”