Securis Investment Partners LLP, the London based ILS investment manager, has entered into a new arrangement with property, casualty and specialty lines insurance company StarStone which will see Securis better accessing risks from primary catastrophe insurance.
Securis already has an existing platform at Lloyd’s, a special purpose vehicle that accesses excess and surplus lines property insurance risks for the ILS and reinsurance fund manager.
The Lloyd’s arrangement, Securis backed SPA 6129, was originally launched as a joint venture between Securis and specialist re/insurer Novae, targeting U.S. facilities business. The SPA is now under the arm of Bermudian re/insurer AXIS Capital, after it acquired Novae.
The new facility with StarStone delivers the same types of exposure for Securis, but through a U.S. domiciled rated platform. Securis will be writing similar non-admitted property risk from both personal and commercial lines, through StarStone.
Artemis spoke with Non-Life Portfolio Manager Herbie Lloyd about the new StarStone arrangement to find out more about the strategy.
Lloyd explained that Securis sees the StarStone relationship “as analogous to its SPA strategy at Lloyd’s, we’re sourcing primary cat exposed risk, exclusively in the U.S.,” Lloyd said. “We now have two mechanisms enabling us to do that.”
The arrangement with StarStone structurally differs to the Lloyd’s platform, Securis enters into a quota-share reinsurance arrangement with the insurer’s U.S. non-admitted entity to secure and collateralise the business underwritten.
Lloyd continued, “The funding mechanism is somewhat different, being a reinsurance transaction, but it allows us to scale our activity a little easier within the direct market and having both Lloyd’s and domestic options gives us further flexibility. The mechanism also provides for both cost and capital efficiency.”.
The business Securis accesses from these primary sources is written primarily through MGAs. Having the potential use of two access points also provides more flexibility to the MGAs that Securis works with.
StarStone and Securis will work together to originate, analyse and underwrite risks for the portfolio. Lloyd noted, “Interests are entirely aligned, with both parties participating in the risk in the same way the Axis arrangement operates”.
The arrangement is another example of ILS fund managers bringing their capacity nearer the front of the value-chain, to efficiently reinsure portfolios of primary cat exposed property business, to the benefit of their investor base.
Willis Towers Watson are the intermediary for the arrangement.