Special purpose Lloyd’s of London syndicate 6129, which was launched last year by Novae Group plc in partnership with specialist insurance linked securities (ILS) and reinsurance investments manager Securis Investment Partners, helped to drive growth for the insurer in Q1 2016.
Novae teamed up with ILS manager Securis to launch a unique Lloyd’s SPS last year. Capitalised fully by funds under Securis’ management, Syndicate 6129 was the first class-specific ILS-backed Lloyd’s SPS, and a focus on U.S. excess & surplus lines property insurance business was also a unique feature.
SPS 6129 went live on January 1st 2016 with a stamp capacity of US$75 million to put to work. Already, after just the first-quarter, Novae has reported that the venture is helping to drive growth for the firm.
In its first quarter trading statement this morning, insurer Novae said that SPS 6129 launched in conjunction with Securis has been a “significant contributor to the growth in the quarter” as the insurer reported an 8.9% increase in property gross underwriting premiums written.
Novae said that the insurer achieved its growth by “capitalising on opportunities in lines of business where rates remain adequate and from the ongoing investment in new underwriting teams and initiatives.”
The special purpose syndicate venture with ILS manager Securis definitely qualifies as a new initiative driving growth, benefiting both parties involved.
The venture enables Securis to access a new source of business into which it can deploy its third-party investor-backed ILS fund capital. It also benefits Securis as the venture provides access to the U.S. E&S market, an area of property risks harder to reach alone.
For Novae the augmented capacity that can be deployed, thanks to the $75m of Securis sourced stamp, grows its power in the market and provides a source of efficient capital that can be put to work alongside, or indeed instead of its own.
For established Lloyd’s players, setting up an SPS in partnership with an ILS manager is an effective way to grow relevance (by increasing capacity), earn fees and profit shares by underwriting for the venture and helping to source the business and also to raise capital efficiency.
Novae said previously that the SPS venture with Securis was expected to help the firm expand its U.S. facilities business in 2016, leveraging the insurers existing income stream and through increasing its access to incremental U.S. E&S premiums. A strategy that is clearly coming to fruition for the firm.