Bermuda-based insurance and reinsurance holding company, Fidelis Insurance Holdings Limited, has received regulatory approval from all relevant regulators to create a new Managing General Underwriter (Fidelis MGU), separate from its existing balance sheet insurance companies.
Approvals or non-objections have now been received from the FCA and PRA in the UK, CBI in Ireland, FSMA in Belgium, and BMA in Bermuda.
Originally announced and agreed in July, the transaction is expected to be effective as of 1 January 2023.
The Fidelis MGU will be led by Chairman and Chief Executive Officer, Richard Brindle, and Fidelis Insurance Group will be led by Chief Executive Officer, Dan Burrows.
Fidelis assures that all capital and risk transfer resources currently available to Fidelis brokers and clients will continue to be available to ensure a smooth transition from the current to new structure.
Nevertheless, AM Best has placed the financial strength ratings of Fidelis and its subsidiaries under review with negative implications following the announcement, suggesting that Fidelis’ business profile could be affected by the separation of key management personnel into a separate legal entity.
“We are delighted to have received confirmation of all necessary regulatory approvals,” said Richard Brindle, Chairman & Group Chief Executive Officer and Chief Underwriting Officer of Fidelis.
“This has been a ground-breaking transaction that will enable the separated entities to focus on what they do best, and we are keen to move forward and focus on our clients and brokers. I would like to thank everyone who has been involved in this deal and I am excited for the future of these two entities.”
The Fidelis MGU’s principal equity investors at completion will be Capital Z Partners, The Travelers Companies, Inc., Blackstone, Further Global Capital Management and Alfa Insurance.
In addition, Blackstone is leading the debt financing to the Fidelis MGU, with Oak Hill Advisors (OHA) and Barings also participating in the debt and providing equity.
The Fidelis Insurance Group capital structure will remain unchanged, as will its investors apart from the purchase of a 9.9% stake in Fidelis Insurance Group by the Fidelis MGU from existing shareholders, creating additional alignment.
Richard Brindle and the Fidelis MGU team will have a significant personal stake in the Fidelis Insurance Group at completion as well as being significant shareholders in Fidelis MGU.
“Receiving regulatory approval is an important step in this intelligent and innovative transaction,” commented Dan Burrows, Executive Chairman of Fidelis Bermuda and Managing Director of Fidelis.
“Fidelis Insurance Group will benefit from providing long-term capacity to the Fidelis MGU along with mechanisms to ensure alignment between the separated companies. We look forward to the start of this long-term and successful partnership which will be focused on the continued delivery of underwriting outperformance within the insurance and reinsurance sectors.”
