Bermuda-based insurance and reinsurance holding company, Fidelis Insurance Holdings Limited, has announced the impending creation of a new managing general underwriter, which will be separated from its existing balance sheet carriers, called Fidelis MGU.
According to Fidelis, the new structure enables each entity to focus on its core functions and specialisms, while providing clients, brokers, and other stakeholders with continued levels of industry-leading service.
The principal equity investors of the newly created MGU will be Capital Z Partners, Travelers, Blackstone, Further Global Capital Management, and Alfa Insurance. The debt financing will be led by Blackstone, says Fidelis.
Travelers has actually invested in Fidelis previously, taking a strategic minority stake in the firm in July of last year.
Impressively, the new MGU intends to originate and underwrite more than $3 billion of gross written premium across various specialty insurance and reinsurance classes of business, making Fidelis MGU one of the largest MGU’s in the world.
The new platform will be led by Richard Brindle as Chairman and Chief Executive Officer (CEO), with a number of leading executives from the senior Fidelis team being retained by the Fidelis balance sheet companies.
It seems the separation of the business is key for Fidelis, with the company explaining that upon separation, the plan is for the new MGU to provide a comprehensive range of services to the Fidelis balance sheet firms, retaining industry-leading underwriters and attracting additional talent across the broader business.
Upon separation, Fidelis expects there to be no changes in the way it currently operates its underwriting from the offices in Bermuda, London, and Dublin. The focus, says Fidelis, will continue to be on exceptional client service, responsiveness and innovation, all of which the firm expects to be core to Fidelis MGU going forwards.
Both the new MGU and Fidelis balance sheet companies will continue to underwrite with the same risk appetite, across the three Fidelis business pillars, including bespoke, reinsurance, and specialty. Ultimately, it’s anticipated that the transaction, which remains subject to numerous regulatory approvals and steps, will bring significant benefits to both businesses, enabling greater flexibility to quickly respond to evolving re/insurance market conditions.
Once everything has been approved, it’s hoped that the Fidelis balance sheet insurers will benefit from providing long-term capacity for the newly created Fidelis MGU along with numerous mechanisms to ensure alignment among the separated firms.
Additionally, notes the holding company, the entire capital and risk transfer resources currently available to Fidelis brokers and clients will still be available, which helps to ensure a smooth transition from the current to new structure.
Commenting on the new MGU, Brindle, Chairman, CEO and Chief Underwriting Officer (CUO) of Fidelis, said: “We are delighted to announce this ground-breaking transaction. The balance sheet companies will have access to our market leading underwriting talent and risk origination, with appropriate structures in place to ensure alignment. I have built my career on underwriting excellence with the support of stable capital providers – from Tarquin to Lancashire and now Fidelis – which will be continued through this transaction.
“Built on the best talent in the market, we are creating an MGU platform that will generate attractive returns for the shareholders of both of the separated businesses. Our success will be defined by the continued delivery of underwriting outperformance, aligned with our long-term philosophy of writing insurance and reinsurance in areas where deep expertise is required to deliver through the cycle. We look forward to the start of a long term and successful partnership between the companies.”
On this transaction, Fidelis is being advised by Evercore Partners International LLP, Kinmont, Willkie Farr & Gallagher (UK) LLP and PricewaterhouseCoopers LLP. The management team is being advised by Mishcon de Reya LLP and BDO LLP. While Capital Z Partners, The Travelers Companies, Inc. and Further Global Capital Management are being advised on the transaction by Skadden, Arps, Slate, Meagher & Flom LLP. Blackstone is being advised by White & Case LLP and Freshfields LLP.