i2B Capital has closed an $8 million structured term loan to National Surety Underwriters (NSU) to fund the capitalization of a new reinsurance subsidiary and the merger of McCabe and Independent Corporate Underwriters.
NSU – a special-purpose surety reinsurance captive and underwriting agency headquartered in Philadelphia – is the sole owner of the reinsurance entity, National Fidelity Reinsurance Company, being set up to underwrite and reinsure surety bonds of up to $2 million per bond and $4 million in the aggregate per principal insured through its licensed insurance partner, Clear Blue Insurance Company.
Barbara Anderson, Chief Operating Officer (COO) of i2B Capital, explained the firm’s goal over the initial 36-month structured term loan is to prepare NSU for traditional institutional financing in the future; “To accomplish that objective, we will provide the growth capital along with our commercial lending expertise to help NSU prepare for the disciplined reporting requirements and credit processes at the next level.”
NSU will also use the funding to finance a merger of McCabe with a Managing General Underwriter (MGU) specializing in surety bonds based in New Jersey – Independent Corporate Underwriters, (ICU).
Surety bonds will be written and placed with multiple carriers through the ICU merger with MGU which will enable surety bonds of up to $100 million to be written with insurance carrier approval.
National Surety Underwriters Chief Executive Officer (CEO), Rennie Rodriguez, added; “Our expertise is building and managing specialty insurance agencies and we see tremendous opportunity for consolidation in a fragmented surety bond industry.
“Through offering a unique package to contracted surety bond agents and targeted strategic acquisitions, we are building a networked system of top-line surety agents.”
In addition to the $8 million loan, the NSU secured $3.5 million from investors to the transaction closing.
Larry Curran II, CEO of i2B Capital, a provider of direct financing to niche-market financial entrepreneurs, said; “This funding is an excellent example of i2B Capital’s ability to navigate and resolve complex business financing issues.
“The transaction included capitalization for three companies in three states with wide-ranging legal and regulatory requirements to create one synergistic entity able to service a broad spectrum of surety requirements.”