Best’s News & Research Service - August 23, 2018 10:46 AM (EDT)
Beat, Paraline Merger to Boost Lloyd’s Underwriting Platform
LONDON //BestWire// - Beat Capital Partners and Paraline UK said they intend to merge in a move the companies said will enhance and further build Beat’s platform to support independent underwriting businesses.
The merger will see Paraline Group, a Bermuda-based insurance holding company, join Neon Holdings Ltd. as a strategic investment partner of Beat, the companies said in a statement. Lloyd’s Syndicate 4242 will be renamed Beat Syndicate 4242.
The merger is subject to regulatory approval.
The companies said Bruce Schnitzer and John Struck of Paraline will join the Beat board of directors, which will be chaired by John Cavanagh. Paul Rayner, active underwriter of Syndicate 4242 and a director of Paraline Group, will become chief financial officer of Beat.
The £110 million (US$141.6 million) Paraline Syndicate 4242 at Lloyd’s is managed by Asta, a third-party managing agency, the companies said.
Beat has two investments — Tarian, a cyber insurance specialist and Chord Re, a specialty reinsurance underwriter. Neon Syndicate 2468 leads underwriting support for both facilities, the companies said. ICAT Managers, a managing general agent underwriting property catastrophe insurance to businesses and homeowners across the United States, will continue its longstanding strategic underwriting relationship with Syndicate 4242.
“Beat has grown rapidly since its formation in 2017. This deal gives us access to a second Lloyd’s platform alongside Neon 2468 that benefits our existing investee companies and enhances our offering to proven lead underwriters who have the ambition to build their own business,” said Beat co-founder Tom Milligan in a statement. He added Paraline has “a track record of successful insurance investment.”
“This transaction is a great move for our business,” said Schnitzer, chairman of Paraline Group, in a statement. “It brings together a talented group of established insurance leaders and a powerful shareholder group with a shared, long-term vision.”
Beat describes itself as “a long-duration venture capital investor exclusively focused on the insurance industry that backs world-class insurance underwriters who want to start their own businesses.”
Paraline Group Ltd. is a Bermuda-domiciled insurance and reinsurance holding company whose principal operating businesses are Asta Capital Ltd. and Paraline Re Ltd., a Bermuda-based reinsurer. Asta Capital, a third-party managing agent at Lloyd’s, manages more than £1 billion of underwriting capital including Paraline’s Syndicate 4242, the companies said. Paraline Re provides aligned underwriting capital to Syndicate 4242.
Paraline is owned by private investors that include Wand Partners Inc. and funds advised by Elliott Management Corp.
London-based Neon describes itself as a global insurer operating in the specialist Lloyd’s market that writes a range of property, specialty, casualty and marine risks on a direct and reinsurance basis, as well as through delegated authorities.
The registered company name for the main regulated entity is Neon Underwriting Ltd. Neon is a member of Great American Insurance Group, members of which are subsidiaries of American Financial Group Inc., an insurance holding company based in Cincinnati.
In July, Neon Underwriting launched a Lloyd’s-approved coverholder to underwrite Nordic marine business for its Neon Syndicate 2468 (Best’s News Service, July 2, 2018). Headquartered in Copenhagen, Denmark, Orca Insurance Agency will focus on the Nordic markets and will offer “comprehensive” marine risk solutions, Neon said at the time. Orca’s offerings include insurance products and risk consultancy and engineering services for the shipping industry.
Underwriting entities of American Financial Group Inc. have current Best’s Financial Strength Ratings ranging from A+ (Superior) to B++ (Good). Lloyd’s has a current Best’s Financial Strength Rating of A (Excellent).
Shares of American Financial Group Inc. (NYSE: AFG) were trading at $110.88 on the morning of Aug. 23, down 0.76% from the previous close.
(By David Pilla, news editor, BestWeek: David.Pilla@ambest.com)