CBS General Partner has announced the launch of a fund called Insurance Capital Partners, LP.
The Fund is a collective investment scheme with a target size of £400m over its lifetime. The Fund has been formed to deploy capital directly in support of underwriting, rather than by owning shares in insurance companies. This is intended to give direct exposure to the insurance underwriting asset class on a basis not otherwise available to investors.
The Fund will focus primarily on the Lloyd's market, where it can access high quality underwriting businesses on a flexible basis. It is intended to offer a new way for private investors to access the Lloyd's market, providing a valuable element of diversity to the market's overall capital base.
In addition, the Fund will seek to identify other opportunities to deploy capital profitably in support of insurance and reinsurance outside the Lloyd's market.
For 2006, the Fund has agreed to provide underwriting capital to CBS ICP Capital (ICPC). ICPC has underwriting capacity of £74.7m for the 2006 year of account, which it is supporting with £29.9m of Funds at Lloyd's. Of this £29.9m, £14.9m is being provided by the Fund. Of the balance of £15m, £10m is being provided alongside the Fund's capital by a Bermudian reinsurance company and £5m is being provided as gearing through a reinsurance with another Bermudian reinsurer.
ICPC's portfolio of underwriting participations is diversified across a range of business classes. The portfolio has been structured with the objective of capitalizing on the favourable pricing environment expected to prevail following the unusually severe 2005 hurricane season. Lloyd's managing agents are already reporting pricing increases in a number of classes of business.
CBS Private Capital (CBSPC), the Lloyd's adviser and members' agency, is acting for ICPC as members' agent and will advise the Fund on further investments in underwriting opportunities in the future.
During 2006 it is intended that the investor base of ICP should be broadened through a further fund-raising in anticipation of possible opportunities to deploy capital during 2006 as well as for the 2007 Lloyd's year of account.
Charles Harbord-Hamond (managing director of CBS Private Capital) said: "CBSPC will seek to identify underwriting businesses with demonstrable track records of superior underwriting performance and will also consider newly-formed businesses whose individual underwriters have a strong track record.
Andrew Castell (director of CBS General Partner) said: "Insurance Capital Partners LP is now established. I look forward to its continuing development as an accessible and flexible means of accessing the Lloyd's market and other opportunities in insurance and reinsurance, at a time when the market is widely expected to benefit from a resurgence in its pricing environment."
