AM RE in talks to raise $75mn to support new E&S carrier
The team behind AM RE Syndicate is in discussions with potential private equity (PE) backers as it looks to raise $75mn of capital to support the launch of a new excess and surplus (E&S) lines carrier that will begin writing business early next year, The Insurer can reveal.
Investment being sought for new AM Star Holdings parent
In talks with multiple possible PE backers
Investment will be used in part to capitalise new E&S carrier
E&S launch comes after planned Lloyd’s syndicate was scrapped in 2018
The proposed E&S carrier will be called American Specialty Inc (ASI). AM Re CEO Shevawn Barder told The Insurer that discussions were now being held with various PE firms and the company was “narrowing down the options to a few specific companies”.
Barder explained that her firm is looking for one new investor that will purchase equity in the newly formed AM Star Holding Company, which serves as the parent to both specialty program quota share MGA AM Re and the soon-to-be-launched E&S company ASI. The support will not only give the investor a minority stake in AM Star – and therefore AM Re and ASI – but will also be used to capitalise the new E&S platform.
ASI is looking to authorise and domicile in either Texas or Arizona. Barder said the company is currently leaning towards Texas as AM Re has itself recently moved its headquarters from New York to the Lone Star State.
The new platform will write E&S business in similar classes to those offered by AM Re: transportation, inland marine, ocean marine, property, general liability and cyber. There will also be a focus on program business.
Aside from the move to Dallas and the planned launch of the E&S carrier, this year will also see AM Re increase the amount of premium it writes to more than $500mn. As Barder explained, there will be further growth in 2020 and the combination of AM Re and ASI will see the business look to write close to $1bn next year.
AM Re will continue on its current growth trajectory, and will account for the bulk of that $1bn, Barder explained, with ASI accounting for 20-30 percent of the total premium volume.
“In respect of ASI, we expect to write 2:1 or 3:1, in terms of income to surplus,” Barder said.
The business has also added talent to its books.
As this publication reported earlier this summer, AM Re hired Ernie Zayicek from ING Bank as a senior vice president and head of corporate development. That appointment was made as AM Re looks to expand into new business ventures.
Zayicek is not the only new arrival, however, with David Saylors having joined as CFO in August from personal lines and SME-focused intermediary Confie.
The proposed E&S carrier has been in the offing for some time, and AM Re had initially hoped the new insurer would be live by July. At that point, the intention was for ASI to be domiciled in Delaware and launched with capital provided by both internal sources as well as a handful of private investors.
However, the launch has been delayed by several factors, including AM Re’s move from New York to Dallas. But with that move now complete, plans are once again progressing for the E&S platform’s launch with a single source of new PE capital instead being sought.
Moves to launch the E&S carrier have arisen after AM Re shelved plans to open its own Lloyd’s syndicate back in 2018.
The onset of the Lloyd’s performance management directorate’s review during the 2019 business plan approval process led to AM Re pulling back from the application to launch a syndicate, and the company turned its attention to creating the E&S platform instead.
AM Re was founded in 2013, and has historically operated as an MGA writing program reinsurance business for a variety of Asian capacity providers including India’s GIC Re and China’s PICC Reinsurance.