Financials Acquisition Corp established London Innovation Underwriters Limited (LIU) to implement its strategy to become “a listed operating company that deploys funds to the Lloyd’s of London insurance market.”
According to Financials Acquisition Corp, the Lloyd’s of London insurance market has a strong track record of innovation and underwriting expertise which the newly established LIU seeks to access through London Bridge 2, a third-party protected cell. risk transformation vehicle.
The company believes that through its combination with LIU, it will create an “efficient vehicle for investors to access the attractive returns of the Lloyd’s insurance market without paying significant goodwill or adding structures in payment.”
Financials Acquisition Corp continued, “It is intended that LIU will provide investors with capital efficient access to some of the best underwriting in the Lloyd’s market and that the Core Syndicate book will consist of established syndicates selected for of their underwriting expertise and diversification benefits. .”
The company noted that it will also look to substantively replicate Lloyd’s performance through a similarly sized Broad Market Exposure book, as well as building an Innovation and Seed book to gain exposure to those growth syndicate focused on fast growing risk classes, new data methods. in underwriting, and new models of risk modification.
Based on the current market conditions, Financials Acquisition Corp said it will target an average return on equity of more than 20% in the next five years.
The company continued, “The company believes that the management team and board of directors have the expertise and relationships with some of the best underwriters in the Lloyd’s market to execute this strategy.
“Working with AON as a core reinsurance broker, LIU has obtained significant conditional capacity commitments from syndicates that it intends to support by deploying the proceeds of Capital Raising as Funds At Lloyd’s (FAL) through LB2.
“LIU has set up LIU Corporate Member Ltd as its wholly owned subsidiary and as a corporate member to provide FAL. LIU works with Argenta as an agent for members, who will manage research, reporting and analysis that allows LIU to improve the portfolio of syndicates.
“The reinsurance book is currently expected to have a capital requirement of less than 50%, which will provide LIU with sufficient capital to support up to £1 billion of capacity.”
Financials Acquisition Corp engaged UBS AG London Branch and HSBC Bank plc as Joint Global Co-ordinators and Joint Bookrunners, and The Growth Stage Limited, Panmure Gordon (UK) Limited and Stifel Nicolaus Europe Limited (trading as Keefe, Bruyette & Woods) as co-Bookrunners of the proposed capital increase.
Will Allen, Chief Executive Officer of Financials Acquisition Corp said, “We believe LIU will offer a unique opportunity for investors to gain efficient access and diversified exposure to the Lloyd’s market with liquidity. .
“We are pleased with the initial reaction we have received from investors and underwriters and look forward to the next phase of the transaction.”
Financial Acquisition Corp is sponsored by FINSAC LLP, a limited liability partnership founded by Allen, formerly of investment bank KBW and Andy Rear, former executive of Munich Re.
Allen and Rear first unveiled plans for the “significant new Lloyd’s re/insurance start-up” in June.
