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Fidelis Insurance Holdings Ltd. announced its intention to create a new managing general underwriter, which, subject to regulatory approval, will be separated from the existing balance sheet insurance companies, called Fidelis Balance Sheet Companies.

This new structure will allow each entity to focus on its core functions and specialisms and will provide clients, brokers and other stakeholders with continued levels of industry-leading service.

The Fidelis MGU’s principal equity investors will be Capital Z Partners, The Travelers Cos. Inc., Blackstone, Further Global Capital Management and Alfa Insurance. Blackstone will be leading the debt financing.

The newly created Fidelis MGU will be one of the largest managing general underwriters globally, with plans to originate and underwrite over $3 billion of gross written premium across a range of specialty insurance and reinsurance classes of business.

Upon separation, it is intended that the Fidelis MGU will provide a comprehensive range of services to the Fidelis Balance Sheet Companies, retaining its industry-leading underwriters and attracting additional talent across the broader Fidelis business.

From a client, broker and reinsurer perspective, it is expected that there will be no changes to the way in which Fidelis currently conducts its underwriting from the offices in Bermuda, London and Dublin.

The Fidelis MGU and Fidelis Balance Sheet Companies will continue to underwrite with the same risk appetite, across the three main Fidelis business pillars, including bespoke, reinsurance and specialty.

The transaction is expected to bring significant benefits to both businesses, with increased flexibility to quickly respond to evolving insurance and reinsurance market conditions and helping to sustain Fidelis’ market-leading underwriting results through access to top talent.

Pending regulatory approval, the Fidelis Balance Sheet Companies are expected to benefit from providing long-term capacity for the Fidelis MGU along with a number of mechanisms to ensure alignment among the separated companies. All of the capital and risk transfer resources currently available to Fidelis brokers and clients will continue to be available, ensuring a seamless transition from the current to new structure.

The Fidelis MGU will be led by Richard Brindle, who will act as chairman and chief executive officer of the MGU. A number of leading executives from the senior Fidelis team will be retained by the Fidelis Balance Sheet Companies.

This transaction and the launch of the Fidelis MGU is subject to regulatory approval and transaction steps.

“We are delighted to announce this ground-breaking transaction. The balance sheet companies will have access to our market-leading underwriting talent and risk origination, with appropriate structures in place to ensure alignment,” commented Brindle, chairman, group chief executive officer and chief underwriting officer of Bermuda-based Fidelis.

“I have built my career on underwriting excellence with the support of stable capital providers – from Tarquin to Lancashire and now Fidelis – which will be continued through this transaction,” he added.

“Built on the best talent in the market, we are creating an MGU platform that will generate attractive returns for the shareholders of both of the separated businesses.”

Fidelis is being advised on the transaction by Evercore Partners International LLP, Kinmont, Willkie Farr & Gallagher (UK) LLP and PricewaterhouseCoopers LLP.

Fidelis’ management team is being advised on the transaction by Mishcon de Reya LLP and BDO LLP. Capital Z Partners, The Travelers Cos. Inc. and Further Global Capital Management are being advised on the transaction by Skadden, Arps, Slate, Meagher & Flom LLP. Blackstone is being advised on the transaction by White & Case LLP and Freshfields LLP.

Source: Fidelis