Capita Insurance Services announces it has concluded a transaction to finance the start up of Cobalt Underwriting Services Limited (Cobalt), a Managing General Agent (MGA), by taking a minority equity stake in its holding company, Cobalt Insurance Holdings Ltd. As part of the transaction Capita Insurance Services will provide business outsourcing services to the MGA for a minimum 5 year period.
The transaction is the first in Capita Insurance Services’ strategy to build a portfolio of minority equity stakes in MGAs combined with business process outsourcing (BPO) contracts. The investment portfolio will provide an income stream from both the BPO contracts and potential returns from dividend income, in addition to any upside from the investments’ eventual sale or partial sale.
Cobalt offers shariah compliant commercial insurance lines of business including: selected property and casualty lines, marine and trade credit. The insurance capacity is provided by XL Group in London. To date there has been only very limited shariah compliant commercial insurance available in London and this development marks an important step forward in providing shariah compliant insurance coverage for the Islamic market.
John Holm, Executive Director, Capita Insurance Services comments; “This is a very positive development both for the London insurance market and for Capita and we are delighted to be able to help bring to the market a unique business with a highly differentiated offering.
The MGA space is currently extremely active and there will be many more opportunities for Capita Insurance Services to invest in talented underwriting teams, allowing them the freedom to establish or grow their businesses on their own terms, while we take care of their non-core operations.”
Richard Bishop, Chief Executive Officer, Cobalt Underwriting Services Limited commented, “We are delighted to have the support of Capita, which is not only a significant investor in Cobalt but will also deliver market-leading administration and processing support. We believe what Cobalt is aiming to deliver will change the market and enhance access to shariah compliant insurance and reinsurance capacity.”
Aon Benfield advised on the strategic planning, feasibility and licensing of Cobalt.
Terry Masters, Leader of Aon Benfield ReSolutions, said: “The London market is recognised as a global leader in its ability to provide insurance and reinsurance coverage for a full range of risks. As part of this it is of growing importance to be able to offer shariah compliant commercial insurance capacity, and this is why we are excited to have been a key partner in the structuring of Cobalt.”
