Cinven targets re/insurance with €1.5bn Strategic Financials PE fund

Private equity specialist investor Cinven is doubling down on what it has learned through recent investments and deals in the insurance and reinsurance space, with the launch of a new fund strategy that will have re/insurance as a significant component.

The PE investor has just announced the final close of its first Strategic Financials Fund (SFF), having raised €1.5 billion capital commitments for it.

The company said the new strategy will focus on areas where Cinven has “developed significant investment expertise,” through its previous work.

For the Strategic Financials Fund, this includes, “life and non-life insurance and reinsurance, asset-backed speciality finance, wealth management, insurance distributors and other ‘capital light’ financial service providers.”

The SFF has already made some investments, two of which we have covered in the past.

First, Cinven’s investment that helped to take insurance and reinsurance broker Miller private, a firm with an industry-loss warranty (ILW) and insurance-linked securities (ILS) broking practice.

Second, Cinven’s participation in the acquisition of legacy, or run-off sector specialist Compre, a deal that enabled Hudson Structured Capital Management (HSCM) to exit its position in the legacy insurance and reinsurance firm.

Cinven has been involved in the insurance and reinsurance space for much longer, of course, with stakes in life insurance focused entities having been a focus, and the private equity specialist provides institutional investors with a way to access interesting segments of the financial and re/insurance markets through its buy-out strategies.

While not the kind of insurance-linked investing we typically cover, Cinven and other PE specialists like it do understand the opportunity to connect risk with capital in a more efficient way and have deep access to institutional markets.

We suspect that over time PE specialists will help to drive innovation in re/insurance, pushing incumbents to adopt more modern business models and improved ways of transferring risks down the market chain to their ultimate capital holder.

Therefore Cinven and its peers have an interesting role to play in bringing institutional interest to the market, as well as in driving innovation as well.

Stuart McAlpine, Managing Partner of Cinven, commented, “For more than 30 years, Cinven has focused on building world class companies using its European focus and sector specialist expertise. We are delighted to have raised our inaugural Strategic Financials Fund and would like to thank Cinven’s long term investors for their continued support, and to welcome our new investors who have built conviction in the SFF’s investment strategy, the strength of the SFF team we have built, and Cinven’s unique capabilities in the financial services sector.”

Caspar Berendsen, Partner at Cinven who leads the Financial Services Sector team, added, “The SFF draws on Cinven’s proven track record of investing in established European financial services businesses with long term track records of sustained growth and cash generation. Across the separate investment mandates of Cinven’s flagship fund and the SFF, Cinven’s financial services franchise is now better positioned than ever to support great management teams in building businesses in the European financial services sector.”

Luigi Sbrozzi, Partner and co-head of the SFF, also said, “We are excited to hold the final close of the SFF which is uniquely positioned as one of the largest pools of capital solely dedicated to financial services in Europe. We are off to a strong start already, having signed three high quality SFF investments so far and we look forward to continuing to identify attractive future investment opportunities within our core focus areas of financial services.”