ILS is key capacity for Beat under Ambac. Casualty an opportunity: Cavanagh & Anand

Speaking with Artemis after the completion of Ambac Financial Group’s acquisition of a 60% stake in Beat Capital Partners, executives John Cavanagh and Naveen Anand told us that third-party capital in general and the ILS market are seen as key capacity for the group going forwards.

As we had reported back in June, Ambac Financial Group, Inc., an NYSE listed insurance holding company, struck an agreement to acquire a 60% controlling stake in Beat Capital Partners Limited, the London-based long duration re/insurance investor, underwriter and MGA incubation platform.

As we said at the time, Beat Capital has been supported by ILS capital from certain insurance-linked securities (ILS) investors and funds in the past, including Canadian pension Ontario Teachers’.

So we spoke with John Cavanagh, Chairman of Beat Capital Partners, and Naveen Anand, President of Cirrata Group, Ambac’s insurance distribution division, to learn more about their plans and the potential role the ILS market may take in them.

Cavanagh told us, “Third-party and ILS capital will continue to be a cornerstone of the Beat model in terms of backing our Lloyd’s syndicates and Cadenza Re.

“We source in three key areas: 1) as capital providers behind syndicates 4242/1416; 2) as Lloyd’s consortium capital partners, and 3) as reinsurers either on a quota share or excess of loss basis.”

Anand concurred, saying, “Under Ambac, ILS and third-party capital will remain key components of the capacity mix backing Beat Capital and Cadenza Re, as the strong growth prospects for the Beat platform will require a commensurate growth in capacity.

“Subsequently, Ambac will continue to leverage the full breadth of both traditional and alternative sources of capacity to support that growth.”

Asking whether ILS is an area that Beat sees as a source of continued capacity growth, Cavanagh explained that the market is seen as an opportunity.

He said, “Efficient capital sources such as ILS will undoubtedly be of significant interest for the Beat model both now and in the future.”

Adding that, “We see this as a very fertile area for expanding our roster of third-party capital providers.”

Anand highlighted that the combined Ambac / Beat platform represents a compelling opportunity for third-party capital investors that are seeking insurance and reinsurance-linked returns, including the ILS market.

“The combined distribution platform of Beat and Cirrata represents an attractive and compelling growth story. The Beat acquisition more than doubles the size of Cirrata Group, Ambac’s property and casualty insurance distribution business, placing it on track to produce approximately $1 billion in premiums on an annualized basis for 2024,” Anand explained.

He went on to tell Artemis that, “The acquisition of Beat also adds immediate scale and diversification to Cirrata Group, increasing the number of MGAs in Cirrata Group from four in Q1 to 16.

“The Cirrata/Beat combination establishes us as a leading insurance distribution platform, with exceptional global growth opportunities through both organic and inorganic means.”

Anand also highlighted that one area that Ambac has been exploring is around the potential for third-party capital and ILS investors to support portfolios of casualty risks.

“Ambac has had a number of discussions with ILS capacity providers in the last year or two as the potential opportunity for casualty capacity continues to develop,” Anand explained.

Further stating that, “As we have seen in the property ILS market, we expect the casualty ILS market to grow, mature and evolve and become an important component of our capital/capacity sources going forward.”

In general Beat and Ambac both see the ILS market as a key capacity source and one that they have an opportunity to do more with, as the combined business grows over time.

Cavanagh said, “Third-party capital sources are fundamental to the Beat model and will continue to be so.”

John Cavanagh, Chairman of Beat Capital Partners, is a speaker at our upcoming Artemis London 2024 conference on September 3rd. Register here if you would like to join us.