Heavyweight investment firm Apollo Global Management has formed a new Bermudian (re)insurer, which is expected to be used as a platform for writing large P&C and life trades, re-Insurance.com can reveal.
Acra Re was licenced as a Class 3A insurer by the island’s financial regulator, the Bermuda Monetary Authority (BMA), earlier this year and its details were recently updated on the register of companies website.
The company will be led by Apollo Global partner Jamshid Ehsani, who is the firm’s co-head of global structured finance of credit.
Other directors listed in the regulatory filing are Chad Leat, the retired vice chairman of global banking at Citi, Stuart Degg, the CEO of capital advisory firm Libero and Joseph Glatt, Apollo Global’s chief legal officer.
Also listed as directors are Charles Collis and Alexandra Macdonald, lawyers with the Bermudian law firm Conyers Dill & Pearman.
Acra leader, Ehsani is a former Swiss Re and MMC executive. Although he maintains a low profile in the insurance stomping grounds of Lime and Front Street, among the investor and finance community he is well known as a serious operator in structuring and investing in innovative insurance trades.
In the P&C world, Apollo Global is perhaps best known for its ownership of Bermudian run-off heavyweight Catalina, the successful £888mn buy-out of Brit Insurance and its advanced talks to acquire the NYSE-listed Aspen Insurance Holdings.
But these transactions are dwarfed in scale by its involvement in the world of structured and life settlements and annuity reinsurance.
In addition to its sponsorship and ownership of the giant annuity reinsurer Athene Holdings, Apollo Global is believed to have invested around $5bn of life securitisations under the stewardship of Ehsani.
Although Apollo Global has not published any details about its plans for Acra Re, re-Insurance.com believes it will be used as a platform to act as a regulated insurance counter-party on large, single transactions which will include both P&C and life capital relief deals as well as funding specific trades such as run-off deals with Catalina.
As an established Insurance entity it will also prevent the automatic requirement to establish a special purpose vehicle for each transaction and - dependent upon the trade - may benefit from insurance accounting requirements.
Class 3A Bermudian insurers are treated as smaller insurers writing third-party business as opposed to captives (typically class 1 and 2) or large (re)insurers (class 4).
A Class 3A insurer must have paid up share capital of at least $120,000 and capital and surplus of at least $1,000,000.
Acra Re has also been given a “C” to write long-term business which means it has total assets of less than $250mn.
Dependent upon its usage, it is conceivable that Acra Re’s capital may rapidly increase. Athene Holdings for example, has exploded in size to over $100bn in assets following a series of milestone transactions which include the recent closing s $19bn reinsurance deal with Voya Financial.
Apollo Global often partners with other investors on individual transactions. It had backing from Crestview Partners and Reverence Capital Partners on the Voya trade.
Earlier this year, RenaissanceRe took a “minority shareholding” in Catalina following Apollo’s deal to buy-out the run-off giant’s other shareholders CDPQ and Ontario Teachers.
Since its 2005 launch, Catalina has completed at least 24 transactions, acquiring $6.3bn of non-life insurance and reinsurance liabilities. According to the firm’s website, it has $700mn in shareholder equity.
It is not clear whether Acra will be used as a platform to provide capital to Catalina’s circa £1.5bn legacy deal to take on a legacy UK employers’ liability book from Zurich. But Apollo and any co-investors will have to provide additional capital to support the mammoth transaction.
Regardless, it seems likely that Apollo Global will continue to bring in capital from different funds it manages as well as external investors to participate on particular trades that it writes through the Acra Re platform.
Apollo Global also prides itself on outsized investment returns and it is likely that as its assets grow the group will aim to outperform on the return.
Apollo Global declined to comment.