US specialty carrier RLI has become a cornerstone investor in an InsurTech fund that is aiming to raise $100mn by the end of the year, re-Insurance.com understands.
RLI became the anchor tenant in the first fundraising round for the fund managed by IA Capital in conjunction with placement agent Stonybrook Capital, according to a sources who had viewed a regulatory filing.
The first round of fundraising is understood to have closed in January, with another deadline thought to be set for the second quarter and the final close expected by the end of the year.
The fund is thought to be seeking investments from small and medium-sized insurers that lack the resources to have meaningful InsurTech investment bodies in-house.
It is expected to target investments across North America and in Bermuda.
IA Capital and Stonybrook will then seek to cultivate working relationships between the fund’s investors and the startups in which they are interested.
The private equity house does not disclose the size of its combined funds but it is understood to total around $300mn,and the firm’s website lists investments in the likes of Hamilton Insurance Group. One of its largest backers is US life insurance giant Prudential.
It typically takes a minority stake of between 5 percent and 25 percent of its investments, although it occasionally takes a larger slice of the companies.
RLI is just the latest carrier to invest in an external fund as the attitude toward managing investments in house appears to have tempered.
IA Capital is not the only external fund to have attracted big names. In January, this publication revealed that Stephen Catlin had signed up to advise on InsurTech investments for Jeff Greenberg’s private equity house Aquiline.