BP Marsh backs new reinsurance vehicle to support XPT program growth

By Ryan Hewlett

Aug 14 - (The Insurer) - London-listed venture capital investor BP Marsh has backed a new collateralised reinsurance vehicle that will support underwriting programs for its U.S.-based investee XPT Group, with the intermediary's senior management also backing the entity.

Gambit Risk Finance LLC (Gambit Re) will enable XPT's underwriting arm, Platinum Specialty, to provide limited risk capital to selected programs within its insurance portfolio, demonstrating alignment of interest between the MGU and its capacity providers.

It will initially support five Platinum programs and is being launched to support XPT's growth ambitions and to enhance its operational and financial flexibility, BP Marsh said in a stock exchange filing on Thursday.

“The vehicle is expected to deliver a strong risk-adjusted return, underpinned by Platinum's historical underwriting discipline,” BP Marsh said.

Gambit Re's capital structure comprises $60 million of preferred equity, with BP Marsh contributing $5 million, of which $1.875 million will be funded on completion.

In return, BP Marsh will receive a preferred equity shareholding of around 8%, which carries an 8% preferred annual return.

The vehicle is also backed by $45 million of capital provided by Chicago-based alternative lending and capital advisory firm Accord Capital and $10 million from RSP, a vehicle formed by XPT's senior management.

Management and operational services will be provided by Platinum, with reinsurance administration outsourced to Bermuda-based Atlantic Security Limited.

“BP Marsh sees this as an opportunity to support one of its experienced management teams with a track record in the sector, backed by strong investors,” the company said.

“We are confident that Gambit Re can deliver long term returns to our shareholders, further building on our ability to source and make unique investment opportunities in the insurance sector, alongside our primary focus on insurance distribution investments.”

Tom Ruggieri, CEO of XPT, added: “Gambit Re allows us to demonstrate conviction in our Platinum underwriting programs and provide our partners with added confidence through aligned capital. The initiative reflects our commitment to innovation and our focus on building a sustainable, high-performing specialty platform. We value the partnership with BP Marsh and are excited to move forward together.”