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Energy duo plan insurance start-up

Aon Natural Resources London chairman Tim Fillingham and ex-Navigators UK and Europe CEO David Hope are looking to launch a new insurance company focusing on energy and commercial property lines.

The company, which is yet to be named, is looking to raise capital in the region of $700mn from private equity backers and expects to hear whether it will receive the money in the next 60 days.

The start-up, which is looking to go live by March next year, promises to offer an “extremely rigorous actuarial discipline” to underwriting in all classes of business, specialising in the natural resources and general commercial property arena.

Hope is expected to be chief underwriting officer while Fillingham will be chief marketing officer.

The pair, who have 25 years experience working together, said the firm would look to employ around 35 people rising to 50 in 18 months. In the short term, Hope and Fillingham are looking for eight underwriters, six actuaries and four engineers to join the team.

The company has begun the process of registering with the Financial Services Authority, and expects to receive accreditation in the next four months. The firm will also enter negotiations with ratings agency AM Best and is looking for a financial strength rating of at least A-.

“We are part of a management team that is looking to create a differentiated technical lines insurance company in the UK with a focused approach driven by deeper expertise of the asset classes and an extremely rigorous actuarial discipline. The company intends to distinguish rate adequacy within and among the traditional asset classes on a more granular level than is typical in the industry to date,” Fillingham told The Insurance Insider.

“As the project develops, the underwriting team will analyse the marginal impact of a given risk to the overall portfolio capital requirements thus allowing rate adequacy on each and every risk, including a return on the true capital associated,” he added.

Market conditions in energy have been remarkably benign this year, with full-year results expected to be strong for those involved in the sector, according to a leading energy underwriter, who added that a start-up would need at least $500mn to become a “viable” player in the sector.

“There’s more confidence around, and more capacity, which means we’re seeing in real terms some competitive features where brokers are beginning to try and test parameters of the market. It is prone to softening though,” he added.

Softening in the energy market – one of the areas that saw significant rate increases after the decimation of the 2005 hurricane season – comes at a time of growing pricing pressures across the (re)insurance industry in response to increased capacity and consecutive years of low catastrophe losses.

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