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Canopius considers expansion outside Lloyd’s

Fast growing insurer Canopius Ltd is looking at options to expand its platform outside Lloyd’s, Insider Week can reveal.

The privately owned company, which last week reported record after tax profits for 2006 of £19.8mn – up from £1mn in 2005 – is looking at the possibility of launching an FSA regulated insurer, or an overseas operation, with Singapore or a US subsidiary under consideration.

Canopius group CEO Michael Watson told Insider Week that despite increasing 2007 capacity on its Syndicate 4444 by 50 percent to £450mn, the insurer, launched in 2004 in a management buyout of the Lloyd’s operations of defunct (re)insurer Trenwick, still considers itself a new business with potential growth opportunities.

Watson, who has handed over the reins as CEO of Canopius Managing Agents to its current managing director Clive Watson to concentrate on his role at the head of Canopius Group, said growth could come at Lloyd’s through consolidation, but the company was not actively pursuing that route.

With last year’s Creechurch acquisition taking Canopius close to its start-out goal of growing the Syndicate to £500mn, it was now natural to turn its attention outside Lloyd’s, he said.

Last August the insurer formed a UK underwriting agency and Watson explained that the business, together with other domestic business written by the Syndicate, might form a nucleus “that could more readily belong in a UK insurance company”.

And the company is also looking at overseas opportunities.

With around 40 percent of business emanating from the US, and chief underwriter Jim Giordano an American with 30 years experience in the market, Watson suggested there would be “clear advantages” to having a physical presence in North America – a step taken by a number of its Lloyd’s peers.

“That makes us uniquely positioned to put a toe into that very large pond should we be minded,” he added.

The option of a Singapore operation is also “under early consideration” said Watson, a move that would see the insurer add to the increasing number of Lloyd’s players with a presence in the region.

“Longer term there are huge opportunities in Asia, so we should look East as well as West,” said Watson.

The company has no plans to go to the public markets to access funding for expansion, however, with Watson explaining that its majority shareholder Engelfield Capital is prepared to make more money available “for the right opportunity”.

The company reported gross written premiums up 26 percent in 2006 to £273mn and said that its total financial resources had increased from £85mn to £159mn in a year it described as “a huge step forward in the development of Canopius”. 

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