Accelerant working with Goldman Sachs on sidecar to sit alongside Bermudian reinsurer

Accelerant is working with Goldman Sachs to raise ILS capital for a sidecar that will sit alongside the new Bermudian reinsurer it has established to assume risk written by its program carrier subsidiaries and place its outwards reinsurance, The Insurer can reveal.

Accelerant and Goldman Sachs copy
  • Sidecar will write a quota share of Bermudian Accelerant Re
  • ILS investors will get access to multi-line portfolio of program business
  • Accelerant Re was approved by the BMA as a Class 3B company in August
  • Business written by Accelerant carrier subs is pooled to internal reinsurer Accelerant Re
  • Accelerant centrally places outwards reinsurance through Accelerant Re

The Jeff Radke-led MGA and carrier insurtech platform has already established Accelerant Re in Bermuda, which will effectively act as an internal reinsurance vehicle to pool business written by its various insurance company operations.

The Class 3B company – which was approved by the Bermuda Monetary Authority in August – will also be the centralized entity through which Accelerant buys reinsurance on the programs it writes as a primary insurer.

As previously reported, the firm does not look to buy program specific reinsurance, but instead has a panel of reinsurers that support its portfolio both on a proportional and excess of loss basis.

The rationale behind the approach is that it can say to its member MGAs that its reinsurance relationship is based on the performance of the portfolio which they are part of, while the diversification of the portfolio leads to a more stable relationship with reinsurers.

The pooling of the risk to Accelerant Re to centrally place outwards reinsurance is likely to lead to efficiencies.

The sidecar is then expected to reinsure Accelerant Re, writing a quota share of the business.

The structure will allow ILS investors to access a multi-line portfolio of business from the underlying programs, which sources described as “shortish tail but not cat”.

Accelerant has been growing fast in the last couple of years and has added 21 member MGAs already in the US less than a year after launching its platform there to add to its existing European platform, which has now swelled to 35 members.

Jeff Radke (left) and Chris Lee-Smith (right) co-founded Accelerant

It now has around 170 products – or programs – across its platform.

The firm is backed by private equity firm Altamont Capital with a EUR200mn capital commitment.

It pitches itself as the only insurance enterprise set up solely to serve the needs of MGAs and program administrators.

Its US carrier platform includes E&S and admitted capabilities and typically retains at least 20 percent of premium on all programs written by its MGA partners – or members.

Accelerant offers MGAs long-term capacity and is willing to take minority investments in the firms on its platform.

It has developed a tech-enabled platform that provides transparency on the programs it writes, including to its reinsurer partners, and looks to enter into fewer, larger relationships with MGA members, providing them with a five-year capacity commitment in return.

Accelerant was cofounded by former PXRE and Argo executive Radke as CEO and former Argo, Aon, Willis and Marsh executive Chris Lee-Smith as head of distribution.

The management of its US platform includes Altamont operating partner Joe Zuk as president, Hugh Burgess as CUO, John Willemsen as head of US distribution and Rick Koehler as US chief business officer.

Accelerant declined to comment on this article.