Applied UW launches EU financial lines unit with StarStone renewal rights deal

Expansive insurance group Applied Underwriters has formed Applied Financial Lines, which will begin by underwriting a $45mn Europe and Middle East renewal book acquired from StarStone as a platform for a broader expansion into specialty insurance business in the region, The Insurer can reveal.

The renewal rights transaction sees Applied Underwriters bring on board a team of underwriters led by Jeroen Claesen from StarStone, with the executive heading up the new Applied Financial Lines platform.

Claesen was most recently head of international financial lines at StarStone and has previously held positions at Catlin and XL.

AM Best A rated Applied Underwriters does not have a European insurance company but will instead utilise the fronting services of Randall & Quilter’s Accredited Insurance (Europe) subsidiary.

Sources said the relationship with Accredited will be a pure fronting arrangement, with 50 percent of the risk ceded to Applied Underwriters in the US, and the balance assumed by a panel of reinsurers.

Applied Financial Lines will start operating from Paris, France – where Claesen is based – and Cologne, Germany, before expanding its footprint to put in place underwriting executives across the continent.

The new unit will look to underwrite a range of specialty lines including professional indemnity and directors’ and officers’ (D&O), distributing its products via an extensive wholesale broker and local retail agent network across the EU, Israel and other countries in the region.

In a statement, Applied Underwriters confirmed the launch and said the renewal rights deal would provide a solid basis for its planned expansion and growth in the region.

“Our strategic plans call for expansion into the EU and Middle East markets with a combination of the product mix we have secured via the StarStone acquisition, the hiring of top executives, and the situating of core underwriting staff in offices across the continent, beginning with Paris and Cologne”

Applied Underwriters CEO Stephen Menzies on securing a platform for growth in the EU and Middle East

Applied Underwriters CEO Stephen Menzies said: “Our strategic plans call for expansion into the EU and Middle East markets with a combination of the product mix we have secured via the StarStone acquisition, the hiring of top executives, and the situating of core underwriting staff in offices across the continent, beginning with Paris and Cologne.”

Claesen added: “We will grow the enterprise substantially, intensifying our relationships with the brokerage community and refining our product offerings and services, with the established expertise that Applied Underwriters brings to the equation. We welcome inquiries.”

According to sources, the StarStone book acquired includes around $30mn of business written in the EU, with the balance coming from Israel.

The existing book has a strong SME focus, but Applied Financial Lines is expected to broaden the appetite to middle market and above with plans to grow significantly in a hard D&O market next year. It will consider public company D&O, but not for US-listed insureds.

The group is thought to be actively looking and close to other deals as it looks to diversify its non-US book of business with the addition of quality underwriting teams in Europe into multiple other specialty lines.

As previously reported, Enstar and Stone Point put StarStone’s international business into an orderly run-off back in the summer around the time the spin-off and reboot of StarStone US – now called Core Specialty – was announced.

Its Liechtenstein subsidiary is being sold, while StarStone’s Lloyd’s platform is being bought by (re)insurance start-up Inigo Limited.

Applied UW expansion continues

For Applied Underwriters, the European launch is the latest expansionary move since its buyout from Berkshire Hathaway by CEO Menzies in a transaction that closed last October.

That deal saw Menzies team up with the Quasha Group and Quadrant Management to buy out the workers’ compensation specialist’s core insurance subsidiaries from the Warren Buffett-led investment giant, in a move first revealed by this publication.

Quadrant Management, the investment firm that bought into Jamie Sahara’s Rivington Partners MGA, acquired the non-insurance service companies of Applied Underwriters.

The transaction triggered significant expansion plans for Applied Underwriters into other areas of the US P&C sector.

In June this year the group bought South Carolina-based trucking MGU Blue Ridge Specialty with ambitions to build out the platform nationally.

And back in April Applied Underwriters bought the MGA of Florida homeowners specialist Centauri Insurance along with an option to acquire its two carrier subsidiaries.

Most recently, Applied Underwriters launched a new E&S casualty MGA led by former Tokio Marine HCC executive Chris Day in a move also first revealed by this publication.