Applied Underwriters is providing its paper to Jacobs Financial Group-owned Triangle Surety Agency in a move that will see the expansive US carrier retain a significant portion of the risk as it continues to diversify its book away from its core workers’ compensation business, The Insurer can reveal.
Stonybrook Capital advised Jacobs on the transaction and is also the firm’s exclusive reinsurance intermediary for cover provided to Applied Underwriters by Triangle’s sister company, First Surety Corporation.
The boutique advisory firm is Jacobs’ exclusive investment banking adviser and has raised capital for it.
Sources said the Triangle surety program being written on the paper of Applied Underwriters associated carriers Continental Indemnity Company (CIC) and Pennsylvania Insurance Company (PIC) represents around $50mn in premium volume.
First Surety – the Jacobs subsidiary that reinsures Applied Underwriters under the agreement – is a surety-focused carrier that specialises in coal reclamation surety bonds and is licensed to write business in Indiana, Ohio, Utah and West Virginia.
Writing the program on CIC and PIC paper will provide licensing in additional states and the ability to offer A rated surety bonds.
For Applied Underwriters, the tie-up is a demonstration of its appetite to further diversify its portfolio of business following its buy-out from Berkshire Hathaway last year.
Last year’s transaction with Berkshire Hathaway saw Applied Underwriters CEO Steve Menzies team up with Quasha Group and Quadrant Management to buy out the core insurance subsidiaries from the investment giant, while Quadrant Management acquired the non-insurance service companies of Applied Underwriters.
Applied UW continues diversification
Since then there has been a series of transactions as Applied Underwriters looks expand into other areas of the US P&C sector, diversifying away from its core business of workers’ compensation.
As exclusively revealed by this publication last week, the company has established an E&S casualty MGA led by former Tokio Marine HCC executive Chris Day, initially targeting the New York construction market.
Applied Specialty Underwriters will build out its book in the casualty segment and underwrites on another Applied Underwriters subsidiary, North American Casualty Company.
In June this year Applied Underwriters 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.
As well as third-party deals, such as providing its paper to First Surety, Applied Underwriters is understood to have started looking at reinsurance transactions.
In a statement to The Insurer at the time, the company said that given its nationwide carrier platform and “financially over-capitalised and liquid position”, Applied Underwriters expected this to be the first of “many transactions” as the impact of the Covid-19 shutdown unfolds on a hardening P&C market.
Commenting on the transaction between Applied Underwriters and Jacobs, Stonybrook Risk Management managing director Paul Dzielinski said: “We are pleased to assist Jacobs and First Surety with this transaction and look forward to continuing to demonstrate our capabilities and growing our expertise in surety bonds.”
Stonybrook Capital CEO Joe Scheerer added: “I could not be any more pleased with this relationship as it is a great example of our reinsurance brokerage operation working hand-in-glove with our investment bankers to create the most positive and holistic client experience possible.”