FG Financial Group launches first reinsurance sidecar capital raise
FG Financial Group, Inc., the company was formed out of 1347 Property Insurance Holdings, Inc., has announced that it is raising capital for its first collateralized reinsurance sidecar, to provide additional capacity to fund its expansion into the hard reinsurance marketplace.
FG Financial Group already underwrites opportunistic collateralized reinsurance through its subsidiary, FG Reinsurance Ltd.
That subsidiary, FG Re, has now formed a reinsurance sidecar, named FG Re Investors I LLC, which is designed to provide collateralized capacity to support the growth of its reinsurance portfolio.
FG Financial is both a reinsurance and asset management holding company, and as well as writing collateralized and loss capped reinsurance, it also provides merchant banking services that allocate capital in partnership with Fundamental Global, a private partnership led by Kyle Cerminara and Joe Moglia, as well as other strategic investors.
The company plans to raise third-party investor capital for the reinsurance sidecar to fund its business activities, with Castle Placement, LLC engaged by FG Re Investors I LLC as a placement agent for this sidecar capital raise.
FG Financial Group CEO Larry Swets explained, “The reinsurance market is the strongest we have seen in many decades, presenting compelling opportunities to write attractive contracts. Since launching our reinsurance business we have grown the number of insurers and reinsurers that we support and remain focused on continuing to drive profitable growth.
“The creation of a reinsurance sidecar provides us with another means of leveraging our underwriting capabilities to execute our strategy of deploying capital in compelling, and frequently unique asymmetrical risk reward opportunities.”
FG Financial Group Chairman and Fundamental Global CEO Kyle Cerminara added, “This structure enables us to source a new revenue stream from the fee income that we will earn utilizing our existing reinsurance platform. We remain focused on patiently allocating capital to drive long-term shareholder value.”
It is ideal market conditions for raising sidecar capacity, as the additional firepower can allow underwriters to take advantage of the hardening market and improved terms.
While raising capital is not easy, FG Re is relatively small at this time, so its first sidecar won’t need to be particularly large to make a big difference to its ability to underwrite to the opportunity currently presenting itself.
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