Transverse Gets A- Financial Strength Rating

THE INSURER - Global Risk Capital Intelligence

Wednesday | 28 August 2019


Program start-up Transverse Insurance Company has secured an A- financial strength rating from AM Best as it gets ready to write its first deals.

The agency also assigned an “a-” long-term issuer credit rating to the company, which is led by former AIG executive Erik Matson as chairman and CEO.

As previously revealed by The Insurer, Transverse has ambitious plans to build a risk-taking fronting platform from a strong pipeline of potential program deals.

In a statement, AM Best said the ratings assigned reflect Transverse’s balance sheet strength, adequate operating performance, limited business profile and appropriate enterprise risk management as a new start-up.

It said that a balance sheet assessment of “very strong” is based on initial financing capacity with supportive risk-adjusted capital levels through a five-year start-up period.

Transverse’s limited business profile reflects its start-up status as a fronting/transformer carrier that will require a period of time to establish its brand and market position.

The ratings agency also highlighted Transverse’s experienced management “cognizant of the key elements in their chosen niche”.

As previously reported, as well more traditional program relationships with MGAs and other distributors at the front end and reinsurers at the back, Transverse is looking to support transformer and ILS partnership arrangements.

Backers of the start-up are led by California-based private equity firm Virgo Investment Group, where Matson is an operating partner and co-head of insurance.

The venture had already secured a Texas-domiciled admitted carrier as well as a non-admitted Delaware shell company and was set to capitalize as an AM Best Class VII financial size insurer, indicating policyholders surplus of $50mn to $100mn.

As well as Matson, the start-up management team includes his former AIG programs division colleague Ethan Allen as CUO and chief actuary, and one-time Third Point Re executive Shane Haverstick as head of business development, according to its website.

The trio are joined by investment fund manager David Paulsson as president and chief investment officer. Paulsson is also the founder of investment firm Cedilla Capital.

Other members of the start-up team include former Republic Group executive Jamie Coleman as head of regulatory and compliance, Jennifer Moran as general counsel, and financial controller April Su, previously at Maiden.

Transverse has also assembled a board of directors that includes former JLT Re CEO and Qatar Re CUO Alastair Speare-Cole, former Greenlight Re CEO Len Goldberg, Drinker Biddle & Reath partner and former investment banker Michael Halsband and Virgo representatives.

It is thought that Transverse is looking to build a book of business of at least $500mn of gross premium in its first three years – a similar rate to that achieved by pure front Clear Blue over the same period since its launch.

The start-up will typically take between 0 and 10 percent of a program on its own balance sheet, then cede the rest to reinsurers.