Philadelphia captive raises $11.5m; moves into surety bonds
National Surety Underwriters, previously known as Agency Bonding Captives, an underwriting agency and reinsurance captive headquartered in Philadelphia, has raised some $11.5 million in a deal that will allow it to underwrite and reinsure surety bonds through its licensed insurance carrier partner, Clear Blue Insurance Company.
It has raised $8 million in the form of a structured term loan from i2B Capital, a provider of direct financing to niche-market financial entrepreneurs. In addition, investors contributed a further $3.5 million to the transaction closing.
The funding will be used by NSU to capitalise a new and wholly owned subsidiary of NSU, National Fidelity Reinsurance Company, a special-purpose surety reinsurance captive licensed through the North Carolina Insurance Department.
It will also be used in relation to the merger of McCabe and Independent Corporate Underwriters, a Managing General Underwriter (MGU) specializing in surety bonds based in New Jersey.
The new combined entity will enable NSU subsidiary NFRC to underwrite and reinsure surety bonds through its licensed insurance carrier partner, Clear Blue Insurance Company, of up to $2 million in any one bond and up to $4 million in the aggregate per principal insured.
In addition, other surety bonds will be written and placed with multiple carriers through the ICU/MGU relationships enabling surety bonds to be written up to $100 million with insurance carrier approval.
“This funding is an excellent example of i2B Capital’s ability to navigate and resolve complex business financing issues,” said Larry Curran II, CEO of i2B Capital. “The transaction included capitalization for three companies in three states with wide-ranging legal and regulatory requirements to create one synergistic entity able to service a broad spectrum of surety requirements.”
Barbara Anderson, COO of i2B Capital, added: “Our goal over the initial 36-month structured term loan is to prepare NSU for traditional institutional financing in the future. To accomplish that objective, we will provide the growth capital along with our commercial lending expertise to help NSU prepare for the disciplined reporting requirements and credit processes at the next level.”
CEO Rennie Rodriguez said: “Our expertise is building and managing specialty insurance agencies and we see tremendous opportunity for consolidation in a fragmented surety bond industry. Through offering a unique package to contracted surety bond agents and targeted strategic acquisitions, we are building a networked system of top-line surety agents.”
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