Peter Mullen, Artex
8 October 2019Analysis

Artex promises Horsehoe deal will benefit captive clients

Artex’s acquisition of Horsehoe will benefit Artex’s captive clients, according to Peter Mullen, CEO of Artex, by increasing the talent available to them and delivering operational efficiencies.

Mullen also predicted captives will be increasingly involved in ILS deals, meaning Artex’s captive clients will benefit from its enhanced offering in this area.

“There have been very few captive transactions involving ILS capital but as the ILS market matures we will see large corporate capacity buyers looking to use ILS capital more and more, and using their captives to access that capacity,” said Mullen. “We are well positioned to facilitate those transactions for our captive clients.”

Some have expressed doubts that the Artex-Horseshoe deal will really benefit captive clients. One insurance consultant suggested the move amounts to a transfer of Artex’s profit centre away from captives to ILS, meaning less resources will be devoted to captive clients.

However, Mullen rejected this assertion. “The addition of Horseshoe allows us to augment our existing ILS solutions with additional capacity and expertise,” he said. “It complements the foundation on which we built ourselves – captive insurance – and allows us to push the boundaries of what a global, top-tier insurance provider looks like.”

Mullen pointed to synergies between the captives and ILS businesses that supported the logic for the deal. Captive clients are often looking to unbundle insurance transactions using a captive as the centrepiece for the transaction, he noted, while in the ILS segment investors are looking to unbundle reinsurance transactions using mechanisms such as side cars, transformers or cat bonds.

“As a service provider to both customer segments we bring similar skills, facilities and technology to the table,” he said. “Both segments require insurance  underwriting and finance skills, both segments use protected cell or SPV facilities and both segments run on similar technology platforms.”

Artex’s acquisition of Horseshoe will bring roughly 80 new colleagues into the Artex team, mostly in Bermuda.