Elseco secures investment from Keyhaven as Davies becomes chairman
Article by Adam McNestrie for The Insurance Insider, 17th April 2019.
Keyhaven Capital has bought a minority stake in Elseco and will inject up to $15mn of growth capital into Laurent Lemaire's expansive MGA, The Insurance Insider can reveal.
As part of the deal, Keyhaven partner Stuart Davies, the former CEO of Canopius, will become non-executive chairman of the multi-line MGA.
Elseco has built a circa-$120mn book across aviation and energy, diversifying beyond its origins in the space market where it has the biggest capacity of any player. It has established footprints in Dubai, Paris, London, Washington and, most recently, Zurich.
The investment coincides with a restructuring of the group and the establishment of a holding company in the UK.
Discussing the investment, Lemaire told The Insurance Insider: "We have invested $6.5mn over the last three or four years in technology. The bottleneck for us in the past was the IT, and it was not possible for us to grow the way we wanted without making a massive leap forward."
The CEO, previously 100 percent owner of the business, said that building the technology platform it had established meant the business was now fully scalable.
The systems the company had in place previously were getting close to their limits, Lemaire said, as the company moved into lines with bigger volumes and areas that required the business to process much more data.
"I said that we would look to halve underwriting costs and to multiply the amount of aviation data we processed by 1,000," he explained. "We are now processing 25,000 times as much data as before."
Lemaire added that the initial influx of money would be $5mn, with an additional $10mn in place to draw down as required for growth.
Elseco will enter a new line of business in the second half of the year and is currently reviewing plans to enter two other lines as it looks to scale its book from the $160mn- $190mn of projected premium income for this year.
Alongside the move into multiple new lines of business, Elseco is looking to white-label its technology platform Atom and license it to other businesses.
London-based small cap private equity house Keyhaven is best known in the insurance sector for its investment in Darag, where Davies is also chairman.
Davies has held that role at the legacy acquirer since June 2017. Prior to that he spent 18 months as CEO of Canopius, following a 10-year spell at the helm of Aegis London.
In January, Elseco struck a deal to acquire StarStone’s Dubai-based coverholder Malakite Underwriting Partners. It also acquired the renewal rights to StarStone’s airline and products book written from Switzerland.
Seven StarStone staff including head of aviation Richard Etridge and Malakite managing partner Giles Hussey moved to Elseco as part of the deal.