Genstar Capital announce formation of Obsidian
Genstar Capital, a private equity firm focused on investments in targeted segments of the financial services, healthcare, industrial, and software industries, has announced it has partnered with insurance industry executives to establish Obsidian Insurance Holdings, Inc., a new fronting insurance holding company, with $100 million of capital.
Obsidian’s insurance carrier subsidiary, Obsidian Insurance Company, has received a financial strength rating of A- from A.M. Best to issue policies underwritten by Managing General Agents, Managing General Underwriters, and program managers. Obsidian will source, underwrite, and manage a diverse portfolio of property, casualty, and specialty insurance programs, and reinsure the majority of the business to select reinsurers.
Obsidian’s senior management team includes executives with broad, complementary, and relevant skill sets, each with a track record of success and experience starting, building and growing profitable insurance and reinsurance companies. Obsidian will be led by William Jewett, Chief Executive Officer, who has over 35 years of industry experience focused on building and managing insurance and reinsurance companies. His most recent executive position within the industry was with Bermuda-based Insurer and Reinsurer Endurance Specialty, where he was President and a Member of the Board of Directors. In addition, Craig Rappaport will join as Chief Operating Officer. He has over 20 years of industry experience focused on building and managing program focused insurance companies, and most recently served as Chief Operating Officer of Specialty Property & Casualty at the Hanover Insurance Group. Emily Canelo is Obsidian’s Chief Legal Counsel, who previously served as Chief Counsel & Executive Vice President for Reinsurance and Insurance of Endurance Services Ltd.
Ryan Clark, President and Managing Director of Genstar Capital, said, “We are thrilled to be backing such an experienced, dynamic, and well-rounded team in the formation of Obsidian. One of the trends we have been following is the emerging need for insurance companies that underwrite program business and act as a conduit to reinsurance and alternative capital. Our formation of Palomar Specialty Insurance in 2014 was a successful investment based on this theme and we think there is opportunity for new players. Obsidian will be an unconflicted partner to its program and reinsurance relationships and we are excited to be open for business with such a terrific team.”
Mr. Jewett added, “Fronting companies currently write a small fraction of the premiums of the rapidly evolving property and casualty industry. This will markedly grow, however, as a direct result of the increasing market share and influence of managing general agents and the inherent advantages of the fronting model. Obsidian will provide value to program managers by delivering solutions that offer greater stability, control, and revenue than traditional carriers, and support long-term relationships and greater access to a wide range of reinsurers. Our experienced management team and business model as an independent, technology-forward program carrier with the willingness and capabilities to take underwriting risk are unmatched in the fronting industry. We see tremendous opportunity ahead and look forward to our partnership with the team at Genstar. They have extensive experience successfully building and growing companies like ours, and we are very excited to be one of their portfolio companies.”
The Holding Company’s Board includes Mr. Jewett of Obsidian; Mr. Clark of Genstar Capital; Scott Niehaus, Principal of Genstar; Richard Taketa, a member of Genstar’s Strategic Advisory Board and former CEO of York Risk Services and; Jeremy Hitzig, former CEO of The Distinguished Programs Group.
Genstar has deep experience investing in the insurance sector, including forming new insurance company platforms. Genstar previously partnered with Mac Armstrong and Heath Fisher in 2014 to form Palomar, a provider of catastrophe insurance for residential and commercial property, which grew rapidly and successfully completed an IPO in April 2019. Genstar’s other current and former investments in the insurance industry include Alera Group, AMBA, Worldwide Facilities, 2-10 Home Buyers Warranty, Acrisure, Insurity, Financial Horizons, Innovative Aftermarket Systems, and Confie Seguros.
Piper Sandler & Co. acted as placement agent and BMS Capital Advisory, Inc. acted as co-placement agent for the capital raising.
About Genstar Capital
Genstar Capital (www.gencap.com) is a leading private equity firm that has been actively investing in high quality companies for over 30 years. Based in San Francisco, Genstar works in partnership with its management teams and its network of strategic advisors to transform its portfolio companies into industry-leading businesses. Genstar currently has approximately $17 billion of assets under management and targets investments focused on targeted segments of the financial services, healthcare, industrial, and software industries.
