Rear & Allen redirect SPAC towards £1bn in listed Lloyd’s capacity

A London-listed SPAC on the prowl since April 2022 for a target in the insurance space now has its eyes on a shot at a £1 billion capacity  Lloyd’s business with major ILS ties, and will ask its shareholders to extend deadlines and pony up new cash to make the developing dream come true.

Financials Acquisition Corp, which industry insiders Andrew Rear (pictured right) and William Allen (pictured left) floated on the LSE in April 2022 with £150 million in IPO funds at the ready, is up against a 15-month deadline from those early moves to seal a deal.

“During the Company’s search process it became clear that the global specialty insurance market and specifically risk underwritten in the Lloyd’s market offered some of most attractive risk adjusted returns globally,” the group said in launching its bid for more time and money.

Lloyd’s ILS initiative London Bridge 2 also matches the founders’ own bent, they said.

Plans remain “at an early stage,” but management expressed confidence that this deal or another can be cut by a revised deadline.

“Upon completion of the proposed transaction, the company’s core strategy will be to focus on the Lloyd’s market,” where management believes it can hit an average return on equity of more than 20% on a five-year horizon.

“Combined with treaty reinsurance programmes written with select participants in the market the company expects to have access to up to £1bn of capacity into the 2024 underwriting year of account,” the group believes.

Shareholders will gather July 10 and be asked to rubber stamp a deadline extension to end-year and possibly to pony up “substantial funds beyond its existing amounts held in escrow” and needed for a deal.

Shareholders have options: all non-sponsors can redeem shares. Hangers-on receive their pro-rata share of a 200,000 bonus pool of new shares upon completion of the proposed deal.

The announcement followed a report by UK broadcaster Sky News that the group would ask for another £500 million to form the Lloyd’s venture seeking to build a £1 billion portfolio of speciality insurance premiums.

Management admitted in its 2022 annual report to a range of macro factors affecting asset availability and valuations, but claimed it could still see “exciting opportunities that meet our criteria.”

At the helm, Andrew Rear, a ten-year Munich Re executive who set up Munich Re Digital Partners. He is a one-time member of the team that built Oliver Wyman’s insurance consulting business in Europe, later leading that unit up until his move to Munich Re.

Set for the executive lead, William Allen, a capital markets guru with a focus on insurance and a pedigree from Keefe, Bruyette & Woods, Macquarie Group and Bear Stearns.

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