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Aquiline invests in new operation at Lloyd's

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NEW YORK—New York-based private equity firm Aquiline Capital Partners L.L.C. is making another investment in the insurance industry, funding a new Lloyd's of London underwriting agency with some industry veterans at the helm.

Ark Syndicate Management Ltd., which will manage Lloyd's syndicate 4020, next month will begin underwriting marine, energy and some property/casualty insurance and reinsurance lines. The operation will have underwriting capacity of £114 million ($220.2 million).

Aquiline, which is headed by former Marsh & McLennan Cos. Inc. Chairman Jeffrey Greenberg, is the lead investor in Ark. Other sponsors are Whittington Group, an international insurance investment firm; Swiss Reinsurance Co.; and private equity fund Lehman Brothers Co-Investment Partners.

Mr. Greenberg will become chairman of the holding company for the operation, Bermuda-based Group Ark Insurance Holdings Ltd.

Ian Beaton, former head of insurance at Aspen Insurance Holdings, will serve as chief executive of the syndicate, while Nick Bonnar, former head of specialty lines at Aspen, will be director of underwriting.

Messrs. Beaton and Bonnar simultaneously announced their resignations from Hamilton-Bermuda-based Aspen last September.

David Foreman, who retired last April as chief underwriting officer of Wellington Syndicate 2020, will serve as Ark's chief underwriting officer. William Malloy, a former president of Marsh Inc. who left the brokerage at the end of last year, will serve as nonexecutive chairman.

Meanwhile, Aquiline announced last week that it had closed its initial fund, the Aquiline Financial Services Fund L.P., with $1.1 billion in total capital commitments.

In addition to providing capital to Ark, Aquiline's fund also has invested in startups Validus Reinsurance Ltd., which is a Bermuda-based property catastrophe reinsurer, and Structured Credit Holdings, a Dublin, Ireland-based wholesale bank.

Although Aquiline's first three investments have all been startups, Matt Grayson, a senior principal with the firm said its investment strategy includes buyouts, startups and companies where it can provide growth capital.

"We're eager to back good management teams with existing companies or in building companies around strong management teams," he said.

While Mr. Grayson noted that insurance will make up only a portion of Aquiline's broader financial services portfolio, he does not rule out the future possibility of Aquiline investing in the insurance brokerage business--a sector to which Aquiline Managing Partner Mr. Greenberg is no stranger.

Mr. Greenberg headed MMC, the parent company of the world's largest brokerage, from 1999 to late 2004, when he resigned amid then-New York Attorney General Eliot Spitzer's fraud and bid-rigging suit against the firm.

"We see a significant amount of change in insurance brokerage and are closely studying it to see if there are opportunities where we could add value," Mr. Grayson said.

Private equity firms recently have been eyeing the retail brokerage sector, in part to time the insurance pricing cycle and make a large return.