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ISG looks to buy distressed U.S. insurance books


LONDON — Independent Services Group Ltd., a consultancy specializing in run-off services, has announced that it is in the market to acquire distressed property/casualty insurance companies in the United States and Bermuda.

The London-based company has appointed two former directors of Singapore-based Whittington Group Pte., which acquires and manages insurers in runoff. Richard Whatton and Stephanie Mocatta, former chief executive of insurance markets and former business development director at Whittington, have joined Independent Services Group to head its leap into the market for acquiring distressed companies.

According to Ms. Mocatta, ISG would like to buy four or five U.S. or Bermudian property/casualty insurers within the next three years. Mr. Whatton said that the company would look at "thinly capitalized" or "distressed" companies, not necessarily in runoff, in mainly U.S. southern states such as Texas, Florida and Georgia

"That is not to say we would not look at doing something in the North East, but companies down south are more interesting and there is less competition [to acquire these companies]," he added.

"We have spent the last six months analyzing 2,761 companies and talking to interested capital providers, " Mr. Whatton said. "But we have not approached anyone yet," he added.

The company is targeting smaller companies — with around $10 million in surplus — although it will consider larger deals, according to Ms. Mocatta. Funding will come from Independent Services Group's own resources, management and external capital advisors.

According to Ms. Mocatta, four unnamed investors have already signed up, and can invest on a syndicated basis to allow for large acquisitions.

Mr. Whatton said that the U.S. market was "untapped," and more attractive than the United Kingdom which is "saturated with people looking to buy," or Europe which he considered "green." "We may move back into these markets when the timing is right," he said.

Initially Independent Services Group would like to buy a complete company, which it can use to transfer or reinsure other portfolios of business. Mr. Whatton said that Independent Services Group would "clean-up" any company it acquired by settling any significant outstanding claims or litigation, as well as improving reinsurance recoverables.

To facilitate its expansion into the U.S. market, the company has established a consultancy business in Richmond, Virginia headed by Jason Tuckley. According to Mr. Whatton, Mr. Tuckley will take on the day to day running of any acquisitions the company makes in the United States.