Alabama-based specialty insurance broker Cobbs Allen is forming CAC Specialty, a combined specialty insurance brokerage and investment banking platform to offer customized insurance and risk transfer services to large corporates, small and medium sized businesses, private equity, and other alternative fund managers.
The founders said CAC Specialty “represents the next wave in the long-term convergence of insurance and capital markets” by combining structured finance solutions with insurance brokerage.
“The current consolidation in the insurance brokerage marketplace has created a need for an independent platform with scalability and the ability to move quickly and nimbly to serve the increasingly complex needs of corporate and private equity clients,” Paul Sparks, executive chairman of the new entity, said.
Sparks has 25 years of experience as the founder and head of the financial services division of McGriff, Seibels & Williams. He joined Cobbs Allen in July.
CAC Specialty says it will provide structuring expertise and placement capabilities across the spectrum of insurance and alternative capital markets. Insurance linked securities (ILS) will not be its focus; rather it said it is interested in other types of transactions including:
- The transfer of the risk of a large portfolio of unfunded revolving lines of credit (non-investment grade) from the banking market to the insurance market, where the capital rules are less formulaic and more risk-based.
- The use of insurance to credit enhance letters of credit, which the company said creates efficiencies when the underlying risk is related to the guarantee of performance instead of true credit exposure.
- The use of insurance to structure a “money-back” investor guarantee for a diversified investment pool. CAC said it recently did this for a retail focused real estate investment fund.
- Leveraged loans and other bespoke financing solutions, which the firm said are relevant in midsized financial sponsor and SME markets, where CAC can be seen as a source of financing in transactional or distressed situations.
David Payne, who joined Cobbs Allen recently and was previously the chief revenue officer of JLT, will be the chief revenue officer. Jack Leventhal, senior managing director and executive officer at Teneo Capital, will lead the investment banking business, and Bruce Denson Jr., president of Cobbs Allen, will also serve as president of CAC.
“This new platform will combine the capabilities of an investment bank and an insurance broker to offer creative risk-transfer solutions for clients,” Leventhal said. “We will deliver a unique suite of products and services that will help clients significantly reduce costs, increase capital efficiency and facilitate the execution of strategic priorities.”
Leventhal and his team are part of Teneo’s Capital Advisory business, which will maintain a strategic relationship with the firm.
CAC Specialty will be majority employee-owned. The firm will have offices in Atlanta, Chicago, Denver, San Francisco and New York.
Founded in 1887 and headquartered in Birmingham, Alabama, Cobbs Allen has offices in Columbus, Houston, New Orleans, New York City, Kansas City, Mobile and Tulsa. The firm is owned and led by its employees.
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