AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to Upland Specialty Insurance Co. (Upland Specialty) in Dallas.
The outlook assigned to these ratings is stable. Upland Specialty is a wholly owned subsidiary of Pursuit Investors LP (a Delaware corporation), the non-operating holding company of Upland Capital Group Inc.
The ratings reflect Upland Specialty’s consolidated balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The ratings also consider Upland Specialty’s excellent projected risk-adjusted capitalization and sound business strategy, which should position the company to take advantage of current favorable market conditions in the excess and surplus (E&S) product lines segment that the company is targeting.
The company is a new specialty E&S lines carrier that will seek to build a diversified commercial E&S business portfolio across the casualty, property and specialty business lines. Business will be generated through wholesale insurance brokers on a nationwide basis.
Upland Specialty’s senior management team possesses significant experience and a solid track record in the E&S market. AM Best believes that this experience, and management’s existing relationships with its distribution sources, will be key to the company quickly gaining traction in its targeted markets.
The ratings also reflect the execution risk faced by any start-up operation. AM Best recognizes that the company will be challenged to achieve operating profitability until it gains necessary scale.
In AM Best’s view, gaining sufficient scale may be the biggest challenge to the successful execution of the company’s strategy, as growth will be dependent on the E&S market’s acceptance of a start-up company that will be focused initially on long tail business lines. However, management’s extensive relationships in the wholesale distribution market should help in this regard.
Upland Specialty, which expects to commence operations in the first half of 2021, is backed by an equity investment of up to $200 million from Newlight Partners LP (Newlight) and an additional investment from members of the company’s senior management team.
Newlight is a growth equity firm with approximately $4 billion in capital commitments and assets under management. The Newlight team has invested approximately $6 billion in over 100 investments since 2005, first as the Strategic Investments Group at Soros Fund Management LLC (Soros), and now as Newlight after the team’s spin out from Soros in 2018.
Source: AM Best
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