Fledgling Bermuda-based insurer and reinsurer Fidelis Insurance Holdings Ltd. raised a massive $1.5 billion in equity capital, a major accomplishment for the industry.

What’s more, Fidelis co-founders Richard Brindle and Neil McConachie said they are pursuing a business model designed to maximize return and make underwriting less volatile by shifting capital and risks between insurance and investments.

Underwriting is set to begin immediately, with an eye on insurance and reinsurance business focused on property, energy, marine and aviation risks, Fidelis said.

Private equity firms Crestview Partners, CVC Capital Partners and Pine Brook are Fidelis founding investors, having committed a combined $650 million. Individual investors made up the difference, as did family offices and institutional investors; the total investment covered both preferred and common equity.

Fidelis’ co-founders are also its main leaders: Chief Executive Officer/Chief Underwriting Officer Brindle and Group Chief Financial Officer McConachie. Both are known for building global specialty insurer Lancashire Holdings from scratch into a $2.4 billion market-cap company listed on the London Stock Exchange.

Worth noting: Fidelis said that principals from Crestview Partners, CVC Capital Partners and Pine Brook backed Brindle and McConachie at their previous ventures.

Brindle said that with the launch of Fidelis, the plan is to bring something new to the market.

“Fidelis will pursue a total return strategy by tactically shifting capital and risk between insurance and investments to maximize return on equity across market cycles,” Brindle said in prepared remarks. “We hope that others follow this model, as we strongly believe it will be very good for the industry, resulting in more responsible and less volatile underwriting.”

Brindle emphasized, however, that Fidelis is primarily an underwriting company and remains supportive of traditional broker distribution networks as a way to reach clients.

Fidelis said it will not follow reinsurance practice whereby their hedge fund owners get exclusive investment manager mandates. Instead, Fidelis plans to allocate capital to top-tier managers running more diverse strategies suitable to different parts of its book. They’ll also get the ability to change managers and locations. Fidelis said that Chief Investment Officer Edward Russell will manage the investment portfolio under direction of the company’s Investment Committee, in consultation with advisor Goldman Sachs’ Alternative Investments & Manager Selection Group.

McConachie said Fidelis believes “the diversification in assets will protect Fidelis against financial market volatility better than a single-manager strategy would.”

Source: Fidelis Insurance Holdings Ltd.