AM Best-rated Newpoint Re facing scrutiny on capital strength, encumbered assets and colourful pasts of group execs

Newpoint Re, the fast-growing but enigmatic St Kitts and Nevis reinsurer, has told AM Best it is seeking a capital injection amid questions over the group’s highly complicated structure, encumbered assets and the colourful backgrounds of individuals involved with its companies.

Last month, the rating agency disclosed it had placed under review with developing implications the B+ financial strength rating and “bbb” long-term issuer credit rating of Newpoint Reinsurance Company after what it described as the “result of an accepted appeal” from the firm.

Newpoint Re’s ultimate parent NFG SA – a Geneva-headquartered private investment holding company which claims to have $2.5bn in assets – says it is “in the process of strengthening its capital structure via a planned issue of common shares”, according to AM Best.

It is the latest twist in the remarkable rise of Newpoint Re, which in the recent hard market years has become an active reinsurer on both sides of the Atlantic, often via fronting companies and program managers, and in classes where capacity is scarce.

According to Newpoint Re's 2023 accounts, its GWP more than doubled to $249.5mn last year. In all likelihood it has now accepted more than $500mn in GWP over the past three years. In London, it operates via direct or indirect support of a number of MGAs writing international business, including Specialty MGA and Selecta, among others. Both firms did not respond to requests for comment ahead of publication. Another London MGA, Landmark Underwriting, has in a statement confirmed it does not either directly or indirectly have any dealings with Newpoint Re, or subsidiaries, and has “not done so for nearly four years”.

As its AM Best rating is below the A- threshold, Newpoint Re often uses fronting companies – including Vietnamese non-life insurer PVI Holdings, which is 51.4 percent owned by Talanx subsidiary HDI Global – to write international business.

It is also increasingly active in the US. Schedule F filings list Newpoint Re as having relationships as a reinsurer with nine cedants in 2023, including Sutton Specialty, Trisura, risk retention group Trailblazers Insurance Company and Mid-Hudson Co-Operative.

Across the nine cedants it assumed $101.3mn of premiums in 2023.

A 2023 investigation by the Des Moines Register has also detailed how the reinsurer became involved with supporting reinsurance-starved US mutuals, such as the Iowa farming mutual Heartland Mutual Insurance Association.

Last month, it was also announced the reinsurer was providing the new capacity for Australian plantation insurance – organised by PSC Insurance Brokers – after other markets withdrew coverage following losses.

But its growing prominence is also prompting increasing scrutiny of the complicated web of companies that form the mysterious Newpoint Group, together with the controversial backgrounds of many of the individuals involved.

These include Keith Beekmeyer, officially listed as the founder, chairman and CEO of US financial services company Newpoint Financial Corp and chairman and CEO of NFG SA. He is also listed as a non-executive director of Newpoint Re and Newpoint Financial (Europe), the financial holding company behind a trio of London-headquartered businesses: Newpoint Capital & Guarantee Ltd, Lloyd’s broker Newpoint Insurance Brokers and Africa-focused fixed income securities firm Iroko Securities.

The British executive – understood to be in his sixties – first came to prominence with his links to the Dai Ichi Kyoto reinsurance scandal in the mid-1990s. More than a decade later, he was arrested in Kenya in 2014 on charges of forging paperwork, according to Nairobi’s X News.

M ore recently, Beekmeyer clashed with the Bermuda Monetary Authority (BMA) after it first stepped in to wind up General Professional Indemnity Ltd, a company linked to him, before then preventing an attempt to acquire struggling reinsurer Citadel Re. It sparked an extraordinary legal battle, with Newpoint Financial Corp filing a November 2022 suit against the BMA in a California court claiming it was responsible for a “nefarious, bad-faith plan” to injure the company. The claim was later struck out on jurisdictional grounds.

Another associated individual with a colourful past is California-based Trevor Saliba, who says he joined NFG in 2022 with roles including chief operating officer and chief investment officer.

But in March 2016, the US Financial Industry Regulatory Authority (FINRA) filed a complaint against Saliba, alleging, among other things, that he broke the regulator’s rules by violating a series of interim restrictions it had imposed on him, providing false testimony and information, and backdating compliance forms.

A FINRA hearing panel later found that Saliba had committed the charged violations and imposed a single bar prohibiting him from associating with any FINRA member firm in any capacity. Saliba has consistently sought to overturn the charges but in a review last year, the Securities and Exchange Commission (SEC) sustained FINRA’s findings.

“The record demonstrates Saliba’s blatant disregard for his ethical obligations to comply with FINRA rules,” the SEC concluded in a 10 March 2023 review.

Another associated individual is Richard Scott Dvorak. A US national, Dvorak was formerly a co-director of Hay Fielding Warranty Ltd, a now dissolved UK company, alongside Beekmeyer.

Remarkably, he also appears to hold a charge over all Newpoint Re assets, research by Australian investigative lawyer Mark J Smith has unveiled.

A 20 July 2021 financing statement filed with the SEC documents that Newpoint Financial Corp (Wyoming) had secured financing from Postd Inc – a Norwich, Connecticut-based firm linked to Dvorak (he has been listed as corporate secretary and treasurer among other roles) – with Beekmeyer and Andrew Bye (Newpoint Re CEO) listed as guarantors of the loan.

The document discloses that the agreement covered collateral of 5,000 Series A convertible redeemable preferred shares of stock at $100,000 per share in Newpoint Financial Corp – totalling $500mn.

Crucially, a filing with the SEC reveals that the financing statement was amended on 19 July 2022. The amendment altered the collateral covered in the agreement – in addition to the $500mn in Series A shares, Dvorak was also handed all of the assets owned by Newpoint Financial Corp (Wyoming), including Newpoint Re.

“In addition to the colleterial being 5,000 Series A convertible redeemable preferred shares … in Newpoint Financial Corp … added is the financial statement including all assets of the debtors, owned by Newpoint Financial Corp to include but not limited to, any and all goods, inventory, equipment, fixtures, accounts, chattel paper, payments tangible and intangible, any and all documents, instruments, deposit accounts, investment property, commodities, drafts, proceeds, letter of credits, commercial tort claims, money, oil, gas, mineral rights, reinsurance contracts or treaties now or owned hereafter acquired by debtors as described in U.C.C. Article 1 through Aericle 9 and the provisions therein,” the filing said.

“Here are the companies Newpoint Financial Corp owns and or controls; Global Alliance Group (Hong Kong) with Visionary PCC (Labuan) under them, Newpoint Capital (United Kingdom) with Sinoasis UK (United Kingdom) and Newpoint Indemnity (Bermuda) under them, Newpoint Reinsurance (St Kitts & Nevis), lroko Securities (United Kingdom) with Mandarin Trust (Luxembourg) and Marula PCC (Mauritius) under them are all made part of the collateral.”

In a statement to The Insurer, representatives for Global Alliance Group Limited (GAGL) and Visionary Insurance Company Limited (Visionary) said the “statement made by Newpoint in its financial statement is inaccurate and/or false” because GAGL is wholly owned by Sinaosia Alliance Group Limited and Visionary is wholly owned by GAGL.

Like Beekmeyer and Saliba, Dvorak also appears to have a colourful past.

A 12 June 1998 court judgment signed by Judge Ernest C Torres in the US District Court of Rhode Island and seen by The Insurer reveals that he pleaded guilty to seven counts of federal tax fraud. A contemporary news report published by Rhode Island Lawyers Weekly discloses that Dvorak agreed to plead guilty to swindling $13mn from the Internal Revenue Service in what it described as one of the largest tax fraud cases in Rhode Island history.

These individuals all appear to have highly influential roles within the complicated web of Newpoint companies that includes the AM Best-rated St Kitts and Nevis reinsurer Newpoint Re. Other entities, in addition to its Swiss holding company, include US subsidiaries in California (Newpoint Financial Corp) and Wyoming (NPFC SPV 1 – formerly known as Newpoint Financial Corp). NPFC is understood to be registered in Delaware with branch offices located in California and Connecticut. Bye, listed as executive director on the Newpoint Re website, is also listed alongside Beekmeyer as a senior officer of Newpoint Financial Corp and chief risk officer.

European operations include Newpoint Capital & Guarantee Ltd and Newpoint Financial (Europe) Ltd. It also owns a Lloyd’s broker, Newpoint Brokers Ltd, and an asset management arm with a number of linked companies. One of these – the Jersey-based Newpoint Surety Asset Finance Ltd – even filed with the London Stock Exchange earlier this year for a $1,500,000,000 secured medium term note programme.

Many of these group entities also frequently enter into intra-group transactions. In Newpoint Re’s 2023 accounts, for example, the reinsurer declared loans totalling $29.877mn including $19.736mn from Newpoint Capital & Guarantee Ltd, $4.325mn from Newpoint Financial (Europe) Ltd and $3.87mn from NFG SA. In turn, Newpoint Re loaned $9.49mn to linked entities.

But the most unusual aspect of Newpoint Re’s balance sheet – in addition to the fact an obscure company holds a charge over it – is its dependence on opaque financial instruments seemingly structured by other group entities. Between the 2022 and 2023 year-ends, for example, Newpoint Re’s financial assets increased from $299mn to $522mn. However, only 2 percent ($12mn) was classified as level one, equivalent to cash or highly liquid assets. The largest component is $250mn of collateralised debt instruments with the reinsurer purchasing a $100mn European mid-term note in 2023 funded by the issuance of ordinary shares to the parent company, in addition to an existing $50mn European mid-term note and a $100mn collateralised note, according to its 2023 accounts.

NPFC SPV 1 appeared to play a significant role. NPFC SPV 1’s 2019 audited accounts – published by Armanino LLP – disclose that the company received $500mn in the form of 20 notes from an unnamed "financial institution". It then transferred $100mn of these notes to Newpoint Re’s HoldCo in St Kitts and Nevis. It is not clear what is the ultimate collateral underpinning these notes.

“On October 31, 2019, the company entered into a convertible preferred stock purchase agreement and 20 promissory and security agreements with an independent third party. Under the terms of the agreements, the company issued 5,000 shares of Series A convertible redeemable preferred stock at $100,000 per share in exchange for twenty $25,000,000 promissory notes … The promissory notes are collateralised by a $500,000,000 cash deposit with a financial institution,” it said.

It is also unclear what was behind AM Best’s announcement last month to revise Newpoint Re’s rating from stable to developing, though the firm’s complicated balance sheet may well be a factor. It will be interesting to watch progress on the parent company’s equity raise and how this might impact the balance sheet strength of Newpoint Re.

​​In a statement to The Insurer, Newpoint Re CEO Bye said: “At this time, we are unable to comment directly on the press release issued by AM Best. However, I can clarify that the planned issuance of common shares is part of a strategic initiative of our parent company, NFG SA, aimed at enhancing its capital structure.

“This initiative is designed to support NFG SA’s growth objectives and enhance its operational capabilities. Newpoint Reinsurance Company Ltd, in conjunction with its parent, is maintaining open and transparent dialogue with AM Best throughout this process.”

Newpoint Re declined to comment further on the scale of the capital injection, the impact of the charge of its assets or when it expects to complete its fundraising.

AM Best declined to comment beyond its commentary last month. In the meantime, the colourful past of some of its executives together with its increased activity in the international reinsurance markets is likely to ensure the scrutiny will continue…

Article amended on 10 September to include statement from Landmark Underwriting.