Legacy start-up Sophrosyne Partners to target corporate long-tail liabilities

Opportunities to tap into the growing demand from European corporates for solutions to their US liability exposures spurred the formation of new legacy specialist Sophrosyne Partners, Eleni Iacovides has told The Insurer.

Former Compre and Darag Group executive Iacovides unveiled Sophrosyne last week, with the newly formed business having secured capital backing from multi-family office Hundle & Partners.

Iacovides leads the business, and she is supported by Daniel Gerber as partner and general counsel. Gerber is also a partner of Gerber Ciano Kelly Brady.

Former AIG senior vice president and global chief investment officer Elaine Rocha chairs Sophrosyne’s advisory board.

Alongside Hundle & Partners, Sophrosyne is supported by a pipeline of transaction capital.

In its launch materials, Sophrosyne is described as a vehicle created to provide European and North American corporates with finality solutions to address the challenges created by liabilities held on their balance sheets.

According to Iacovides, corporates are increasingly looking for ways to divest liabilities that burden their balance sheet and distract from their core strategic focus.

Sophrosyne’s goal is to deliver innovative solutions that unlock value for those corporates and which in turn allows them to redeploy capital, gain certainty and increase their market value.

Talking to this publication, Iacovides said in the first instance, Sophrosyne will focus on acquiring principally long-tail liabilities such as asbestos, environmental, PFAS and product liability, from corporates that hold them and either do, or do not, have insurance coverage in place.

“For example, Boiler Inc has asbestos liabilities and insurance coverage with Carrier X. We would seek to acquire Boiler Inc’s liabilities and establish an SPV or a cell that will hold these liabilities. The insurance coverage / asset would transfer along with the liabilities,” explained Iacovides.

“Dan and I have, separately, looked at a number of these transactions in the last few years.

“We have both recognised that this will be a growing area and increasing demand, a bit like traditional legacy was perhaps some years ago. We expect this to continue and our discussions with intermediaries in this space supports this.”

Sophrosyne is both industry and business volume agnostic, and Iacovides said the start-up will look to engage with mid-size corporates that may need to dispose of their long-tail liabilities.

At the same time, Sophrosyne also plans to participate in auction processes where transactions tend to be bigger.

“We have partnered with seasoned professionals with complementary skills sets that will be pulled into the appropriate transactions, as appropriate,” Iacovides said.

“The flexibility and agility of our model enables Sophrosyne to offer the appropriate structure for each transaction without the challenges that perhaps large organisations face,” she added.

Sophrosyne’s focus will be on entering into deals with European entities that have US liability exposure.

In terms of specific geographies, Iacovides said larger economies, for example Germany, France and the UK, would be the first that Sophrosyne targets as “they would be more ready for our solutions”.

Sophrosyne’s launch comes after Iacovides departed Compre almost two and a half years ago. This publication revealed in April 2022 that Iacovides had parted ways with Compre, some two years after she had joined the business as chief development officer from run-off rival Darag Group.