Applied UW sells Centauri to Arbol sub and redeploys capital to E&S HNW homeowners

Applied Underwriters is selling its Florida-based admitted carrier Centauri Insurance to Arbol’s newly formed Lilypad Insurance business, with capital freed up by the sale redeployed to support its entry into the E&S high-net-worth (HNW) homeowners space, The Insurer can reveal.

Omaha, Nebraska-headquartered Applied Underwriters confirmed on Thursday that it had agreed the “strategic sale” of Centauri to the start-up carrier subsidiary of climate risk solutions provider Arbol Inc.

The transaction reunites Centauri with its former CEO Ricardo Espino, who now heads up Lilypad.

Insurance Advisory Partners was the exclusive financial advisor to Applied Underwriters on the transaction.

In a statement, Applied Underwriters said that it will continue to serve a large, fast-growing and broad portfolio of property business through its Home National personal lines division, which was launched last year with the hire of Bob Courtemanche as CEO.

And sources said that the surplus that had supported the admitted homeowners book of Centauri will now be diverted to support Applied Underwriters’ entry into the E&S HNW space.

Personal lines veteran and former Ace Private Risk Services chairman and CEO Courtemanche joined Applied Underwriters to run its homeowners platform as Espino left the business, in a move first revealed by this publication.

At the time it said it would streamline and strengthen its existing homeowners platforms and reposition itself for national expansion under the new Home National banner.

The Insurer had earlier revealed the company was looking to combine its various homeowners operations, including Centauri Insurance, programs and MGAs written on American Modern and Hiscox paper, and its New York-focused Constitution Insurance Company, with personal lines veteran Courtemanche at the helm.

Applied Underwriters subsequently confirmed that Home National would operate as an MGA representing eight carriers, five from its existing family of insurance company subsidiaries as well as three other blue-chip insurers.

In today’s announcement, Applied Underwriters said the Centauri sale is subject to regulatory approval, with closing anticipated within the next 45 days.

The Centauri companies – which Applied Underwriters bought in a transaction that closed in early 2021 – are domiciled in Florida and Louisiana.

Lilypad, once combined with Centauri, will address the admitted insurance needs of homeowners and property investors throughout the US, said the statement.

Commenting on the move, Courtemanche highlighted Centauri’s geographically diversified book of business.

“Centauri has stood its ground firmly, weathering many major storm events over the years, including Ian. Meanwhile, we at Home National have diversified and grown our MGA business platform rapidly, gaining traction in higher limit business, such as commercial condo and apartment complexes, higher-end homes, and shared and layered placements – all almost entirely in the E&S space,” he said.

Need for climate data analysis and technology

Applied Underwriters president Jamie Sahara pointed to the importance of experienced leadership in navigating the ever-evolving complexities of coastal insurance.

“We are pleased that our Centauri team will move to Lilypad and be joined by other accomplished professionals to serve policyholders effectively. In fact, the admitted property market requires the extraordinarily narrow, concentrated focus of sector specialists with long-term insight and the kind of advanced climate data analysis and related technology that Arbol brings,” he continued.

And Espino said that Lilypad had been set up as a direct response to the growing insurance coverage gap in catastrophe-prone areas.

“By leveraging Arbol's advanced climate data and technology infrastructure, we are uniquely positioned to offer tailored insurance solutions to address the risks and challenges of coastal living – no small task, but one for which we may now apply Arbol's sophisticated climate instrumentation to succeed in," he commented.