Startup Torus Buys A Shell To Expand In U.S.

Torus Insurance Holdings Limited, a new specialist insurance company underwriting from London, said it has agreed to purchase Praetorian Specialty Insurance Company, a shell entity with licenses that Torus can use to expand its U.S. business.

Financial terms of the agreement to buy Praetorian, a member company of QBE the Americas, were not disclosed.

Torus, which began operations in June, noted that PSIC is eligible to do business as an excess and surplus lines insurer in 42 U.S. jurisdictions.

Tim Fillingham, chief marketing officer at Torus, said it has its holding company in Bermuda for the London-based specialty insurance underwriting business.

"While we transact out of London, to underwrite business in America we need the various required licenses," he said, explaining that the company is embarked on a lengthy licensing process in the various states and the firm wanted to acquire a shell company "to strengthen our position in the U.S. market."

Torus said it intends to acquire PSIC through a cash transaction, which will be completed as soon as the necessary regulatory approvals have been received.

David Hope, acting chief executive officer of Torus, commented, "This is an important first step in the strategic expansion of Torus' specialty business in the United States. It will give us immediate reach into the greater part of the specialty business in the world's largest market and reflects our commitment to develop services that will differentiate Torus with brokers and customers through technical expertise, innovation and a global approach."

Praetorian began business as the U.S. subsidiary of Hannover Re and was sold to Australian QBE Insurance Group Ltd., Sydney, in 2007 for $800 million. Mr. Fillingham said that price had no correlation with what Torus paid because QBE had taken Praetorian's business and amalgamated it into their operation.

QBE lists three entities as members of Praetorian Financial Group on its Web site: admitted carriers, Praetorian Insurance Company and Redland, and Praetorian Specialty Insurance, the nonadmitted insurer acquired by Torus, which Praetorian Financial originally bought from Alea North America in October 2006.

Torus involves a group of senior insurance executives who invested in the firm along with First Reserve Corporation, which provided $720 million equity funding for the firm to begin business. First Reserve is a private equity firm that specializes in the energy sector.

Acting CEO Hope was formerly CEO of the London operations of The Navigators Group Inc.

Torus has authorization to operate from the UK Financial Services Authority and Bermuda Monetary Authority.

The firm began writing business July 1 as a technical lines insurer specializing in large, complex risks with a particular focus on the energy sector starting with onshore and offshore energy and other large industrial property. It said it plans on moving into other lines during the next twelve months.

Torus said it combines high levels of technical underwriting discipline with in-depth engineering and energy industry understanding, and First Reserve Corporation's 25 years of energy industry experience gives Torus access to a valuable knowledge pool and technical insight.