Parhelion, an energy and climate risk finance focused company specializing in non-traditional risk issues, is aiming to raise $500 million in capital as it seeks to become a “sustainable insurer” focused on ESG aligned underwriting and investments.
Beginning its capital-raising with initial backing from insurance and reinsurance broking group Howden, Parhelion is designed to become “the world’s first fully permanent insurer,” the company explained.
Howden has seeded the business itself and it is expected that Parhelion will match the increasing demand from corporates for an insurance provider with an increase in institutional capital looking for sustainable or ESG suitable investment strategies, which will enable them to combine more ESG. may help in their transition to becoming.
Studies show that “a consistently strong relationship among corporates with advanced ESG credentials and low insurance claims enables Parhelion to offer premiums and cover at advantageous terms while generating strong shareholder returns,” says Howden. to believe.
Parhelion will focus on writing both traditional risk coverage and will also create new ESG-specific products for future risks, therefore meeting the needs of corporates who are already advanced on their ESG journey and who are beginning the transition. are.
Parhelion is led by veteran industry experts Julian Richardson (who has worked at Chaucer, the International Trade Division and has been running a climate finance consulting firm called Parhelion for the past few years) and David V. Cabral (former COO of Peak Ray in Hong Kong). As co-CEOs, both have significant expertise in climate finance, insurance and reinsurance.
In addition, reinsurance executive Chris Sharp (formerly of Dell, Ark and Aspen) will join Parhelion as chief underwriting officer in September 2021.
The company aims to start underwriting from January 1, 2022.
Charlie Langdale, Head of Sustainable Insurance, Howden, commented, “We are delighted to offer a unique solution to our customers who need a fresh and sustainable approach to future risks. Parhelion Backed by Fresh Capital Will be a weightless highly rated ESG centric carrier that our customers can partner with and trust. Its launch is a step towards facilitating industry transformation in the long run.”
Parhelion’s co-CEOs, Julian Richardson and David V. Cabral said, “Companies are transitioning to sustainable buying and this should not be limited to a physical good; it should also include financial services and products. Our vision is to provide a good measure of better risk control and underwriting performance, regardless of market cycles. The vision is to support the transition of customers into a more sustainable and resilient future while creating cycles. This vision will be supported by an ecosystem of services and shared data insights to support the overall customer ESG transition.”
What’s particularly interesting about a venture like Parhelion is how it can become an attractive partner for insurance-linked securities (ILS) capital looking for sources of returns linked to ESG.
Parhelion could easily launch the world’s first ESG reinsurance sidecar, for example, once it achieves some scale and the type of capital it needs, which allows it to leverage ESG-focused and efficient capital from institutional markets. Can provide a comprehensive source.
Of course, right now, private equity is probably the type of money that will support Parhelion for its launch, as has recently been the way reinsurance start-ups raise capital.
But that money doesn’t always come with the longest horizon and usually very high return requirements, meaning other ESG-focused insurer ventures may tap the appetite of the world’s largest institutions with an ILS-aligned structure in the future. can choose to do.
As a result, we suspect that Parhelion may be the first insurer or reinsurer to launch with the goal of being fully sustainable, but it certainly won’t be the last given investor appetite.
Howden Capital Markets and Tiger Risk Capital Markets & Advisors are both advising Parhelion to raise its capital.
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