New E&S carrier Champlain Specialty lands A- AM Best rating

Champlain Specialty Insurance Company has secured an A- financial strength rating from AM Best as the entity backed by Glencoe Capital’s David Evans and related funds looks to build out a book of direct insurance business as an E&S carrier led by a team of WestCongress executives.

The move represents an evolution from its origins as a reinsurance captive for Glencoe Capital-owned MGA WestCongress Insurance Services (WCIS).

Vermont-domiciled Champlain Specialty has also been assigned an “a-” long-term issuer credit rating by AM Best, with both ratings given a stable outlook.

Champlain Specialty is led by president Michael Roskiewicz, executive vice chairman Richard Smith and executive vice president Thomas Dulapa.

Its chairman and majority owner is Evans, the founder of private equity firm Glencoe Capital, which invested in WestCongress when it launched in 2017.

Smith is also chairman of WCIS, with Dulapa executive vice president of the MGA. Parent company WestCongress Insurance Holdings is led by president and CEO Steve Kerr, the former Marsh and Aon veteran drafted in last year to run the company.

Smith, Roskiewicz and Dulapa were all part of the senior management team of First Mercury Financial Corporation and CoverX Specialty and have pedigree in building E&S carrier businesses.

The organizational structure chart in Champlain Specialty’s statutory filings has Evans as the ultimate beneficial owner with a series of trusts and Glencoe-related funds including Stockwell Managers III, LPs and Glencoe-WCIS Investors listed as holding an interest.

Champlain Specialty was incorporated in April last year with a transaction approved in September 2020 for WestCongress Re to merge into the newly formed insurance company.

WestCongress Re was a Cayman captive insurance company owned by WestCongress Insurance Holdings that began business in 2016 and wrote reinsurance to support a specialty liability program managed by MGA WCIS.

As an MGA WCIS focused on market segments including energy, security, and roofing and artisan contractors.

According to a financial examination report by the Vermont Department of Financial Regulation last September, Champlain Specialty at that point had a two stage-business plan.

The first was to continue writing reinsurance business produced through the WCIS program that was previously written by the captive.

The second would see it pivot to become a direct writer of risks after building appropriate capital levels and securing a rating.

In a statement today, AM Best said that Champlain Specialty’s risk-adjusted capitalization is projected to be at the strongest level over the next four years.

It added that the carrier’s operating performance is assessed as “adequate” given results through its first year of operation, during which it has been writing reinsurance previously assumed by the captive.

“Champlain’s ability to execute on its business plan will be a key rating factor going forward, especially the company’s planned capital raise over the next five years,” it continued.