Lloyd’s start-up Cobalt in advanced sale talks

Delayed shariah-compliant Lloyd’s start-up Cobalt is in advanced sale talks with National Standard Finance, an infrastructure and debt investor based in Sandy Springs, Georgia, The Insurance Insider can reveal.

Sources said that the two sides were targeting the signing of a deal by the end of the month.

The business is currently owned by management, third-party managing agent Capita, legacy carrier Armour Holdings and the Bank of London and the Middle East.

Banking sources said that National Standard Finance would acquire almost all of the company, with management likely to retain a small stake but all of the institutions set to sell out.

As well as acquiring the service company, which will do the underwriting for Syndicate 1438, National Standard Finance is poised to provide the Funds at Lloyd’s needed to support the underwriting.

Having proved the concept as an MGA in the company market, Cobalt applied to establish a shariah-compliant Lloyd’s syndicate and received in-principle clearance for a Capita-managed syndicate in October 2016.

Approval was given subject to the capital being put in place to support the business plan.

An April 2017 start date was pencilled in but the launch has faced repeated delays as Cobalt struggled to find a suitable capital backer.

Emirates Re had been close to buying in, but the reinsurer’s parent company, Dubai Group, decided not to pursue the investment at the eleventh hour.
In June, the company’s CEO Richard Bishop departed. Chairman Max Taylor and active underwriter Anne Plumb remain in place.

Sources have said that given that National Standard Finance can put the underwriting capital into a corporate member ahead of the closing of the deal, the company still has an ambitious timetable to launch on 1 January.

National Standard Finance is a fund that provides finance to infrastructure in emerging economies.

The business model may dovetail with Cobalt’s given the large number of major infrastructure projects in Muslim countries.

The Corporation has been very publicly supportive of the idea of takaful insurance, with CEO Inga Beale saying in 2015 that Lloyd’s was “perfectly equipped to provide shariah-compliant insurance and reinsurance”.