A bidding war has broken out in London City between some of the best known insurance companies. Tungsten, the acquisition vehicle driven by Edi Truell, is thought to be behind an effort to purchase Equity Red Star. Right now Equity Red Star operates within the Lloyds London insurance market but is in distress.
Truell, who is also the founder of Duke Street the private equity house, is thought to have been given preferred bidder status by Insurance Australia Group (IAG) the owner of Equity. However, in amongst all of this is US private equity firm Aquiline Capital Partners, who are also thought to be keeping a close eye on Equity Red Star.
Equity is valued to be worth somewhere around £100m. It is the only personal lines syndicate that is able to operate within the Lloyd’s market, but it has been hit hard by personal injury claims over the last few years. In January they also almost were hit by a one million pound fine by the insurance market run by Lloyd’s of London after an investigation was launched into how it underwrite matters.
Instead of the fine it was told it would have to pay the £95,000 costs of the investigation and admit to two charges of ‘detrimental conduct’ when it came to underwriting. The charges were related to losses that happened as a result of the underwriting syndicate.
Former IAG UK chief executive, Neil Utley, former senior underwriter John Josiah from Equity Red Star, and UK commercial director for Equity Douglas Morgan are still under investigation. Lloyds can impose individual fines on the men if they are found to be guilty. They can also prevent them from working in the market again if they are found guilty of improper underwriting practices.