Subrogation Capital Group, Inc., announced the launch of the first of a series of investment funds that will focus exclusively on purchasing portfolios of insurance industry subrogation claims.
The inaugural fund is expected to be capitalized with a minimum of $30 million and will specialize in buying the subrogation rights of automobile-related insurance claims. The fund is scheduled to close before the end of the second quarter. The company plans to establish several follow-on funds totaling $250 million over the next thirty six months.
According to Scott Conant, one of the firm’s principals, “Through this fund, we have created unique capital and cash flow solutions for insurance companies and state insurance funds throughout the country. Typically, these enterprises carry subrogation claims on their balance sheet as receivables, but until now, they have had to endure a lengthy and costly collection process before actually realizing cash payments.”
Conant, a 30-year veteran of the insurance industry and a former KMPG Peat Marwick consultant added, “By providing up-front cash payments for these portfolios, we offer an alternative remedy to insurance companies focused on balance sheet and operating performance and we can be an important source of liquidity for companies faced with cash flow challenges and capital deficiencies.”
The fund’s criteria for portfolio purchases will include a valuation process that employs highly sophisticated computer modeling techniques developed by Subrogation Partners, Inc., a national claims administration company.
Thomas Bryan, a principal and general counsel of Subrogation Capital, added, “We have already received considerable interest from a number of “portfolio sellers”, and equally important, we have had an overwhelming response from the banking and investment communities. Many of the fund’s prospective investors and strategic partners believe that we have identified a new institutional investment asset class.”
The fund’s Advisory Board is comprised of Joseph Termini, former special deputy superintendent of the New York State Insurance Department; Vincent Mistretta, Sr., former executive director of the New York State Insurance Department; Kieran Sweeney, former president and CEO of Arrowhead General Insurance Agency, the country’s largest privately held general insurance agency; and Linda Lamel, a former president of the College of Insurance and vice president of TIAA-CREF.
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