Arbol aims to grow TAM of parametric through subsidiary Lilypad, which acquired Centauri

Arbol, a technology-led underwriter of parametric risk transfer, climate and weather insurance or reinsurance business, has established Lilypad Insurance as a homeowners specialist carrier and the subsidiary has acquired Centauri Insurance from Applied Underwriters.

This is Arbol’s first move into the US homeowners indemnity insurance space and the parametric specialist sees this as a a hybrid distribution channel, which can also assist in its goal of growing the total addressable market (TAM) for parametric risk transfer, Artemis understands.

Lilypad Insurance is a newly established subsidiary for Arbol and it will serve the unique insurance needs of homeowners and property investors in coastal areas, the company explained.

It has received its Certificate of Authority from the Louisiana Department of Insurance and will commence operations within Louisiana, as it looks to foster coastal resilience.

Lilypad Insurance has entered into an agreement to acquire two carriers, Centauri Specialty Insurance Company and Centauri National Insurance Company, from Applied Underwriters, to create an immediate footprint in the market.

Lilypad has named Ricardo Espino, former CEO and Co-Founder of Centauri Insurance, as its CEO, while Traci Stillwagon, a former Centauri leadership team member becomes COO of Lilypad Insurance.

“We established Lilypad as a direct response to the growing insurance coverage gap in catastrophe-prone areas,” explained Ricardo Espino. “By leveraging advanced climate data and technology infrastructure, we are uniquely positioned to offer tailored insurance solutions to address the risks and challenges of coastal living. We aim to ensure homeowners in coastal regions can access dependable and competitively priced coverage, thus safeguarding their properties and financial futures.”

“The integration of Centauri’s existing capabilities into Lilypad Insurance marks a pivotal advancement in our mission to safeguard coastal homeowners,” said Stillwagon. “This acquisition not only immediately extends our market reach but also enhances our product offerings, ensuring that more homeowners have access to available and dependable insurance coverage.” Stillwagon said. “We are grateful to Applied Underwriters for their support during this process, and we look forward to continuing to provide uninterrupted coverage to Centauri’s clients.”

Lilypad Insurance sees the coastal homeowners insurance market as at a critical juncture, as insurers increasingly withdraw from states like Florida, California, and Louisiana, limiting homeowners’ and businesses’ options for coverage.

“This retreat has been driven by the growing frequency and severity of natural disasters, compounded by high reconstruction costs, leading to a pressing need for alternative sources of insurance protection,” the company explained.

Operations and policies for Centauri Specialty Insurance Company and Centauri National Insurance Company will continue without interruption, and Lilypad said that it is committed to “continuing the excellent standard of service for Centauri’s clients.”

Jamie Sahara, President of Applied Underwriters, commented on the news, “We are pleased that our Centauri team will move to Lilypad and be joined by other accomplished professionals to serve policyholders effectively. In fact, the admitted property market requires the extraordinarily narrow, concentrated focus of sector specialists with long-term insight and the kind of advanced climate data analysis and related technology that Arbol brings.”

Adding, “This is the hardest property market any of us can remember, and that has possibly ever existed, but we remain bullish in this line. However, our strength is in underwriting—we are not weather predictors.”

Steve Menzies, Chairman of Applied Underwriters, also said, “Our business is structured around a carefully thought-out acquisition and corporate development plan. In comparison to private equity firms which buy with a plan to sell, or to public companies that invariably integrate every acquisition seeking accretive earnings, we are a private company focusing on business operations with the prospects for long-term organic growth, and then on the rational buying and selling of business units given market conditions. In this case, there is a trade up in value for Centauri as it will benefit from important new synergies with Arbol and its related portfolio of businesses.”

It’s an interesting move from Arbol, as this company continues to plough ahead on its mission to provide parametric weather, climate and catastrophe risk and reinsurance solutions.

By backing a coastal homeowners carrier, Arbol is looking for both a source of risk, as well as an alternative avenue for distribution.

Arbol’s ultimate goal is to grow the total addressable market for its product set, and this hybrid approach will provide another channel through which to do that, as Lilypad Insurance grows.