Tampa-based Lighthouse Management LLC announced Dec. 28 that it has completed a $65 million senior note issuance in a private placement.
The capital from this transaction will be used to refinance existing debt at the managing general agent; infuse growth capital into Lighthouse’s affiliated insurance carrier, Lighthouse Property Insurance Corporation; expand its distribution to third-party carriers, and for general corporate purposes, Lighthouse said in a news release.
The transaction was placed with a private capital fund based in New York.
“This senior note issuance is an important piece in our next phase of growth,” said Lighthouse Chief Executive Officer Patrick White. “This investment strengthens our capital position and allows us to continue serving our customers and our agents, while also taking advantage of the current market opportunity,” he said.
Established in 2008, the Lighthouse group of companies include an MGA and two insurance carriers focused on homeowners insurance in the Southeast. Lighthouse Management LLC is licensed to write business in Louisiana, Texas, Florida, Mississippi, South Carolina and North Carolina, but has not begun to write in Mississippi yet.
White told AM Best that Lighthouse plans to take advantage of hardening market conditions, because several carriers in Florida, Louisiana and Texas have experienced massive losses over the past few years and are retreating from these markets.
Higher rates, combined with Lighthouse’s 13 years of experience of coastal coverage, solidly positions the company, he added. “We see growth opportunities along the coast as we all continue to deal with abnormal weather patterns across the Southeast,” leaving inland markets to other writers, including national carriers.
Lighthouse Property Ins. Corp. completed its merger with sister company Prepared Insurance Co. in 2020, allowing it to assume Prepared’s portfolio and write directly in the state of Florida, according to a Lighthouse press release dated June 16, 2020. The merger resulted in a unified carrier with over $200 million in gross written premium. In addition to entering the Florida homeowners market, Lighthouse said the deal offered expansion capabilities in the Southeast.
Lighthouse also owns Lighthouse Excalibur Ins. Co. with just over $60 million of gross written premium, Lighthouse said in the news release. Lighthouse acquired Excalibur National Insurance Company in 2019 and relaunched it as Lighthouse Excalibur.
According to the Louisiana Department of Insurance website, Lighthouse Property Insurance Corp. has administrative offices in Tampa, is domiciled in Baton Rouge and has assets of $204.0 million, liabilities of $160.3 million, surplus of $43.7 million and lost $71.6 million dollars in 2020. The company wrote $20.3 million in total Louisiana premium and $214.0 million in total premium nationwide. Lighthouse property had authority to write homeowners and fire and allied lines in Louisiana beginning in 2008. On Sept. 23, 2015, the company received authority to write burglary and forgery, liability, marine and transportation, steam boiler and sprinkler leakage, and miscellaneous.
Lighthouse Excalibur Insurance Company is admitted in Louisiana with administrative offices in Tampa and domiciled in Baton Rouge. Lighthouse Excalibur got its certificate of authority on March 31, 2016, and is licensed to write fire and allied lines, homeowners and liability, according to LDI’s website.
As of 2020, Lighthouse Excalibur had assets of $16.6 million, liabilities of $2.7 million, surplus of $13.9 million and negative net income amounting to $668,883. The company wrote $56.3 million of total premium, all homeowners and all in Louisiana.
Neither Lighthouse Property nor Lighthouse Excalibur has turned a profit in the last three years, 2018, 2019 or 2020, according to financial overview reports.
Lighthouse said it distributes through 3,000 licensed, independent agents.
According to Lighthouse’s website, the company has partnered with TigerRisk Partners, a reinsurance brokerage, to place its catastrophe loss reinsurance program. TigerRisk Capital Markets and Advisory acted as exclusive placement agent to Lighthouse in the private placement. Foley and Lardner LLP served as legal counsel.
Lighthouse group’s financial strength rating is A Exceptional by Demotech Inc., but AM Best said it does not currently rate operating entities of Lighthouse’s parent, TWIMG LLC.
Ranked by 2019 direct premium written TWIMG LLC, which includes both Lighthouse Property and Lighthouse Excalibur, placed ninth from the top in the top 10 writers of homeowners insurance in Louisiana, according to the Insurance Information Institute.