Specialist insurance firm Torus Insurance Holdings Ltd. (Bermuda) has been launched with a $720 million equity funding from private equity firm First Reserve Corporation.

First Reserve, which specialises in the energy sector, joined forces with a group of senior insurance pactitioners to set up the company, with senior management of Torus also investing personally in the new venture.

The company's operating companies Torus Insurance (UK) Ltd., in London, and Torus Insurance (Bermuda) Ltd., in Bermuda, have received authorisation from the UK Financial Services Authority (FSA) and Bermuda Monetary Authority (BMA) respectively.

Torus Insurance (UK) Ltd. and Torus Insurance (Bermuda) Ltd. have been assigned A - (excellent) ratings from AM Best and will start accepting risks incepting on July 1.

David Hope has been appointed chief underwriting officer at the new firm and will act as CEO until January 1, 2009. Agreement has been reached with a senior industry executive who will assume the position at that stage.

Mr. Hope has almost 30 years' experience as an underwriter in the London market and from 2002 to 2007 was CEO of the London operations of The Navigators Group Inc. He previously held senior underwriting positions at Octavian Managing Agency, latterly Markel International.

Torus is a technical lines insurer specialising in large complex risks with a particular focus on the energy sector. Its investment in experienced underwriting teams and industry leading technology is designed to provide insurance buyers with knowledgeable partners, and their service providers with improved service at every point of the insurance transaction.

Torus will combine high levels of technical underwriting discipline with in-depth engineering and energy industry understanding, to create the necessary levels of confidence to write meaningful line sizes on the risks that it selects. First Reserve's 25 years of experience in the energy industry across every part of the value chain will give Torus access to a deep and valuable pool of relevant knowledge.

Commenting on the launch of the business, Mr. Hope said: "We are obviously excited about the creation of the new business, the substantial investment commitment from First Reserve Corporation and the FSA and BMA authorisations. We will be looking to work with our clients and their brokers to build a business that differentiates itself through technical expertise, product innovation as well as class-leading service.

"Our aim is to focus on building long-term relationships with clients that appreciate the involvement of a partner that takes an active role in managing risk.

"Torus will focus on large commercial and specialty businesses in all major markets, starting with onshore and offshore energy and other large industrial property and move into other lines during the next 12 months.

"Over time we plan to build a company which we believe can differentiate itself with brokers and customers through technical expertise, innovation, service and a global approach. Certainly in the energy sector we are very fortunate to have considerable technical insight from our investor, First Reserve Corporation."

Mark McComiskey, managing director of First Reserve, said: "Torus is an opportunity for First Reserve not only to fund the creation of a new business but also to use its extensive knowledge of every part of the energy industry to make a significant contribution to the company's development and its success. The risks that Torus will underwrite will be large, site specific, unique and typically of the type where underwriting performance is improved by a data driven approach supported by extensive knowledge of the underlying asset.

"Torus has successfully recruited a high quality team of underwriters, engineers and actuaries and we are delighted that members of the management will be joining us and investing in the new business. Together we look forward to a successful future through an innovative approach in a large and growing market which will benefit both the insured and their brokers."

Best has assigned a financial strength rating (FSR) of A- (excellent) and an issuer credit rating (ICR) of "a-" to Torus Insurance (UK) Ltd. and Torus Insurance (Bermuda) Ltd. Concurrently, Best has assigned an ICR of "bbb-" to Torus Insurance Holdings Ltd. (Bermuda). The outlook for all ratings is stable.

The ratings agency believes the Torus group's consolidated risk-adjusted capitalisation is likely to be maintained at a strong level, based on performance forecasts and Best's specific insurance start-up criteria. Although premium rates in targeted business lines continue to decline, pricing is expected to remain at a level sufficient to support operating profitability, assuming normal catastrophe experience. In addition, risk selection and pricing is likely to benefit from the engineer site evaluations and technical pricing models that will be embedded in the group's underwriting process.

Best rekons the likelihood of successful execution of Torus' business plan is enhanced by a senior management and underwriting team that has extensive experience in the insurance industry and the targeted classes of business. The group's interim chief executive is its chief underwriting officer, Mr. Hope, and Best is aware of the industry executive who will ultimately assume the position of chief executive.

Offsetting these strengths is the strong competition Torus is expected to face within its core business lines from well-established insurers. In addition, the group faces the considerable challenge of building and retaining market acceptance and successfully growing its business profitably as rates and conditions in core markets deteriorate.