By David Bull

March 26 - (The Insurer) - An affiliate of PE firm Gallatin Point Capital is providing $95 million of the $110 million surplus financing to support the launch of The Baldwin Group-sponsored Builder Reciprocal Insurance Exchange (BRIE), which will provide capacity to the intermediary’s builder-sourced homeowners book.

In a statement Wednesday, The Baldwin Group said that BRIE has entered into a note purchase agreement to raise $110 million of surplus financing through the issue of surplus notes.

Affiliates of Baldwin are funding the $15 million balance alongside Gallatin Point Capital.

Insurance Advisory Partners was exclusive financial advisor to Baldwin and placement agent for the surplus notes.

As previously reported, Tampa, Florida-based Baldwin announced last month that it had secured regulatory approval to launch a Texas-domiciled reciprocal exchange, with an MGA affiliate of the intermediary serving as the new vehicle’s attorney-in-fact $(AIF)$.

The launch of BRIE comes as Baldwin continues to integrate the circa $200 million book of builder-sourced homeowners business it acquired from QBE in 2022 as part of its deal for Westwood Insurance Agency.

In Wednesday’s statement, the intermediary said its MGA, Millennial Specialty Insurance, will be able to accelerate the transition of the book from its existing carrier partner with the launch of BRIE.

It added that MSI has fully satisfied all conditions necessary to extend the term of its existing program administrator agreement with its existing carrier partner, which will continue to support the book through the transition.

Commenting on the funding, Baldwin CEO Trevor Baldwin said: “Launching BRIE represents a meaningful milestone in our continued journey to vertically integrate across the value chain and bring innovative, third-party risk capital solutions to market in support of more efficient risk transfer outcomes for our clients.”

Gallatin Point co-founder and managing partner Matthew Botein added: “Baldwin’s growth over the past decade has been remarkable, and we are excited to be able to support them through our capital investment as they continue to create innovative insurance solutions for their clients and further grow their builder-sourced homeowners book of business.”

The reciprocal exchange model has become increasingly popular in recent years, especially for homeowners business.

A reciprocal exchange insurer has similarities to a mutual. It is an unincorporated aggregation of at least 25 policyholders, with the reciprocal exchange managed by an AIF.

The vehicles are essentially owned by their policyholders, but their operations, such as underwriting, claims and management services, are provided by an AIF for a pre-agreed fee.