Matthew Cooleen, executive v.p. at Chubb Financial Solutions in New York, is preparing to debut a standalone insurance firm, labeled Sentient Capital, that will compete in the structured products arena. The move follows Chubb's decision to stop writing new credit derivatives business. Cooleen confirmed the plans, but declined further comment. He is in talks with banks about backing the project, which is expected to launch before year end.
Given the large numbers of insurers who have jumped out of credit derivatives recently there is a unique opportunity to establish a presence in this space, according to an official familiar with Cooleen's plans. Many insurers have been pressured to exit due to the difficulty in explaining such issues as mark-to-market accounting to investors, the official noted, adding that these concerns would not apply to Cooleen's operation due to its private nature.
On the buy side particularly, there is a lack of synthetic players with adequate ratings to sell credit protection and Sentient, which has offices slated for New York, London and Bermuda, would fill this void, said the official. Cooleen is currently talking to the rating agencies about criteria the firm needs to meet to gain a AAA rating.
Initially Sentient will develop as a buy side shop, purchasing senior tranches in cash and synthetic structures such as collateralized debt obligations and asset-backed deals. The firm will offer both financial insurance and reinsurance. In the long term, Sentient will trade and structure credit derivatives.
Cooleen is taking a handful of staffers from Chubb to the new operation with further hires as the business expands. Around 45 staffers, including Tobey Russ, president and ceo, are expected to leave Chubb. Russ also plans to set up an insurance firm but his vehicle, dubbed Quanta, will offer products such as environmental, property and casualty insurance and will not be involved in the derivatives markets.
