VenGrowth Capital Partners Inc. today announced a $5 million investment in established insurance firm Focus Group Inc.

The VenGrowth Traditional Industries Fund Inc. and The VenGrowth II Investment Fund Inc. provided a subordinated loan that was used by Focus Group to establish an insurance company, Omega General Insurance Co. (Omega), to facilitate the repatriation of surplus assets by foreign insurance companies.

Omega will provide foreign insurance companies with branches in Canada, the ability to exit the Canadian market with surplus capital in hand, on a timelier basis.

The deal represents the third investment completed by the Traditional Industries Fund.

Focus Group has been servicing companies operating in the North American insurance industry since 1986. The company provides critical services such as financial and risk management, compliance, claims handling and administrative support for international insurance and re-insurance companies.

An increasingly important aspect of Focus Group’s business is its “run- off” service for companies that have ceased writing business in Canada and want to repatriate capital. Omega, established as a property and casualty insurance company with a significant capital base, will take on existing books of Canadian business and speed up the repatriation process for departing insurers.

According to VenGrowth, a total of 26 foreign insurance companies are currently in run-off, with a further 20-25 expected to withdraw from the Canadian market. The total assets represented by this target group are approximately $2 billion.

“Focus Group is an established company with the qualities that we target on behalf of shareholders — an experienced management team, proven track record, cash flows and a unique value proposition,” said Graham McBride, managing general partner, VenGrowth Capital Partners, in a news release. “With the proceeds of this financing, Omega is well positioned to take advantage of a significant opportunity in the Canadian insurance industry.”

The VenGrowth Traditional Industries Fund Inc. is VenGrowth’s most conservative labour sponsored investment fund. Launched in November 2003, the fund focuses on predominantly small and medium sized Canadian companies in traditional manufacturing and services industries that are expected to generate sustainable cash flows. The fund had net assets of over $24.5 million as of Sept. 30, 2004.