Veteran insurance executive Mitch Blaser has launched a new Bermudian-headquartered company with the aim of building one of world’s top global specialty insurers.
Mosaic, which will target complex risks and use cutting-edge technology to maximise efficiency, is basing its head office and an underwriting operation on the island.
In London, the company will operate Lloyd’s Syndicate 1609 – a number chosen to reflect the company’s strong connection with Bermuda – and it has also launched operations in several US locations, as well as in Asia.
Mr Blaser, one of the founding members of Bermuda specialty insurer Ironshore’s executive team in 2007, is backed by anchor investor Golden Gate Capital. The US-based private-equity firm will hold a majority stake through its financial services portfolio company, Angel Island Capital. Members of Mosaic’s leadership team have also invested in the start-up.
Mosaic is focused on high-value, specialty lines of business with steep technical barriers to entry and strong growth trends, including transactional liability, cyber, political risk, political violence, environmental, financial and professional lines.
Mr Blaser told The Royal Gazette: “We want to be number one in each of those lines of business. We expect to be top three in five to six years and we expect to write $1 billion of premium within four to five years.” He said these risks were complex, growing and increasingly relevant to insurance buyers.
The idea to launch the company was not driven by the hardening market that has sparked a wave of start-ups and new capital pouring into the re/insurance industry.
“All the market conditions have done is give us a tailwind we didn’t expect,” Mr Blaser said.
He added that Mosaic’s hybrid structure and hi-tech platform, built with insurtech providers, creates “a new model for the industry”.
Mr Blaser explained that Mosaic would “eat its own cooking” by taking a lead line of the business it writes through Syndicate 1609 and syndicate the remaining risk globally.
“There is nobody syndicating risk in local markets around the world today,” Mr Blaser said. “Through our structure of having underwriting hubs and expertise around the world, we’ll have access to the business, access to talent and global distribution.”
The choice of 1609 as syndicate number was “our way of telling the world that this is not a Lloyd’s-only operation, it’s just part of our mosaic that emanates from Bermuda”, Mr Blaser added.
Mosaic has $185 million in initial capital and Golden Gate, as a long-term backer, has some $17 billion in committed capital and will be able to supply extra capital as the insurer expands.
The start-up’s Lloyd’s operation is the “centrepiece” of the company, Mr Blaser said. Advantages of the London market included its ratings, its licences to do business around the world and the capability it offers to centralise capital to be deployed globally.
So why choose Bermuda as home for the company’s headquarters?
For one thing, Mr Blaser is fond of Bermuda, lives on the island and, as a Permanent Resident’s Certificate holder, intends to stay.
“Also, we believe we can build a very strong underwriting capability out of Bermuda, and we believe that the regulatory structure gives us a good opportunity to think about expansion.
“Bermuda’s regulatory framework has global recognition. It gives us advantages in terms of flexibility.
“In Bermuda, there is also some tax advantage – although that’s not the cause célèbre any more – and access to a big insurance market and ability to access talent.”
The Bermuda operation, based at 141 Front Street, will start out with between five and ten people, senior executives and roles associated with underwriting. Headcount is expected to expand with the business.
Mosaic benefits as an underwriter from not having a legacy balance sheet, but its technology also benefits from not having legacy infrastructure, Mr Blaser said.
He stressed that back-office tasks would be largely automated from the start, while artificial intelligence, with machine-learning algorithms to support specialised underwriting, would feature in a platform that would improve itself over time.
He added: “From a processing standpoint, everything will be automated. In terms of connections to our syndicated capital partners, we’ll be using blockchain, so they will know where they are with that risk, any time, all of the time.”
In terms of efficiency, Mosaic will be moving a step further than the type of outsourcing that Mr Blaser oversaw about a decade ago when he was chief operating officer at Ironshore. In 2012 the Bermuda insurer struck a deal with Genpact to manage its back-office operations.
He added: “We figured we saved about 40 per cent on back-office costs with what we did at Ironshore. And what we’re doing at Mosaic is probably 40 per cent of that.”
He estimated that this would knock about three percentage points off the expense ratio, compared to a traditional structure.
Underwriting talent in highly specialised lines of business is a major differentiator for Mosaic. Focusing on these lines will allow underwriters “to be part of something very entrepreneurial”, Mr Blaser said.
“What we are really touting as our mantra is an ownership culture. We want everybody who works at Mosaic to be an owner. Therefore, return on equity and making the pie bigger is going to be in everybody’s interests.”
He disagreed with the suggestion that AI could diminish the role of the underwriter.
“It’s the opposite,” Mr Blaser said. “Underwriters today have assistants who are gather information every which way. Everything is random. Every time they think of something, it has to be added to some system somewhere, you have to build it.
“Our system will grow and build itself. It will facilitate underwriters’ access to data and analytics that they now spend a lot of time searching for. They will not be wasting that time any more. They’ll be leveraging their technical knowledge in the underwriting aspect of what they do.”
Mr Blaser, Mosaic’s chief executive officer, has so far hired about 35 people. The leadership team includes Lisa Fontanetta, chief of staff; Krishnan Ethirajan, chief operating officer; Oz Haque, chief financial officer; Chris Brown, executive vice-president, syndicated capital management; Charlie Mackay, EVP, active underwriter, Mosaic Syndicate 1609; and Olly Reeves, group chief risk officer.
Dan Haspel, a managing director at Golden Gate Capital, said: ““We are very excited to partner with Mitch and the best-in-class Mosaic team on this new venture.
“This is a very opportune time to invest, as Mosaic’s specialty lines insurance platform will be well positioned to capitalise on the growing demand for additional risk capacity, driven by the hardening rate environment.”
Mosaic has also partnered with Asta Managing Agency, a third-party managing agent at Lloyd’s, which will provide a range of oversight and governance services to Syndicate 1609.