LIRG targets Barbados reinsurer launch as ILW platform expands

Alternative risk transfer (ART) specialist LIRG is aiming to accelerate growth in industry loss warranties (ILWs) and parametric reinsurance as it lays the groundwork to transition from an MGA and reinsurance intermediary into a reinsurer.

Mark Groenheide (pictured), co-founder, CEO and president of Algorithmic Insurance Services, trading as Latin International Reinsurance Group (LIRG), said the business was founded a year ago to focus on ART, programme development, and helping entrepreneurs bring new insurance ideas to market.

“What I really wanted to do is exactly what we’re doing now: found a boutique organisation focused on two things: alternative risk transfer and programme development, and in particular, parametric and index-based solutions,” he said.

Groenheide previously co-founded NormanMax, the parametric-only Lloyd’s syndicate focused on natural catastrophe risk.

LIRG now has an ILW book running into the hundreds of millions of dollars. Groenheide told GR the firm writes retrocession protection for 70% of the world’s top 50 reinsurers, including a large proportion of the top 10.

The immediate priority is further expansion, he explained.

“We’re renewing a lot of our binders,” he said, with LIRG seeking an additional $200m-$300m for its ILW portfolio.

Groenheide also revealed to GR that the firm had agreed a new binder with Active Re, providing capacity of up to $5m per programme for ILW or index-based risks worldwide.

He said the firm has introduced hybrid ILWs incorporating parametric triggers, designed to accelerate payment where an event makes it clear that an underlying loss threshold will be breached.

“If there’s a no-brainer situation, we don’t need to wait for the index provider,” he said. “In those situations, we’d be able to issue a check quickly.”

While named windstorm remains a significant part of the ILW market, LIRG is also active across cyber, terrorism and marine, alongside parametric retrocession, commodity price index covers, and cloud downtime – protecting against a period when a cloud service, server or data centre is unavailable, and users cannot access remote data or applications.

Groenheide said he expects softening conventional reinsurance conditions to support demand for alternative structures.

“As the market continues to soften, more and more people look for ART as a way to either protect their earnings or diversify,” he said.

The longer-term plan is to move further up the risk chain. LIRG is filing to become a Class II reinsurer in Barbados, with Groenheide targeting an initial capital base of around $25m.

“Our inevitable goal or plan is that we eventually want to become a reinsurer,” he said.

The company may initially use an A-rated fronting partner, before progressively transitioning towards writing through its own balance sheet.

“It’s going to take some time, but hopefully next year, we can make that full transition,” Groenheide added.