Earlier this month, Lloyd’s reinsurance group and startup Inigo snapped up StarStone Managing Agency and Syndicate 1301. Now, its chief executive and co-founder Richard Watson tells Insurance Times the firm’s plans for 2021 and why people and data are vital
At the end of 2019, when Richard Watson retired and stepped down from his role as chief underwriting officer at Hiscox, he realised that a startup culture was very appealing to him.
Watson served 33 years at Hiscox in various senior roles, however his realisation around the attractiveness of startups came off the back of a three-month trip around Australia and New Zealand with his wife, which he took after his retirement.
He tells Insurance Times: “With a little time and distance, I started to realise that what I really enjoyed in life was working with a small team of motivated, exciting, dynamic, talented people who really made me have to try hard.
“I’m a great believer that life is only so long and that you have really got to love what you do. You have got to be really committed and excited by the prospect. When I lost that, I thought [it was] time for a change.”
This led Watson to approach two of his former Hiscox colleagues – Russell Merrett, former managing director at Hiscox London Market, and Stuart Bridges, the former chief financial officer of both Hiscox and markets operator ICAP – with a business prospect.
The business aims to provide meaningful capacity on a “sustainable and transparent term” to insurers. Inigo specialises in property insurance, terrorism and violence cover, general liability, directors’ and officers’, marine liability and energy liability.
And self-proclaimed history lover Watson says the startup’s name derived from Inigo Jones, his favourite architect, to represent “great design that lasts over time,” quality and building something up from nothing.
Now, with a capital of $800m from a consortium of global investors and its latest acquisition of StarStone Managing Agency and the rights to operate Syndicate 1301 from Enstar under its belt, Watson says the firm has its eyes on executing its business plan.
Hitting the target
Watson says Inigo’s recent acquisition of StarStone acts as the firm’s “main vehicle”.
He continues: “When we raised the money, we created a new corporate member for 2021 and that is being managed by what is now our own managing agency at Lloyd’s of London.”
Watson adds that the infrastructure of StarStone allows Inigo to be its own managing agent.
The purpose of the acquisition, therefore, was to enter the Lloyd’s market without having to use an expensive third-party managing agent, or spend additional time and money setting up a brand new managing agency.
“All of the 1301 liability from 2020 and prior stays with the Enstar Group, so we do not have to worry about the run-off or [past] year liabilities. Our business plan is to underwrite $400m of gross written premium in year one through 1301,” Watson explains.
”What [StarStone] gave us was the immediate ability to apply for business planned approval and be our own managing agency in Lloyd’s.
”We don’t need to do any more acquisitions - that’s given us the infrastructure we need and now it’s all about getting the team in place and underwriting the business.
“It’s all down to executing the plan. We have got the Lloyd’s approval, we have got the infrastructure to do it - it’s all about doing that sensibly in the market.
“I would love to see us hit our year one stamp capacity. We have strong aspirations to grow over the next two or three years, but our primary aim is to do that in Lloyd’s.”
People and data
Watson says he has been “delighted and humbled” by the calibre of underwriters that have agreed to join Inigo.
Inigo currently has around 50 staff members, but it aims to get to 100 by the end of the year.
Watson aims to “keep it really simple” in terms of organisation structure, to maintain a startup culture.
Watson believes that the backbone of the firm will be a combination of people and data, with underwriting being at the forefront of the business.
“Critical to an organisation like ours is having a very high bar for the people that come to work here. But you have got to be prepared [to invest] in understanding the risks that your teams are running,” he adds.
This means investing in building the right databases and recruiting the right people who can run analytics in an intelligent, but collegiate, way.
“The joy of a company like ours is that we can keep it small and [keep] underwriting focused. In this marketplace, that presents an attractive opportunity,” he says.
Post-Covid, Watson says the main challenge for the industry will be responding to risks that cannot be easily aggregated or controlled and that may cause unforeseen losses, such as cyber risk.