Former reinsurer ReAC resurfaces as Calliden
Former failed reinsurer Reisurance Australia Corporation Ltd (ReAC), which went into run-off in 2000 with liabilities of A$470m, has reinvented itself as a general insurer.
The Australian Prudential Regulation Authority (APRA) has approved a licence that allows the company, now renamed Calliden, to re-enter the insurance market. CEO Nick Kirk said the licence approval process had been "very rigorous and intense" but gave Calliden a strong foundation on which to grow its business. He said the Australian market was now more heavily regulated than when ReAC had been licensed, with APRA looking to ensure companies remained viable, were well capitalised and had risk management procedures in place. During its five-year run-off, ReAC commuted 828 client relationships, cancelling 15,614 reinsurance contracts. Calliden was "considering its options" to commute the remaining A$13.5m of outstanding cedant and contract claims, Mr Kirk said. "The sooner outstanding claims are finalised, the better."
Australia's once dynamic inwards reinsurance market suffered a knockout blow in 1999, which resulted in the demise of its largest players. GIO Re, now named Gordian Run-off Ltd, was hit hard by aviation claims and went into run-off with losses of A$743m. Hurricanes in the US and European windstorms forced ReAC into run-off, and New Cap Re went into liquidation with a capital deficiency of more than A$1bn.
Mr Kirk said Calliden was being cautious in its market re-entry, focusing on the stable and "under-serviced" small business sector. "We want to make Calliden the first choice for customised general insurance solutions for affinity groups and associations in the SME sector." Many small businesses had to obtain cover offshore that did not always meet all their needs or contained significant restrictions, he said. Calliden would work solely with 20 to 30 brokers and agents to develop and distribute its products to avoid conflicts between competing distribution channels. Mr Kirk said Calliden aimed to write A$60m of business in year one and have an annual premium income of A$200m within five years.