The biggest insurance start-up in Bermuda’s history, Convex Group Ltd, is gaining traction and is looking to bolster its team and its Bermudian operation.
That will include hiring and investing in local talent, and a larger office on the island.
The Bermudian-based international specialty insurer and reinsurer last month secured commitments for an additional $1 billion of equity capital, bringing the total raised committed capital to $2.7 billion since it launched in April 2019.
Matt Paskin is chief underwriting officer, reinsurance, and has more than 35 years of industry experience. He was previously chief underwriting officer at XL Catlin Re.
He answered questions from The Royal Gazette that included how the company has coped during the Covid-19 pandemic, its plans for building-out operations in Bermuda, and his thoughts on the emergence of a Class of 2020-2021 in the reinsurance sector.
Question: How has Covid affected Convex in how it operates, and in the types of coverage that are emerging?
Answer: From the outset Convex made a strategic decision to be a tech-enabled business that supported a flexible working environment, so our systems and the business’ mentality were created on this basis. As such, we have been able to move seamlessly to remote working in both Bermuda and London. We have continued to operate efficiently, and our level of service has remained at the level we have always aspired to offer.
We are absolutely looking forward to safely meeting our colleagues, clients, brokers and partners face-to-face when we can do so, as we know that people are missing this form of interaction. In person engagement is vital when developing relationships, trust, empathy and understanding – key cornerstones in our industry – and it is challenging to achieve this all via video calls.
Operationally, Convex launched in May 2019 but underwriting momentum gained more traction after January 1, 2020. Our ambition as a business is to offer something different to our clients and to engage with them in a true partnership based on fairness, dignity and respect. We are guided by our principle of being straightforward and fair and when considering what coverage to write, we always want to ensure we remain client focused and that we maintain a good level of discussion with our target clients. We focus on identifying their needs and understanding how they assess a peril and what their risk appetite is. All this takes place before we then engage and build a solution to mitigate and manage their risk exposure.
Covid-19 has certainly impacted our market, but our journey as a company has and will continue to place the client at the forefront, with no immediate rush for top line growth; and this is true whether we are working from home or in the office.
How will Convex buildout its operations in Bermuda? Are we going to see a larger office here, more staff, and will it be focusing on emerging risks such as cyber, and pandemic-related coverage?
Today, Convex Group has approximately 300 people and our Bermuda office comprises roughly five per cent of our employees. We are now in a position to further bolster our team and capability so we are actively hiring and investing in local talent, with a commitment to build out our Bermudian operation. We have also committed to larger office space, which will accommodate and allow for this growth.
We want to enable and encourage our staff to grow with the company and we are committed to fostering a working environment where everyone has the opportunity to build their career and collectively work toward Convex becoming a leading market in Bermuda. We have also launched a graduate training programme, which we are currently accepting applications for, and a summer internship programme which offer young Bermudians the chance to learn from our team.
From a business perspective, we are looking to grow both our insurance and reinsurance functions in London and Bermuda, with the intention to use the capital available to strengthen both domains dependent on our clients’ needs and appetite.
Bermuda is an established and key re/insurance marketplace for us. It is an excellent place to do business and has certainly become the go-to market of choice for particular products and significant placements in certain areas of the market that we want to be involved in. Its proximity and access to the US is ideal, its regulator is strong and its agility and nimbleness as a marketplace makes it an attractive jurisdiction. Convex is keen to become an important part of Bermuda and to support the broader community.
Do you believe a hardening market could be here for a few years, or could it be more short-lived than has been the case historically?
We will certainly continue to see pressure on pricing over the next few years. Pricing is influenced by experience, exposure and opportunity cost. So far the recognised experience of Covid-19 seems to be dramatically short of exposure and to that end, prices are moving but not as dramatically as if the realistic potential was being recognised. If as we believe, that recognition continues into 2021 and beyond, then the market is likely to continue to harden.
In today’s market, in what ways can Convex benefit from being a large and legacy-free operation?
Convex has grown rapidly and we recognise and appreciate that we are fortunate to be free from legacy systems and processes as it allows us to look forwards rather than backwards. However, we are working in a familiar re/insurance marketplace and we are engaging with clients who know and respect our people and their expertise, and who value us as a practitioner. We’ve seen a change in appetite amongst other reinsurers, which has resulted in Convex’s voice and vision becoming an attractive alternative proposition.
There is increasing talk of a Class of 2020/2021 emerging in the reinsurance world. Do you see Convex as part of that, and in what ways will the new Class be different from those of 2001/02 and 2005? (ie: size of operations and staffing levels, use of technology, types of risk).
Convex’s entrance into the market was proactive; we are building a model that is long-term and considered in order to become a player with sustainable traction, presence and prolonged influence – and this was the case before Covid-19. We are all watching with interest as the new arrivals prepare and we are excited to see how different they will be.
The ILS market has had a good run. But with some ILS capital now ‘trapped’, do you believe there is a shift towards more traditional re/insurance operations, and if so why?
There is a knock-on effect from the loss of ILS and retro capacity which is changing the appetite of some of the conventional capital, leading to a reasonable amount of dislocation. While ILS capacity was trapped and not replenished and traditional capacity remained, then clients became attracted back to the ILS market. I am sure that the ILS capacity hasn’t disappeared – it’s probably just licking its wounds.