Are we witnessing a new wave of Bermuda start-ups?
Despite many predictions that there would be no Bermuda start-ups following Hurricane Katrina, the Class of 2005 is emerging. Companies however will have to be up and running by the middle of November to take advantage of the 1 January renewals season.
First off the block is Jeffrey Greenberg's $1bn capital start-up, which has not yet been formally announced. Initial reports suggest that the company is to be called Validus Reinsurance and Edward Noonan is set to become its CEO. Validus Holdings Ltd, the holding company for the startup reinsurer, has been incorporated in Bermuda. The company will write property catastrophe and other specialty lines.
Greenberg, the former chairman and chief executive of Marsh & McLennan, is setting up with capital from Aquiline Capital Partners, a private-equity firm he and partners are establishing from their base at Venturion Capital in New York.
Until recently, Noonan was the acting CEO and president of the Cayman-based United America Indemnity. He left the job on 7 October. “Mr Noonan has expressed an interest in pursuing, at this time, recently emerging opportunities in the reinsurance industry,” the company said in a press release at the time of his departure. He was appointed acting CEO on 7 February this year, and before that was the president and CEO of American Re Corporation. Expected to join Noonan is the former president of Willis' North American operations, George Reeth.
Another significant announcement was Harbor Point, which will take over the reinsurance subsidiary of Chubb, Chubb Re. With a capitalisation of $1.5bn, the new global reinsurance company is also expected to write other new business as it has been set up by the same Marsh & McLennan $3bn Trident private equity funds, which helped set up Axis Capital, Ace, XL Capital and Mid Ocean Re.
John Berger, who is currently president and CEO of Chubb Re, will become president and CEO of Harbor Point. Harbor Point will acquire Chubb Re's ongoing business. Trident III, LP, a private equity fund with $1.1bn in capital managed by Stone Point Capital, and The Chubb Corporation are the lead investors in the new entity.
Last but by no means least; Amlin has announced it will launch Amlin Bermuda with a capitalisation level of $1bn. The Lloyd's syndicate had publicised its intentions to launch a Bermuda reinsurer in its interim results, but is doing this earlier than expected. “This is an opportune time to make this move”, said Amlin CEO Charles Philipps. “We plan for it to start trading in December this year and in addition to Amlin Bermuda we are increasing the capacity of Syndicate 2001 by 17.6% to £1bn.”
With no word yet on who will head the company, the source of its core team is known. “We are planning to send our own team out there from London on the basis that we want this company to have an Amlin stamp on it,” Philipps explains. “In the early days we expect to be transferring three or four employees out there in time for the first renewal season.”
A market source has also revealed that a forth reinsurer is in the pipeline. To be backed by Cypress Group and Capital Z, the new operation will have a capitalisation of between $700m and $1bn and will be headed by Richard Brindle, formerly of Tarquin.
In total, only two or three new companies are expected to successfully get off the ground in contrast to the dozen or more reinsurance start-ups being founded on the Island after the 9/11 terrorist attacks and Hurricane Andrew in 1992.