There's a new kid on the re/insurance block, but at the moment it seems a little shy.
In the fourth quarter of 2001 and early 2002, the re/insurance industry saw what was probably the greatest ingress of capital into its coffers. New re/insurers opened their doors, existing players boosted their operations with funds from an eager investment community, and the fears immediately post-9/11 that the industry was facing meltdown dissipated.But my, we knew the new capital was here. The 'class of 2001' arrived with a fanfare and marching band, and have not been too modest to hide their lights under bushels ever since. By contrast, September saw the arrival of a new sibling for the Bermudian businesses, and yet this infant is still to bawl its presence to the world.
Class actQuanta Reinsurance Ltd initially incorporated in June of this year - the only class 4 to set up in Bermuda in 2003. A class 4 re/insurer is authorised to underwrite direct excess liability business and property catastrophe reinsurance, against minimum capital and surplus of $100m. But things went quiet, and it wasn't until September, following rumours of a new Bermuda-based start-up headed by former CNA executives, that US investment bank Friedman, Billings, Ramsey Group Inc (FBR) announced that it had closed a $550m stock offering for Quanta Capital Holdings Ltd. The private offering netted Quanta about $505m, according to an FBR statement, which also revealed that Tobey J Russ was Chairman, President and CEO of the newcomer. In the statement, Russ said: "The net proceeds from this offering will be used to capitalise our corporate entities and establish initial operations; to purchase US licensed insurance and reinsurance shells; to acquire Environmental Strategies Corp; and to fund working capital, as well as for other corporate purposes. We believe that our technical expertise will allow us to write a diverse portfolio of specialty lines that have the potential to provide underwriting profit even through the market's cycles. Our goal is to develop the most technically advanced risk underwriting and assessment platform in the insurance industry." Russ came from Chubb, where he held a very senior position with Chubb Financial Solutions. According to local media reports in Bermuda, Quanta Reinsurance Ltd is headed by David Whiting, a former Swiss Re executive.In the early stages, and following the example set by its slightly older Bermudian competitors, Quanta received an A- (excellent) rating from AM Best Co, assigned to Quanta Reinsurance Ltd and Quanta Reinsurance US Ltd. Again, like several of the new wave Bermudians, Quanta had already decided to take the 'four pillar' approach of operations in Bermuda, the US, the UK and Ireland.
Core of US operationsEnvironmental Strategies, an environmental engineering, remediation risk management and consulting outfit, was duly purchased, and it now forms the core of the US operations. Quanta US Holdings Inc is based in New York, and focuses on professional liability, environmental liability, surety, fidelity and crime, marine and aviation, and structured products business. The Bermuda operations, currently based in Church Street in Hamilton, focus on reinsurance, according to a spokesman for Quanta, but, he said, because the organisation is currently applying for licenses and is "just getting underway", it is not releasing any more information for the time-being.Nevertheless, some information has floated to the surface about the newcomer, mainly because CNA has shown its displeasure at losing a slug of its employees to Quanta by first suing Thomas Taylor, a former senior executive who had joined Quanta as CEO of its US operations, and then several of its former professional liability underwriting team who had left for the new operation. Taylor, who had left CNA early in 2001, agreed to leave Quanta and not form any business relationships with CNA employees until three years after his leaving date from CNA, a term which expires next February.
Further acquisitions?There are currently signs that Quanta may be in the process of making other acquisitions to augment its US operations, and it is already thought to number several dozen employees, though these have not been verified by Quanta. The public statements it has made about its European business being formed around two operations, one in the UK and one in Ireland, would indicate that it is planning to take the same route as other new Bermudians such as Axis and AWAC, and write European business through a licensed Irish company with a London-based branch office to access London market business. At time of writing, the UK regulator, the Financial Services Authority, confirmed that Quanta is not licensed as an insurer or reinsurer in the UK, though it does not comment on license applications.With renewals on the way, and a slug of capacity available for US casualty business, it is unlikely that Quanta will continue its modest approach to the industry for much longer.By Sarah GoddardSarah Goddard is the editor of Global Reinsurance.