Sources said that other buyout firms evaluating the scope to exploit sector disruption created by Covid-19 and pre-existing dynamics include sector stalwarts Stone Point and Aquiline. Family offices are also understood to be open to chances to support experienced management teams.
To date, financial investors are understood to have been holding preliminary discussions with senior sector figures and investment bankers to weigh up the prospects of capitalising on presumed rate rises. Such moves could involve full start-ups or management buy-ins to existing businesses.
This publication is not aware of any PE houses which have firmly partnered up with management teams, with most taking a "wait-and-see" approach given the degree of uncertainty.
Sources have flagged a number of senior leaders in the sector not currently in positions considered "backable".
These include former Axa XL CEO Greg Hendrick, who left his position in February and is free of restrictions in Q4, and former Validus CEO Ed Noonan, who is not thought to be interested in another CEO role.
Former Ascot and Neon CEO Martin Reith is another possibility, with Hiscox's recently retired group CUO Richard Watson also touted as a credible leader.
Former Talbot CEO and most recently global head of specialty at AIG, Peter Bilsby is another available industry leader who could potentially attract capital, sources said.
Axa XL's recently departed CEO of global specialty Neil Robertson is also viewed by some as a possible leader for a start-up venture.
One senior source said that there is scepticism around a pure reinsurance start-up of the kind seen after Hurricane Katrina, but intimated that there could be appetite for Bermuda-domiciled businesses with insurance and reinsurance arms – essentially smaller versions of 2019 start-up Convex.
Another senior market source said that there is time to allow the degree of dislocation to clarify itself over the next couple of months before a decision needs to be taken, with a "greenfield" start-up in Bermuda executable in only around two months.
Financial sponsors have had relatively limited involvement in the global specialty, reinsurance and US P&C market over the past decade as valuations have typically run ahead of required levels for acquisitions and start-ups have been scarce.
There is a high degree of uncertainty around the extent of market opportunity that will emerge from Covid-19, with the event effectively a live catastrophe of uncertain duration and severity.
In addition, the market is struggling to reconcile the increased cost of risk resulting from underwriting and investment losses with the downward pressure on premiums owing to reduced ability to pay and reduced exposures.
However, there is a school of thought which suggests that rates in big-ticket insurance could surge. In the first quarter, London market rates in the aggregate were up in the high single digits to low double digits, and some believe this could top 20 percent when the Covid-19 effects fully feed through from the beginning of 2021 onwards.
All parties were contacted for comment.
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