The above companies were all launched in the immediate aftermath of the 9/11 attacks to take advantage of the rapidly hardening specialty and reinsurance markets post-2001.
Aspen, Arch, Axis, Endurance, the short-lived Goshawk Re, Montpelier Re, Platinum and Olympus Re. The above companies were all launched in the immediate aftermath of the 9/11 attacks to take advantage of the rapidly hardening specialty and reinsurance markets post-2001.
And all of them chose Bermuda – rather than Lloyd’s/London – as their home, highlighting the attractiveness of the island as a “mousetrap” for (re)insurance.
Indeed, Aspen was even born by carving out the reinsurance business of Lloyd’s blue-chip carrier, Wellington, in a move that weakened its franchise and ultimately enabled its takeover by Catlin Group five years later.
In contrast, Lloyd’s struggled to attract “Class of 2001” start-up capital and instead faced an onslaught of criticism from some of its existing businesses (remember the “gang of six”?) about its structures and costs.
Sound familiar?
Well, today’s news that former Hiscox head of underwriting Richard Watson has launched post-Covid-19 start-up Inigo with $800mn of private equity is a tremendous boost for Lloyd’s and its CEO John Neal.
As well as choosing Lloyd’s as Inigo’s base, Watson also pointedly praised Neal in the company’s launch statement.
“Inigo has chosen London as its principal base since it regards the overall insurance ecosystem offered by Lloyd’s as exceptionally attractive and believes it will best support the growth and development of the new syndicate,” explained the firm today.
Watson added: “We are fully supportive of the direction that John Neal, Lloyd’s CEO, is taking the market, making it a more attractive and efficient place in which to trade. For a company like ours, entirely focused on underwriting, London also has the depth of young talent we need to develop the analytical and data-led approach that is at the core of what we hope to do.”
As a reminder, Neal returned to Lloyd’s two years as CEO with the market undergoing similar levels of hand-wringing, existentialist doubt as it experienced in the aftermath of the losses from the 1997-2001 soft market.
But he arrived with a reforming zeal and an upbeat mien. In reality, a number of his plans over the past 12 months have been put on ice, in part because of Covid-19. But there is still now a collectivist desire to reduce costs, improve underwriting standards and challenge outdated shibboleths.
Inigo’s launch today is, therefore, an encouraging validation of that approach, the market and also London’s “centre of excellence” resources. There are also likely to be one or two others – not least Mosaic, which The Insurer first revealed in October – which will act as a further vote of confidence in enterprise capital’s belief in London.
Of course, this is not to say Bermuda’s attractions have diminished. It still has substantial regulatory, legal and tax advantages and a supporting infrastructure that makes it a compelling home. It is why other “Class of 2020” start-ups – such as Conduit and Vantage – have chosen the island as their base, as did Convex (now super-charged with $2.7bn of equity) last year.
But the fact that one of biggest British insurance start-ups in the past decade has chosen the 334-year-old market should be taken as a sign of encouragement that London also remains an attractive place to underwrite despite the enervating losses, high costs and failing businesses which Neal inherited when he returned to Lime Street two years ago…
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