Bermuda:Re+ILS brings you the third instalment of its Bermuda’s Risk Transfer Hall of Fame—in every issue we profile five individuals who have contributed significantly to Bermuda’s journey as a global risk transfer hub.
In the October 2019 issue of Bermuda:Re+ILS, we launched Bermuda’s Risk Transfer Hall of Fame. In every issue we will profile five individuals who have contributed significantly to Bermuda’s journey as a global risk transfer hub.
The launch marked the Bermuda Monetary Authority celebrating its 50th birthday—and the fact that it is some five decades since Fred Reiss started his pioneering work on Bermuda that led to the formation of the first captive and the start of what has become a global industry and key part of the worldwide re/insurance sector.
In those 50 years many other executives have contributed to Bermuda’s growth and development, following in the footsteps of Reiss in helping drive forward innovation while making huge contributions that have resulted in Bermuda’s becoming the world capital of risk transfer.
That is why this publication has created Bermuda’s Risk Transfer Hall of Fame.
In each issue, we will celebrate the achievements of five individuals who have contributed to this journey through Bermuda’s history. They may be still working or long retired. If they have contributed significantly to Bermuda’s journey, we will consider recognising them.
The individuals we choose will be selected based on a quarterly poll of our readers, which will encourage them to suggest names they believe are worthy of recognition, and the thoughts and judgements of our editorial panel. We will profile five new names in every issue going forward.
This issue features the third batch of executives, featuring five more industry legends.
But this is an ongoing process. If you wish to suggest someone you believe should be recognised for his or her contribution to Bermuda’s risk transfer market, look out for our poll or simply get in touch along with a couple of lines on your reasons.
We hope the individuals profiled on the following pages inspire readers and remind everyone that any individual can make such a difference if they have the drive and innovative skills. We look forward to hearing your future nominations.
Stephen Catlin is a reinsurance veteran who started off as a teaboy at Lloyd’s of London in the 1970s. He is now one of the most recognisable people in the re/insurance market—with a name that commands a great deal of respect from his peers.
Catlin turned down his family’s initial suggestion that he become a dentist, preferring instead to try his hand at insurance. He started off at Anton Underwriting Agency in 1973, before founding Catlin Underwriting Agencies (CUA) in 1984, almost literally on a shoestring, at Lloyd’s of London. He grew that business through one of the most stressful periods in the history of the Lloyd’s market, as it came close to collapse in 1990. CUA avoided the missteps that plagued the main market.
CUA’s first Lloyd’s syndicate (Syndicate 1003) began underwriting in 1985 on behalf of Lloyd’s Names with a premium capacity of £6 million. Syndicate 1003 grew successfully during its early years, outperforming the Lloyd’s market as a whole, particularly during the period from 1988 to 1992 when Lloyd’s reported huge financial losses.
By its 10th anniversary in 1995, Syndicate 1003 had increased its premium capacity to £170 million. During that year, the company received a substantial private equity investment from Western General Insurance Company of Bermuda, which was controlled by the Pritzker family.
The investment allowed CUA to establish a second Lloyd’s syndicate (Syndicate 2003), which underwrote coverage in parallel with the established Syndicate 1003. While Syndicate 1003 continued to write coverage on behalf of capital supplied by traditional Lloyd’s Names, Syndicate 2003 was backed by capital solely supplied by CUA.
In 1999, CUA incorporated a holding company in Bermuda, originally called Catlin Westgen Holding and later renamed Catlin Group Limited. Catlin was the first of the traditional Lloyd’s of London managing agents to establish a holding company in Bermuda, a strategic move later copied by several of its peers.
The company was not badly impacted by the tragic events of 9/11 2001 but was able to access private equity to help it to continue its steady growth. From May 2000 to January 2003 Catlin himself served as chairman of the Lloyd’s Market Association, the trade association representing the interests of Lloyd’s underwriters and underwriting agents.
From 2002 to 2004 Catlin was a member of the Council of Lloyd’s and from January 2003 to December 2006 he was a member of the Lloyd’s Franchise Board. From 2010 to 2011 Catlin was the president of the Insurance Institute of London.
In 2006 CUA acquired Wellington and in 2007 Catlin became the first Lloyd’s insurer to open an office in China.
In 2011 Ernst & Young named Catlin UK entrepreneur of the year, and in the same year CUA negotiated a strategic partnership with China Re, a P/C reinsurer 85 percent owned by China’s Ministry of Finance. In January 2015 CUA began managing a standalone syndicate formed by China Re.
In 2015 CUA was acquired by XL, which was then purchased by AXA in 2018. Catlin retired in 2017.
As with so many others who retire from this market, however, the pull of re/insurance remained strong. In 2019 he created a new international specialty re/insurer operating in Bermuda and London, named Convex Group, alongside fellow former Catlin executive Paul Brand.
Convex raised $1.8 billion of initial committed capital and was initially capitalised with approximately $1.6 billion of common shareholders’ equity, with access to further capital as the business expands, with invested capital from the Convex management team, Onex Partners V, Onex Corporation’s large-cap private equity fund, PSP Investments and a consortium of co-investors.
In a career spanning some 48 years, Anthony Fox has risen through the ranks from his beginnings as a junior reinsurance broker technician at Leslie & Godwin in London, to chairman and chief executive officer of Aon in Bermuda.
Fox joined Aon Bermuda in April 2016 to lead its reinsurance operations, while also serving as a member of its UK leadership team. By that time he was already a well known figure in Bermuda, having come to the island in January 2002 as deputy chairman of John B Collins Associates, charged with setting up the company’s operation on the Island.
There, he became chairman of the Bermuda Insurance and Reinsurance Broker Association’s (BIRBA) sub-committee.
He spent seven years with John B Collins, before joining Guy Carpenter in Bermuda in April 2009. He stayed with Guy Carpenter for a similar period, serving as deputy chairman and CEO.
By the time he moved to Bermuda he had already worked his way through the ranks to the most senior levels of management in London. From his first job as a junior reinsurance broker technician, he moved to Carter, Wilkes & Fane, where he served as a senior account executive and broker, handling catastrophe, pro rata and per risk treaties and focusing on the North American business.
Fox’s leadership qualities were already becoming clear, and by 1981 he had been given an opportunity at Sten Re UK, where he served as a director. He again headed the North American business, building up a sizeable portfolio from scratch in a stint lasting 18 months. It was an early experience of the joys of building a business, an experience he acquired a taste for, and has repeated a number of times in his career.
His next stop was E.W. Blanch UK, where he spent around seven years, between 1982 and 1989, having now ascended to the position of managing director. He joined the firm as a startup and again built the business from the ground up, growing revenues to in excess of £3 million, with profits of £1.1 million.
In 1986 the company achieved Lloyd’s broker status, with Fox responsible for London and European operations, while also assisting in most US production activities.
In 1989 Fox took his business-building expertise to the next level. Willis Faber had acquired E.W. Blanch UK, so Fox and another partner formed their own company, Fox, Craig & Co. Fox served as managing director until his own company also became the subject of an acquisition. Bradstock Group, where he remained until his move to Bermuda in 2002, acquired Fox Craig & Co in October 1993.
Fox started life at Bradstock as managing director of the North American division for subsidiary Bradstock Blunt & Crawley. By 1996 he had risen to the role of chairman of that business, responsible for running the Lloyd’s of London reinsurance broker and all its broking and marketing activities.
In 1998 he became deputy chairman of Bradstock Group, responsible for reinsurance broking. Business-building was again at the fore, with new offices and joint ventures launched in Kuala Lumpur, Singapore, Australia and Turkey. In 2000 he became chairman and CEO of the business, before he was snapped up by John B Collins, which was pondering its move on Bermuda.
Marc Grandisson has spent the majority of his career at Arch, having worked for nearly 20 years at the group in various different roles.
President and chief operations officer of Arch Capital Group (ACGL) since January 2016, and chief executive officer since March 2018, Grandisson was also named deputy chair of the Association of Bermuda Insurers & Reinsurers (ABIR) for 2019/20 in January 2019. He started his journey at Arch Reinsurance in October 2001, as chief actuary.
Educated at the Wharton School of the University of Pennsylvania and Université Laval in Canada, Grandisson spent the first few years of his career holding various positions with the Berkshire Hathaway Group, F&G Re and Tillinghast/Towers Perrin. But he soon found his way to Arch where he was to spend so many years and rise to the top post.
During his ascent through the ranks Grandisson took on roles as chief underwriting officer and actuary, and then president and chief operating officer, at Arch Re, before he became president and chief executive officer of that business in April 2004, one month after Arch had launched Watford Re.
He held that role for a little under two years, before becoming chairman and chief executive officer of Arch Worldwide Reinsurance Group in November 2005, a position he held for a decade. His appointment as president and chief operating officer of ACGL gave him responsibility for all the company’s operating units, including the insurance, reinsurance and mortgages.
Constantine Iordanou, who he replaced as ACGL’s CEO, had given Grandisson considerable credit for establishing Arch’s reputation as a force in the reinsurance and mortgage markets.
Grandisson described the approach he helped create at Arch by saying: “We allocate capital where the market needs it most and is willing to provide a fair return, rather than where we allocated capital five years ago.”
It avoided competing in markets where there was a “frenzy of excess capital”, he said, preferring to allocate capital in areas where it saw opportunities and dislocations, without being clouded by preconceived ideas.
He emphasised Arch’s nimbleness of approach, contrasting it with the “traditional committee approach” at some competitors, which made for a cumbersome decision-making process that led to opportunities being lost before a decision had been taken to act on them.
The launch of Watford Re illustrates Arch’s innovative approach. A dislocation between the return on equity (ROE) expectations at insurers versus reinsurers was seen as an impediment to the ceding of risk. Watford Re aimed to overcome the issue by enhancing ROE generated from underwriting, buoying up the net position through an investment strategy that assumes more risk than the industry’s traditional high grade fixed income strategies.
“Within the Arch structure we have a certain level of leverage on underwriting and investment, with the emphasis on the underwriting side, supported by our investments,” Grandisson explained at the time.
“Watford Re recasts the relative balancing of risk, taking more investment risk and less underwriting risk. There is an area where Watford Re can get to 15-plus ROE, while presenting clients with an underwriting position that they can feel comfortable with,” he said.
Grandisson was also involved in Arch’s innovative approach in working with government-sponsored entities (GSEs) such as Fannie Mae and Freddie Mac, to expand the insurance component of its mortgage credit risk transfer programme.
Arch worked closely with the GSEs and the Federal Housing Finance Agency in an arrangement that created a considerable amount of revenue not only for Arch, but for the wider Bermuda market.
James Stanard cemented his reputation in Bermuda’s reinsurance industry as founder, chairman and chief executive officer of RenaissanceRe. In his time at the helm of RenRe he grew its market value from $141 million in 1993 to over $3 billion by the time he left in 2005.
Since then, Stanard’s reputation has grown even further. In 2008 he was back with the latest new business: TigerRisk Partners, which he has helped to build into one of the most reputable re/insurance brokers in the world.
TigerRisk is a privately-held reinsurance broker and risk/capital management advisor that it says focuses on challenging the status quo, where customers and reinsurance partners benefit from its market knowledge and analytics.
RenRe and TigerRisk are both heavyweights. RenRe is one of the best known names in Bermuda’s reinsurance industry and a worldwide leader in property catastrophe reinsurance, achieving the highest return on equity in the insurance industry in each of 10 consecutive years during Stanard’s tenure.
TigerRisk brings a considerable air of exclusivity to its business. It focuses on a limited number of large clients, rather than attempting to grow its market share by working with as many clients as it can. TigerRisk believes that, as industry consolidation continues and the top re/insurance firms grow ever larger, top professionals will increasingly look for a personal touch, and the company aims to deliver just that for its clients.
“In a world of massive organisations with a vast array of services, there is room for a specialised firm with the highest levels of integrity and professionalism, and senior level attention to clients and relationships,” it says on its website.
TigerRisk is credited with being one of the first companies to fully appreciate how changes to the risk transfer landscape and the requirements of cedants was transforming the industry. One way it rode this trend was with the formation of Panthera Re in 2018. The Bermuda-domiciled vehicle, a TigerRisk subsidiary, facilitates access to capital markets for TigerRisk’s re/insurance clients.
Stanard himself is described as cerebral, soft-spoken and reserved, serving as the actuarial representative of TigerRisk’s founding partnership; the business was co-founded by Rod Fox. He was educated at Lehigh University in Pennsylvania, where he studied mathematics, and received his PhD in finance from New York University.
During his 35 years in the re/insurance industry, Stanard has held underwriting and actuarial positions at Prudential, Chubb, and INA, and was also involved in the founding of F&G Re, where he served as executive vice president from 1983 to 1990.
From 1990 to 1993 Stanard served as the executive vice president of USF&G, with responsibility for underwriting and claims. It was here that he started to build his reputation as a leader of the turnaround team before he moved to RenRe.
As well as serving as chairman of TigerRisk, Stanard is chairman or director at several privately-held companies, including F&S Ventures, which he launched, also in partnership with Fox.
He is a trustee of the Bermuda Institute of Ocean Sciences and a director of Habitat for Humanity International.
Frank Majors was the founder of Nephila Capital, and is currently co-chief executive officer and president of Nephila Holdings, as well as a director of Nephila Capital. His main focus is on risk management and strategy, where he has been deeply involved in the evolution of one of the great success stories in the insurance-linked securities (ILS) market. As of January 1, 2020, Nephila manages approximately $10.4 billion of assets under management for geographically diverse institutional investors.
Majors was educated at Vanderbilt and the Owen Graduate School of Management, where he studied economics and finance, respectively. He founded Nephila Capital, along with Greg Hagood, in 1998. It was originally founded in London as part of Willis, but relocated to Bermuda in 1999 to deepen relationships in the world’s largest catastrophe reinsurance centre.
Nephila was to become almost synonymous with the ILS market that it did much to promote and bring into the mainstream. Its success brought it to the attention of Markel, which in August 2018 acquired Nephila. At the time, Markel described Nephila as “the pre-eminent ILS manager in the world”.
Nephila had been the first institution to focus on the convergence of catastrophe reinsurance and weather risk transfer markets with capital markets, as well as the first provider of alternative capital to the reinsurance market. Its success was not, however, exclusively reliant on the growth of the ILS market: there was also a human element.
When Markel announced the acquisition it said its interest in Nephila owed much to its “deep and long-term investor relationships, tremendous energy, creativity and innovation in matching investor risk appetites with client needs”.
It also praised the “ incredibly experienced and talented management team” that Nephila had built, all of which is a ringing endorsement of what Majors and Hagood had built.
A different ingredient
The story of Majors’ career should be understood in the context of the emergence of ILS as a crucial component of the re/insurance market. In 2014 Majors said ILS was helping to de-lever the industry significantly. At a time when some insurance executives were drawing uncomfortable parallels with the mortgage-backed securities (MBS) market, which had sat in the eye of the 2008 financial crisis, Majors was quick to stress the important differences between these types of securities.
“ILS is very different from mortgage securitisation, which was a process of adding leverage. ILS really is taking a risk off levered balance sheets on to unlevered balance sheets,” Majors said, although he acknowledged that such securities had the potential to be abused as the market developed and matured.
“This development of alternative capital does have the possibility for concern, or abuse, or misuse, or being taken too far in the future,” he said.
Majors was instrumental in the creation of the first Lloyd’s syndicate to be wholly backed by ILS capital: in 2013 Asta Managing Agency received approval from Lloyd’s to establish syndicate 2357, backed by Nephila Capital, with Majors serving as active underwriter.
Syndicate 2357 focused on catastrophe excess of loss reinsurance for companies that were unhappy with coverage provided by the traditional reinsurance market. Today its gross written premium is over $500 million.
Frank Majors, James Stanard, Stephen Caitlin, Marc Grandisson, Anthony Fox