Bermuda:Re+ILS brings you the first instalment of 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. Here is how the process works.
As the Bermuda Monetary Authority celebrates its 50th birthday, it is also 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 a key part of the re/insurance sector globally.
The name Reiss is widely known and celebrated on Bermuda, but many other ground-breaking executives have followed in his footsteps driving forward innovation and making huge contributions that have resulted in Bermuda’s becoming arguably the world capital of risk transfer.
As Bermuda has grown as a global force in reinsurance, speciality lines, captives, insurance-linked securities (ILS), collateral re and, most recently, insurtech, it has often been thanks to the hard work, dedication and creative thinking of innovative leaders with the courage to do new things. That has created the buoyant risk transfer market Bermuda represents today.
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 very much working or long retired. If they 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 worthy of recognition, and the thoughts and judgements of our editorial panel. We will profile five new names in every forthcoming issue.
We start the process in this issue with five true 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, please look out for our poll or get in touch along with a couple of lines giving your reasons for the nomination.
We hope the individuals profiled on the following pages will inspire readers and remind everyone that any individual can make a difference if they have the drive and motivation. We look forward to hearing your future nominations.
Michael A. Butt is a leading figure in the re/insurance industry and has been an influential player in the Bermuda market for many years and through a career of many different companies.
In a career that has spanned five decades, he has built businesses and markets and been a passionate voice on the issues of climate change and climate-related risks.
Butt has been the head of eight different companies over his career and now holds the position of chairman for AXIS Capital Holdings and non-executive chairman of AXIS Specialty and chairman for AXIS Specialty Holdings Bermuda (both subsidiaries of AXIS Capital Holdings).
He has been chairman of the board of AXIS Capital Holdings since September 2002.
In a rich and varied career in re/insurance Butt has been chairman of the Association of Bermuda Insurers & Reinsurers (ABIR); chairman and CEO at Eagle Star Holdings; chairman at Sedgwick Group; chairman and CEO for Eagle Star Insurance Co; president and CEO of Mid Ocean; and a trustee of the Bermuda Institute of Ocean Sciences.
In January 2019 the International Insurance Society (IIS) announced that Butt was the 2019 Insurance Hall of Fame Laureate. He was honoured at a Gala Awards dinner at the IIS Global Insurance Forum in Singapore in June.
Butt has more than 45 years of insurance industry experience. From 1982 to 1986, he was the chairman of Sedgwick and vice chairman of the Sedgwick Group in the UK. From 1987 to 1992, Butt served as chairman and CEO of Eagle Star Holdings and Eagle Star Insurance Company. He was on the board of the Farmers Insurance Group in California and BAT Industries in London from 1987 to 1991.
Butt served as a director of Phoenix Securities in London (1991–1992); Marceau Investissements in Paris (1987–1992); and Istituto Nazionale delle Assicurazioni in Rome (1994–1998).
He was president and CEO of Mid Ocean in Hamilton, Bermuda from 1993 until 1998 when it was acquired by XL Capital. From 1998 to 2002, he was a director of XL Capital.
Butt was the chairman of the INSEAD International Council from 1988 to 1991 and was a member of the INSEAD Board in France from 1982 to 2010. He was the chairman of the Development Capital Campaign from 2002 to 2009. He has been a member and contributor of The Geneva Association since 1987.
He was vice chairman of the Association of Bermuda International Companies, and chairman of the ABIR from 2008 to 2009. He was a director of Butterfield in Bermuda from 1996 to 2002. Butt was a member of the board of trustees of the Bermuda Biological Station for Research from 1996 to 2007.
Butt has an MA in history from Magdalen College, Oxford, and an MBA from INSEAD.
In June 2011, he was appointed as an Officer of the Most Excellent Order of the British Empire (OBE).
He lives in Bermuda and is a member of many of the Island’s clubs.
One of those nominating Butt said: “Michael has made a broad, encompassing and lasting contribution to the risk transfer industry and should rightly be seen as a leader, innovator and visionary.
“He has been instrumental in establishing Bermuda as one of the world’s foremost global hubs for risk transfer.”
If anyone deserves to be called a re/insurance industry legend on Bermuda, Brian Duperreault is very high on the list of possible contenders. He’s also a man who keeps retiring—and then discovering interesting new things to do which means that he has to ‘un-retire’.
Born on Bermuda, Duperreault is now the president, chief executive officer and a director of insurance giant American International Group, (AIG). An American citizen, he served in the US Army at the time of the Vietnam War.
Joining AIG was in a way a return to his origins, as Duperreault held various senior executive positions with AIG and its affiliates from 1973 to 1994. In 1994 he moved to become CEO of ACE, a position that he held for a decade until 2004. He then served for two years as non-executive chairman of ACE, before retiring for the first time in 2006.
In 2008 he was persuaded to come back from retirement and served as president and CEO of Marsh & McLennan Companies from 2008 to 2012, leading the company out of one of the most difficult periods of its existence, including allegations of bid-rigging. He steadied the company and rebuilt its reputation—and then retired again.
However, once again it did not stick and after he became fascinated by the use of technology in the form of cutting-edge data analytics and data science in insurance, Duperreault teamed up with the principals of Two Sigma and co-founded Hamilton Insurance Group, a Bermuda-based holding company of property and casualty insurance and reinsurance operations in Bermuda, the US and the UK in December 2013. He became first its CEO and then both chairman and CEO.
Duperreault left Hamilton for his current position at AIG in May 2017, where he has worked hard to turn the company around after a period of bad financial performance as it struggled to return to the boom times it enjoyed before the 2008 financial crash.
Duperreault has built up a reputation as an innovative and progressive leader in the world of re/insurance, as was demonstrated by the keynote speech he gave when he was CEO of Hamilton Group, at the Bermuda Captive Conference in June 2014. In this speech he pointed out that while women make up half the workforce and come to that workforce armed with diplomas from the finest business schools, according to the research firm Catalyst, fewer than 5 percent of CEOs in Fortune 500 and Fortune 1000 companies are women.
As Duperreault pointed out: “In our industry, the figures are even worse—just 1.3 percent of CEOs in finance and insurance are women. According to a large number of recent studies, a variety of factors are at play.
“The interesting thing is they’re interconnected, and each has an impact on the other. One factor is the gender bias we all bring to our jobs. Whether we’re male or female, we have a concept of what we think that means. And it affects how we perceive and interact with each other.
“Often, that concept involves stereotypes. As much as we’d like to think we can shake them off, those stereotypes are embedded by our upbringing and by our cultures. When you add race and ethnicity, you add more layers of stereotypes.
“We use words like ‘aggressive’, ‘decisive’ and ‘independent’ to describe men. When we see that type of behaviour, we recognise it as male. We use words like ‘helpful’, ‘sympathetic’ and ‘understanding’ to describe women.”
Those who nominated Duperreault as a leader for this edition were effusive in their praise of him. One respondent said that he was a “Bermuda-born reinsurance legend”, while another said: “Brian has tirelessly dedicated his entire career to developing the re/insurance industry in Bermuda. He is a true advocate of Bermuda’s value proposition.”
Duperreault is well known for his contribution towards charitable causes. On Bermuda he was chairman of The Council Partners Charitable Trust, The Centre on Philanthropy, the Bermuda Institute of Ocean Sciences, and other Bermuda non-profits.
In 2004 he founded the Duperreault Fellowship, which supports the professional development of therapists and clinicians.
It was established to prevent and treat substance abuse by providing funding for individuals to master their skills and become part of a well-trained group of human service professionals in Bermuda to provide the highest quality of alcohol and drug-related services.
Brian O’Hara is one of Bermuda’s best known re/insurance industry veterans. Now retired, he remains active, serving as a board director for a number of companies, on Bermuda and off it, and he remains a distinctive face with passionate views on the market—and on the Island.
Brought up in California, O’Hara began his insurance career in San Francisco with The Royal Insurance Company and Employers’ Reinsurance Company.
He is best known for his time at XL, which grew significantly under his watch. In 1986, he joined XL Insurance (Bermuda) as its founding president and chief operating officer.
O’Hara then built a long and distinguished career in insurance. He served as president and CEO of the company from 1994 until 2008 and as chairman of XL’s board of directors from 2008 to 2009, after which he retired.
Under his leadership, by 2006 XL had a revenue of $9.8 billion and total assets of $59.3 billion, building it into one of the top insurers in the world and one that kept a close eye on new developments in the market, such as technology.
After O’Hara’s retirement XL’s path developed further. In May 2015, the company bought Catlin Group for $4.1 billion in cash and stock and in July 2016, the company changed its domicile from Ireland to Bermuda and its name changed from XL Group plc to XL Group Ltd.
In September 2018, AXA acquired XL Group for $15 billion and renamed the division AXA XL, an acquisition that surprised many in the industry at the time.
O’Hara is a former chairman of the Association of Bermuda Insurers and Reinsurers (ABIR) and is a director/member of the executive committee of the US Chamber of Commerce. O’Hara is director emeritus of the School of Risk Management at St. John’s University, a director of the Roundtable Private Equity Partnership and a member of the senior advisory board of Oliver Wyman.
He has a BSc in economics from Santa Clara University, a Chartered Property Casualty Underwriter designation, and an Honorary doctorate in commercial science from St. John’s University.
Technology still attracts O’Hara, as was shown in May 2018 when he was appointed to the board of insurtech startup Envelop Risk.
He commented at the time: “I am honoured to serve on the Envelop Risk board of directors. Envelop Risk is transforming the cyber insurance and reinsurance market through its innovative AI-based technology that addresses the complexity of cyber risk to more effectively quantify risk and tailor products.”
Those who nominated O’Hara for a place in Bermuda:Re+ILS’s Hall of Fame were effusive in their praise. One reader described him as: “XL’s first employee who later became CEO of the company. Brian’s vision in building XL and his commitment to the Bermuda market throughout his career have helped the Island to retain its prominence as a re/insurance domicile of choice.”
Another reader said that during O’Hara’s career with XL “he grew one of the great risk transfer companies on the Island”.
A third said: “Brian O’Hara essentially helped form the excess casualty market back in the 1980s when XL was founded. He served as president and CEO of XL from 1994 until 2008, and as chairman of XL’s board of directors from 2008 to 2009.
“He joined XL Insurance (Bermuda) as its founding president and chief operating officer in 1986 and served as chairman of the ABIR.”
Andre Perez is the founder of Horseshoe Group and is in charge of the Group’s operations as well as responsible for the development of the insurance management and consulting activities. In addition, he has oversight of the Group’s transformer, Horseshoe Re.
Perez has more than 25 years of experience in insurance, reinsurance and alternative risk transfer. He has a demonstrated track record and expertise in general management and business development, setting up startup operations and joint ventures, P&C underwriting, pricing, actuarial valuations and dynamic financial analysis, due diligence and acquisitions, strategic planning and reinsurance product design.
Prior to setting up Horseshoe Group, he held various positions in both insurance company operations and consulting. This included being head of office and a director of Alea Bermuda. His roles and responsibilities at Alea Bermuda included setting up and managing an underwriting operation, with emphasis on structured business for several lines including auto, workers’ compensation, general liability, property and aviation.
He successfully developed a unique reinsurance product to address collateral issues for captives and as an executive of Alea Group was a member of the executive team as well as of the underwriting and the reinsurance security committees. Perez was also in charge of intra-group reinsurance placements for the Group.
Before that Perez was senior vice president for Overseas Partners (OPL) in Bermuda. During that time, he co-created Overseas Partners Cat, a property catastrophe reinsurance joint venture with RenaissanceRe, and managed OPCat’s day-to-day operations.
At OPL he was in charge of a reinsurance portfolio of structured risk, aviation and space. He was also chief actuary, with responsibilities that included the management of the actuarial team with oversight of pricing and reserving for all lines of business as well as capital management.
Perez was responsible for management and placement of OPL’s outward and intra-group reinsurance programmes, participated and led several due diligence projects for prospective acquisitions and was a member of the Underwriting Approval Committee.
Before OPL, Perez was at KPMG Bermuda where he led the actuarial consulting practice, after holding various positions in the industry as a consulting actuary for Coopers & Lybrand Canada, and chief pricing actuary for Zurich Canada as well as other actuarial positions.
Perez is a fellow of the Casualty Actuarial Society. On Bermuda is also a member of the Insurance Advisory Committee, is a former member of the Bermuda Monetary Authority’s (BMA’s) Technical Advisory Group and is also a former member of the BMA Workgroup on special purpose insurer regulation.
A leader in ILS
Horseshoe Group describes itself as the leading provider of insurance management and advisory services for insurance-linked securities (ILS).
Horseshoe was formed in 2005 and makes a point of saying that it is not affiliated with any other service provider or insurance carrier and acts impartially and without conflict of interest in advising its clients.
After Horseshoe acquired IKONIC Fund Services in 2016, the company formed Horseshoe Fund Services (HFS), a Bermuda-based exempted company licensed as a fund administrator by the BMA. HFS is dedicated to providing hedge fund and private equity administration outsourcing solutions to a wide range of global investment managers adopting a diverse range of investment styles.
Its fund services product offering specialises in hedge funds, fund of hedge funds, private equity funds and funds investing in ILS. Its clients range from emerging managers to large institutional funds.
As one executive commented: “Andre has been facilitating risk transfer for many years and has been a true innovator in that space.
“He has built a very successful business that has facilitated the ability for ILS to provide significant capacity to the market. That has been fantastic for Bermuda and he deserves all the plaudits he gets.”
The late Frederic (Fred) Reiss has rightly been described as the founding father of the captive insurance market on Bermuda.
Born in 1924, Reiss was admitted to Harvard and served in the US Navy in World War 2; he was awarded two Purple Hearts after serving on Atlantic convoys. After the war he became first a property engineer and then an insurance broker in Youngstown, Ohio.
He then moved his focus from the US Mid West to Bermuda.
He was the first to coin the term “captive insurer” when he invented the concept of the modern captive and popularised the captive insurance movement.
Reiss realised that the insurance products on the market at the time for US companies such as the ones he had been working for in Ohio were not adequate for the needs of the market. As a result he came up with the concept behind captive insurance companies.
Captives became popular because they allow the sharing of underwriting profits normally retained by conventional insurers, as well as providing the option to self-insure high frequency risks. They provide a means to insure low frequency but high severity risk in cases where coverage would usually be unobtainable, and provide direct access to reinsurance.
In 1958, Reiss developed the American Risk Management company, and he toured the world to seek an offshore jurisdiction which would allow his ideas on captives to flourish.
At the time US regulations made it prohibitively expensive to form and operate captives onshore. In 1962 Bermuda assisted Reiss in forming what is believed to be the first modern day captive insurance company.
It was thanks to Reiss and his work on captives that the concept became an established practice in the industry, and in so doing he made Bermuda a centre for captive domiciles, boosting it towards the major international financial centre that it is today.
The captives market was slow-moving at first, as the concept was new and controversial. But Reiss persevered and in 1962 he founded International Risk Management in Bermuda. As captives became increasingly in demand in 1972 he formed the “captive of captives” facility known as Hopewell International, thereby creating the first established captive management organisation. Between 1970 and 1976, his firm was dominant in the Bermuda captive insurance scene and was considered well ahead of its time.
Bermuda rapidly became a leading market for captive insurers and in 2008 the majority of captives in the world were based on the Island. However, other jurisdictions such as the Cayman Islands amended their laws to encourage captives to be created or relocate to them, and while Bermuda is still a major player in the market it no longer has the lion’s share of captives.
The development of Bermuda as a major financial and insurance hub in the 1980s helped to boost the Island, as during that decade there was a substantial fall in the number of tourists visiting Bermuda.
Reiss was appointed a member of the Bermuda’s Insurance Advisory Committee and was a board member of the Bermuda Commercial Bank.
Reiss died in 1993 but his name lives on in the Fred Reiss Lifetime Achievement Award, which is given out at the annual Bermuda Captive Conference to luminaries from the captive insurance industry on the Island. The award was created in 2016 and this year was presented to Jeremy Cox, executive chair of the Bermuda Monetary Authority.
“So much about Bermuda, its economy, what it is good at and what it stands for can ultimately be attributed at least in part to the vision of Fred Reiss,” is how one respondent described this Bermuda legend’s contribution.
“He stood alone in driving forward what was, at the time, a revolutionary form of risk management. Bermuda has benefited ever since—as has every company that has ever formed and benefited from a captive.”
AXIS, American International Group, Horseshoe Group, XL Group, American Risk Management, Michael Butt, Brian Duperreault, Brian O’Hara, Andre Perez