New reinsurance licence signals Canopius Re’s Bermuda ambitions
Securing a class four licence was “a first step” for Canopius Re that the reinsurer hopes will “lead to the creation of a much more capable reinsurance business and Bermudian proposition across all platforms,” according to Charles Craigs, chief executive officer at Canopius Re.
Canopius Re was granted a class four reinsurer licence by the Bermuda Monetary Authority (BMA) in January 2021, allowing it to increase gross written premiums and take on more third party risks.
In fact Canopius Re has taken a number of steps to grow its footprint since returning to Bermuda from Zurich in mid-2019, for example with the majority acquisition of specialty reinsurer Multi-Strat Holdings in 2020.
“This is an opportunity to develop an alternative risk carrier accessing risks coming to the Bermuda market.”
A large part of Canopius Re’s role has, until now, been as an intragroup vehicle providing reinsurance to other Canopius risk carriers, but gaining a class four licence allows Canopius Re to underwrite significantly more third party risks.
Having a class four licence will significantly boost Canopius’ presence and standing in the Bermuda market and bolster its product offering for clients, investors and intermediaries, Craigs says.
“We already have various platforms in Bermuda primarily focused on underwriting for Canopius Syndicate 4444 or raising capital for insurance-linked securities (ILS) transactions,” says Craigs. “The growing underwriting appetite of Canopius Re provides a further element to this platform, broadening and deepening what we offer in Bermuda.”
Craigs says one of Canopius Re’s priorities in the short term is accessing the improved rate environment in property and casualty business, but it also has eyes on other classes.
“Although it is too early to be specific about potential classes, it is well documented that the Canopius Group has ambitious US growth aspirations, most recently evidenced with the hire of Lisa Davies as president and chief underwriting officer of Canopius USA,” says Craigs. “Supporting these growth aspirations will be a key aim and the Bermuda market is well located to do this.”
Importance of Bermuda
Craigs notes that Canopius already writes a large, well-established and well-diversified portfolio at the group level and believes Canopius Re, with its new licence, can leverage the group’s broader underwriting expertise to access business in Bermuda.
“As a group we see improvements in the rating environment continuing, which presents considerable opportunities for Canopius Re to target,” Craigs says.
Canopius Re submitted its formal application letter to the BMA at the end of November 2020, along with a 17-page overview document detailing its reasons for making the application and demonstrations of its ability to meet the required criteria for the class four licence.
Craigs describes the BMA’s process for evaluating Canopius Re for its new licence as “intensive and detailed but also highly cooperative”.
“The timing reflects the improving rate environment in the property and casualty market and with that increasing opportunities to underwrite profitable business,” says Craigs.
“Canopius Group already has a large, well-established and diversified portfolio of business, the bulk of which is written on Lloyd’s syndicate paper, so this is an opportunity to develop an alternative risk carrier accessing risks coming to the Bermuda market.”
It is also a recognition of the strategic importance of the Bermuda market, with which Canopius has long ties.
“Before moving to Zurich, Canopius Re was originally established in Bermuda in 2007, so returning in 2019 was something of a homecoming,” recalls Craigs.
“This represented Canopius’ recognition that Bermuda, as a key global reinsurance hub, with access to business and capital, and with a leading regulatory regime, was the ideal location for the business to flourish.”
