Duperreault’s Mereo starts underwriting
Brian Duperreault’s (pictured left) Mereo Insurance aims to take advantage of “attractive rate levels” and a need for more capacity in the casualty and specialty reinsurance markets as it launches its platform this week.
The Bermuda-based reinsurance platform, which will also write property reinsurance, has received an A- credit rating from AM Best and aims to offer reinsurance solutions to the marker by combining traditional reinsurance with capital market solutions, the company said.
Duperreault, who previously headed Marsh, American International Group, ACE (now Chubb) and founded Hamilton Insurance in Bermuda, is chairman of the company.
Former Aegis London CEO David Croom-Johnson (pictured right) is CEO, supported by Richard Holden, deputy chief underwriting officer, who was formerly CEO of reinsurance at the Fidelis Partnership and CUO for its Bermuda operations.
Mereo’s common equity was led by Susquehanna Private Equity Investments, a member of the Susquehanna International Group of Companies, and The Andover Companies, with preferred equity provided by Ares Management Alternative Credit funds. The full amount of capital raised has not been disclosed but is reported to be between $650 million and $700 million.
“This first close will allow the platform to offer flexible, scalable and timely solutions to the reinsurance market immediately,” the company said.
“The reinsurance market is currently pricing at attractive risk-adjusted rate adequacy levels and has created a unique investment opportunity, with reinsurance rates rising across many sectors.
“Mereo is positioned to take full advantage of this environment by combining traditional reinsurance with capital markets solutions. Mereo offers an innovative business model designed to address the growing demand for risk transfer.”
Duperreault added: "The current healthy market in reinsurance presents an unprecedented opportunity for investors.
"With attractive risk-adjusted rate levels across the P&C market, as well as a need for more capacity, Mereo is uniquely positioned to deliver solutions that meet the growing demand for reinsurance while providing attractive returns to our investors."
Croom-Johnson added: "I am delighted that we are entering the market at such an exciting and dynamic moment. The current market dynamics will allow us to produce a diversified and balanced portfolio of specialist reinsurance businesses across a broad spectrum of property, casualty and specialty classes to meet our investors’ needs."
According to its website, Mereo plans to write catastrophe excess of loss reinsurance, with 70% of its underwriting in the US, In specialty it will write marine, energy, aviation, space, political risks, accident and health, crop and contingency.
In casualty, it will write general and excess liability, professional indemnity, E&O, D&O and Cyber and its target industries include marine, energy, transportation, financial lines, mid-market general liability and cyber.
AM Best said Mereo’s A- rating was based on its very strong balance sheet.
It said Mereo’s business plan projected very rapid premium growth in the company’s early years.
“Initial capitalization in 2024 and retained earnings through the forecast period are expected to support Mereo’s premium growth, which is expected to be rapid in its early years, based on projections,” the ratings agency said. “The company’s capital is anticipated to be managed through the use of reinsurance and potentially third-party capital. Investment risk is projected to be low given its conservative investment portfolio, which will remain matched closely to the evolution of the liability profile, supporting stability in future balance sheet metrics.”
AM Best said Mereo’s business plan envisages a portfolio composed of casualty and specialty business diversified by subcategories, geographies, and attachment points.
Mereo was assisted by a selection of advisors including; Guy Carpenter Capital & Advisory, Willkie Farr & Gallagher, Lockton Re Capital Markets, , BMS Group Ratings Advisory, Kinmont Advisory, Price Forbes Re, and Appleby Bermuda. Ares was advised by Skadden, Arps, Slate, Meagher & Flom.
The Andover Companies is one of the largest and longest-standing property and casualty mutual insurance groups in the Northeast, operating through its subsidiaries Merrimack Mutual, Cambridge Mutual, and Bay State.
Ares Management Corporation is a global alternative investment manager with $484 billion of assets under management. Apart from Mereo, it is an investor in Aspida Life, which has a Bermuda-based life re/insurer.
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