Brian Duperreault
2 February 2024News

Duperreault-backed insurer plans 'rapid' premium growth

Brian Duperreault-backed insurance start-up Mereo Insurance is expecting to record rapid premium growth when it starts underwriting, according to ratings agency AM Best. 

It also appears the start-up insurer, reported to be Bermuda-based, is planning to write casualty and specialty business and expects to be capitalised this year, said the agency, which assigned Mereo an A- (Excellent) preliminary financial strength assessment. 

AM Best said the the outlook for the preliminary credit assessment was stable. 

"Initial capitalisation in 2024 and retained earnings through the forecast period are expected to support premium growth, which is expected to be rapid in its early years, based on projections<" Am Best said. "Capital is anticipated to be managed through the use of reinsurance and potentially third-party capital. 

"Investment risk is projected to be low given a conservative investment portfolio, which will remain matched closely to the evolution of the liability profile, supporting stability in future balance sheet metrics."

The agency added that an adequate operating performance assessment and limited business profile assessment were based on Mereo’s business plan.

"The plan includes rapid premium growth in its first years and improving operating profitability that supports an adequate operating performance assessment. Outlined in the plan is a portfolio composed of casualty and specialty business diversified by subcategories, geographies, and attachment points." 

AM Best said Mereo’s senior managers had extensive experience and strong track records in the industry.  Duperreault is an industry legend who spent the early part of his career at AIG before building Bermuda-based ACE Insurance into an industry success story, founding Hamilton Insurance and leading industry giants Marsh and AIG. 

AM Best added: "The limited business profile assessment, nevertheless, considers the execution risk faced by any start-up operation, in recognition of the customary challenges associated with gaining market acceptance in the casualty and specialty space, while remaining profitable," Best said "An ERM structure has been established initially and is expected to evolve as the product risks complexity of the business evolves."

The ratings agency assessed Mereo’s balance sheet strength as very strong. 

"The PCA also reflects AM Best’s assessment that, based on Mereo’s business plan, the company will maintain a balance sheet assessment of very strong supported by projected risk-adjusted capitalisation at the strongest level throughout the five-year initial forecast period, as measured by Best’s Capital Adequacy Ratio."