No future graduates: four CEOs from ‘Class of 2005’ downplay repeat of history
Four chief executives shaped by their experiences launching new reinsurers on Bermuda as part of the so-called ‘Class of 2005’ have agreed that it is unlikely the island will ever see similar numbers of startups, all launched with a common purpose and in a short space of time again.
They were speaking during the Bermuda Business Development Agency’s Risk Summit, which took place in Bermuda, 9-11 March. Four CEOs of the Class of 2005 took to the stage to discuss lessons learned over the past 20 years since Hurricanes Katrina, Rita, and Wilma caused insured losses of some $120 billion. The most revealing line in the discussion was also the most definitive: “I don’t think there will be another ‘Class’.”
That assessment was informed not by nostalgia; instead, they argued it was due to structural considerations. The reinsurance startups of 2005 were built on a simple premise of capital scarcity - and the fact the only real entry point was via a balance sheet reinsurer. Now, there are many more ways capital can enter the market.
Conan Ward, former CEO of Validus, now CEO of Solis Re, recalled: “We raised a billion and a half dollars in capital in one week.” He went on to explain that when 9/11 hit, “the capital came into the market almost overnight, the industry reloaded almost immediately.” But even then, the window was already compressing. “There were great opportunities, but they didn’t last as long.”
Today’s market no longer requires new balance sheets to respond to dislocation. John Berger, former founder and CEO of Harbor Point Re and current chairman of Coaction Specialty Insurance, put it bluntly: “What we learned in 2005 was there’s just a lot of capital, and they’re smart, different ways to get in our business.”
The evolution has been architectural with sidecars, ILS funds and collateralised structures replacing the need for fully formed carriers: “Private equity or hedge funds form a company just for this particular risk, and then wind it down,” he explained as the reason for not needing an abundance of new balance sheet re/insurers.
Speed is also a defining variable. Where 2005 required weeks of capital raising and regulatory sequencing, today “a sidecar can be executed in a couple of weeks, and a meaningful amount of capacity can come into your balance sheet,” Ward noted. This structure has eliminated the temporal arbitrage that once justified startup formation.
Capital no longer needs to build companies; it attaches itself to existing platforms. Berger believes that if major cat losses occurred at once, “alternative sources of capital would be lined up to give more capital.” The scarcity premium that underpinned the class of 2005 has been structurally overcome.
In that context, launching a new reinsurer is not just difficult but strategically incoherent. Berger went as far as to say: “If somebody came to me and said, I want to start a reinsurance company, I’d say, ‘Don’t do it. There’s no need.’” The panel, also included Ryan Mather, CEO of Ariel Re, and Chris McKeown, former founder and CEO of New Castle Re now CEO of Vantage Reinsurance.
The constraints are not just operational, but financial. Ward said: “From an investor standpoint, the exit is very tricky. You're talking about a sector that doesn't trade at great multiples, and very few balance sheet businesses do anymore.” He also highlighted the mismatch between private equity expectations and reinsurance economics. Without a clear exit, the traditional startup model breaks down.
Instead, value has migrated elsewhere towards distribution, specialisation, and capital structuring. The opportunity is no longer to build a balance sheet, but to access risk more efficiently than incumbents.
Bermuda remains central to this system, but in a different role. In 2005, it was the launchpad for new carriers, supported by a regulator that, as Berger put it, was “constructive in helping you set up.” Today, it is the hub through which capital flows into existing platforms.
The class of 2005 was defined by urgency. The modern market has solved that problem. That is why the panel believes there won’t be another ‘Class of’.
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