New reinsurer Conduit plans $1.1bn IPO
Conduit Holdings Ltd intends to raise $1.1 billion through a stock market flotation in order to set up a new Bermudian re/insurance company.
The company, which will be led by industry veterans Neil Eckert and Trevor Carvey, said it will operate under a Class 4 licence from the Bermuda Monetary Authority.
The company is the latest evidence of a Class of 2020 forming to take advantage of rising reinsurance rates.
Conduit published details of its intended initial public offering of shares on the London Stock Exchange yesterday, pointing out that Mr Eckert and Mr Carvey believed this to be “an exceptional market opportunity”.
The business expects to write property, casualty and specialty reinsurance and said it will target “strong cross-cycle returns on equity in the mid-teens”.
The statement added: “Years of high insured losses, diminished reserves and the more recent losses and industry strain caused by Covid-19 and severe capacity shortages in certain classes of insurance and reinsurance have produced major corrections in reinsurance pricing and policy terms and conditions.
“Against the industry background of losses, litigation and capacity constraint, as a new business, Conduit has no legacy exposure and, following the offer, its strong and unencumbered balance sheet will be fully available to write new business in what the founders believe to be an attractive market environment.”
Mr Eckert, the founder and former chief executive officer of Brit Insurance Ltd, is a director of Conduit and the proposed executive chairman. He said: “Trevor and I have traded in hard markets before, but we believe these are exceptional times by any standards and a really opportunistic time to launch a new reinsurance company bringing fresh capital and a very focused business plan to the market.
“We are enthused by the industry support we have had while developing our ideas for Conduit and look forward to opening for business.”
Mr Carvey is set to be Conduit’s CEO. He was a founding underwriter and at Arch Re Bermuda, which set up in 2002 as one of the wave of companies established in response to the market dislocation triggered by the 2001 terrorist attacks on New York and Washington, DC.
Mr Carvey, who also previously worked for Hamilton Insurance Group’s London arm as head of treaty, said: “We will be targeting an excess of loss and quota share book of treaty reinsurance business across property, specialty and casualty lines.
“We are excited by a market where there is so much price improvement across so many classes. For the first time in a long while we think a well-capitalised new entrant can come into the market and successfully target quality business in scale and at historically attractive rates."
Mark Heintzman, a former chief financial officer of Bermudian-based Ironshore Insurance Ltd, is the proposed CFO for Conduit.
Charles Collis, a lawyer with Conyers and head of the firm’s insurance practice, is also a director of Conduit. Conduit said Mr Collis was a director for the purposes of the incorporation of the company only and will not have an ongoing role on the board.
Conduit is targeting an A- rating from AM Best.
The company will be one of several start-ups in the pipeline. Dinos Iordanou, the former chairman of Arch, and Greg Hendrick, former CEO of Axa XL, are to head up a new re/insurer called Vantage.
Rosh Capital management is also setting up a new Bermudian reinsurer called Rosh Re, backed by $600 million of family office capital.
Lloyd’s of London insurers Chaucer and Ark have each applied to the BMA to set up new Class 4 reinsurance companies on the island.
Arcadian Risk Capital, a managing general agent, has also launched a new underwriting operation on the island.
Many existing Bermudian reinsurers have been raising capital to take advantage of market conditions, including RenaissanceRe, Arch Capital, Hiscox, Fidelis and Lancashire Group.
Maamoun Rajeh, an Arch Capital reinsurance executive, estimated last month that the capital influx into re/insurance this year has been about $12 billion, most of it invested in existing platforms.