Duperreault: Mereo can find a home ‘for almost any risk’ across managed capital

By David Bull

March 12 - (The Insurer) - Founding chairman Brian Duperreault believes his Bermudian reinsurance startup Mereo can find a home “for almost any risk” across the various sources of capital it is managing, including its AM Best A-minus rated reinsurance vehicle, multiple ILS funds and specialty fund.

Closing out the Bermuda Risk Summit on Wednesday in Hamilton, the industry veteran described Mereo – which announced its launch as Mereo Insurance Ltd last month – as an “interesting structure”.

“It's an insurance entity. We have the management in a management company, which isn't unusual here in Bermuda particularly, but the management isn't embedded in any of the capital that we deploy.

“So we have a rated insurance company here, a Bermuda-based reinsurance company, at A-minus. We also have an ILS fund. Actually, we have several ILS funds and another specialty fund. So we're managers of capital,” said the former Ace, Marsh McLennan, Hamilton and AIG chief.

Mereo Insurance Ltd has equity backing from Susquehanna’s private equity arm and The Andover Companies, as well as a preferred equity investment from Ares Management Alternative Credit Funds.

Sources close to the situation previously told this publication that the startup had launched with in excess of $650 million in capital, and ambitions to increase that to $1 billion.

In a statement confirming its launch, Mereo Insurance Ltd said it is positioned to take full advantage of attractive reinsurance market conditions across a broad spectrum of P&C and specialty classes by combining traditional reinsurance with capital markets solutions.

It would offer an innovative business model aimed at addressing the growing demand for risk transfer, it continued.

Speaking at the Bermuda Risk Summit, Duperreault said the startup would be able to bring capital to deploy to a broad array of risks.

“I always thought in a good insurance team, particularly the underwriters, their job is to match risk and capital, and so we have several capitals. We believe that for almost any risk we can find a home within the family of capital that we're managing,” he declared.

As previously reported, Mereo – which has been two years in the making – has put together a leadership team that includes co-founder and CEO David Croom-Johnson, supported by co-founder and deputy CUO Richard Holden.

Its Neil Strong-led ILS platform, Mereo ILS Opportunities Limited, is understood to have gone live in time to be active at the January 1 reinsurance renewals following a successful initial fundraising.

At the Bermuda Risk Summit, Duperreault said he had been attracted to the startup because he was excited by its concept.

He also talked about his love for the Bermuda market as a “risk capital”.

And the executive said upcoming changes to its tax regime in response to the G20 drive to introduce a minimum corporate tax would not negatively affect the island.

“I hope we'll still be known for what we've been known for all along, which is that ability to look at risk and find a way to solve a problem for the one who has it. And I don't think the tax is going to make that much of a difference.

“It's been a push by the G20 for a very long time to have a minimum tax in Bermuda. And Bermuda, being the industry and the regulator together, hand in hand, worked out a way to do this in a very intelligent way,” he commented.

“So I think it's going to be fine. I don't think it's really going to affect Bermuda. I don't think it's going to affect capital formation, the attraction of talent, (or) the ability to manage.

The executive was speaking ahead of the launch of a biography written by Wendy Davis Johnson called “Faith & Purpose: The Life & Vision of Insurance Icon Brian Duperreault”.