Bermuda-based, integrated reinsurance platform Mereo has launched with initial capital of more than $700 million, after receiving full regulatory authority from the Bermuda Monetary Authority (BMA) and an A- rating from AM Best, Reinsurance News understands.
It was revealed around the 2024 annual meeting of the reinsurance industry in Monte Carlo that Mereo expected to be operational for the January 1, 2025, renewals, to capitalise on the attractive market opportunity.
The company has announced that it begins operations this week into “an attractive global property and casualty reinsurance market.”
We’ve heard that the integrated Mereo platform consists of Mereo Insurance Limited and the Mereo ILS Opportunities Fund.
As Reinsurance News understands, the former will underwrite a diversified reinsurance portfolio with an equally weighted mix of specialty, property and casualty, and plans to write around $520 million of premium in its first full underwriting year.
The new reinsurer’s initial over $700 million financial base is anchored by leading investors Susquehanna International Group (SIG), and The Andover Companies, with preferred equity provided by Ares Management Alternative Credit funds. It’s expected that this strong backing, coupled with Mereo’s unique business model, positions the reinsurer well to offer flexible, scalable, and timely solutions to the reinsurance market.
The Mereo ILS Opportunities Fund is a diversified open-ended fund comprised primarily of illiquid property insurance, reinsurance, retrocession, catastrophe bonds, and industry loss warranties (ILWs), Reinsurance News has learned.
In fact, from what we understand, the ILS fund has already started trading and Mereo deployed an initial limit in the 1.1 2025 property cat renewals, in both reinsurance and retro opportunities, of around $250 million, with additional funds available to deploy at the upcoming April and mid-year reinsurance renewals.
It was reported last year that industry veteran and Co-founder Brian Duperreault, formerly the Chairman and Chief Executive Officer (CEO) of AIG, serves as Chairman of Mereo. It’s also been confirmed that Co-founder David Croom Johnson, former CEO of Aegis London, serves as CEO and Chief Underwriting Officer (CUO) of Mereo Insurance Limited.
Co-founder Richard Holden, previously CUO of Fidelis Insurance Bermuda and Global CEO of Reinsurance and Capital Management, serves as Deputy CUO of Mereo Insurance and CUO of Mereo ILS.
The Mereo Advisors website lists some additional roles across the platform, including Neil Strong, most recently the CEO of IQUW ILS Ltd, as President of Mereo Advisors and Mereo Insurance Limited, and as CEO of Mereo ILS. The site also lists Lawrence Minicone, previously Head of Research at Tekmerion Capital Partners, as CEO of Mereo Advisors Limited and Chief Investment Officer (CIO) of Mereo Insurance Limited.
Additionally, the website lists Derek Walsh, formerly COO, General Counsel and Co-Founder of Acacia Holdings, as Chief Legal Officer and Chief Operating Officer of both Mereo Advisors and Mereo Insurance Limited; Federico Waisman, previously Head of Underwriting Management at IQUW, as Chief Analytics and Risk Officer of Mereo Insurance Limited; and Jonathan Reiss, a Managing Director at Strategic Risk Solutions, as Chief Financial Officer (CFO) of both Mereo Advisors and Mereo Insurance Limited.
Through its office in Hamilton, Bermuda, Mereo is looking to participate on a proportional and non-proportional basis, with a focus on property, casualty, and specialty business.
The company’s website states that within property, it has appetite to support regional, nationwide, and global carriers, primarily covering catastrophe excess of loss. The cat split is said to be 70% U.S. and 30% international, with a mix of wind, earthquake, wildfire, severe convective storms, and flood.
In specialty, Mereo will target a broad mix of classes including marine, energy, aviation, space, political risks, accident & health, crop, and contingency. Mereo says that it has a modest appetite for retro in the specialty arena, and will target clients such as Globals, P&Cs, Syndicates, and MGAs.
Within the casualty space, Mereo will access business through quota shares of proven carriers with impressive track records, with a broad base of classes to include general and excess liability, professional indemnity, E&O, D&O and cyber.
“The current good market in reinsurance presents an unprecedented opportunity for investors,” said Duperreault, Co-Founder and Chairman of Mereo. “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.”
Global ratings agency AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to Mereo Insurance Limited (Mereo) (Hamilton, Bermuda), with a stable outlook assigned to these ratings.
AM Best notes that this reflects the reinsurer’s balance sheet strength, which is assessed as very strong, as well as the company’s adequate operating performance, limited business profile and appropriate enterprise risk management.
“The ratings also reflect AM Best’s expectation that, based on Mereo’s business plan, the company will maintain a balance sheet strength assessment of very strong supported by its projected risk-adjusted capitalization being at the strongest level throughout the five-year initial forecast period, as measured by Best’s Capital Adequacy Ratio (BCAR),” explains the ratings agency.
AM Best expects Mereo’s premium growth to be rapid in its early years, based on projections, supported by initial capitalization and retained earnings through the forecast period.
The ratings agency goes on to say that the firm’s capital is expected to be managed through the use of reinsurance and potentially third-party capital. At the same time, investment risk is projected to be low given Mereo’s conservative investment portfolio, which AM Best says will remain matched closely to the evolution of the liability profile, supporting stability in future balance sheet metrics.
Croom Johnson added: “I am delighted that we are entering the market at an exciting and dynamic moment allowing 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. I am excited that Mereo has finally launched and I would like to thank our clients and brokers for their support and patience.”
Scott Rosen, Partner at Ares Management, said: “We are pleased to be able to work with an experienced team in a new venture like Mereo. Through our flexible capital solution, we look forward to supporting their growth and strategic ambitions as a trusted reinsurance counterparty.”
Charles J. DiGrande, President and CEO of The Andover Companies, commented: “Andover is proud to partner with the talented Mereo team who have a strong track record of success. This investment is an excellent addition to the Andover portfolio because of the diversified nature of Mereo’s writings and the cultural alignment of our firms.”
Mereo was assisted in the overall detailed process by a selection of advisors, which includes Guy Carpenter Capital & Advisory, Willkie Farr & Gallagher LLP, Lockton Re Capital Markets, LLC, BMS Group Ratings Advisory, Kinmont Advisory, Price Forbes Re, and Appleby Bermuda. Ares was advised by Skadden, Arps, Slate, Meagher & Flom.
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