It is at once surprising but in some way predictable: market veteran Brian Duperreault’s (pictured) venture Hamilton Insurance Group is on the offensive on several fronts, looking to carve up some very different segments of the re/insurance business.
In recent months Hamilton cemented its new commitment to the Lloyd’s market, Hamilton at Lloyd’s, starting with a seed of £70m ($102m) capacity but with bigger aspirations.
In Duperreault’s home market of Bermuda, Hamilton Re accesses reinsurance business in partnership with technology-focused New York hedge fund Two Sigma Investments.
In the US, Hamilton USA’s still-unnamed small and medium enterprise (SME) insurance joint venture with American International Group (AIG) and Two Sigma looks to corner the $76bn small commercial insurance market.
That initiative arose, somewhat unsurprisingly, as a result of a conversation between Duperreault and AIG’s present CEO Peter Hancock. Before leading Ace and coming out of retirement (the first time) to lead Marsh & McLennan, Duperreault cut his teeth in several senior executive roles at AIG.
“I was talking to Peter about doing something together into data science, because it’s something he’s been interested in,” Duperreault told Reactions. “Actually I didn’t think
According to Duperreault, Hamilton was by then “well underway in approaching the issue”, developing a technology and data science approach via its Two Sigma relationship. That, Duperreault thinks, was part of the attraction for AIG.
The venture is also a response to the way AIG usually approaches business, in that its product-centric approach does not suit the SME market.
“For a small business, they need all kinds of products: they need property and casualty basic coverage; they may need professional liability; maybe they need workers’ comp; maybe they need auto; perhaps they need cyber; the list goes on,” said Duperreault.
“In joining with us, he’s taking business that isn’t being addressed and probably couldn’t under their current approach, but in a joint venture with us he can carve that out. He gets the benefit of a concentrated effort with proven partners to address this space, which is a big space in the US market,” he said.
“In return, we get the capabilities, the data, and the ability to write business that we would not be able to write. He gets the capabilities from us that he didn’t have. It’s one of those joint ventures where everyone brings something to the table. There’s a recognition that together we’re better than we are apart,” added Duperreault.
Duperreault will serve as chairman of the new venture’s board, in addition to his chairman and CEO roles at Hamilton, while Richard Friesenhahn, currently executive vice president of US casualty lines at AIG, will run the operation as its chief executive.
Hamilton at Lloyd’s
In May, Hamilton at Lloyd’s moved into new office space in the Aviva Building on 1 Undershaft, just opposite Lloyd’s and the growing cluster of London’s re/insurance market towers. It is led by CEO Dermot O’Donohoe, who joined Duperreault’s London market venture eighteen months ago. He represents another market comeback, as former CEO of Torus’ international business, now StarStone since its 2014 acquisition by Enstar.
“We’re at £70m capacity now,” said O’Donohoe. “We think £300m in three to five years, on a pure organic timescale.”
Despite the recent wave of consolidation in London’s re/insurance market, Duperreault doesn’t rule out deal-making. “If we find a suitable opportunity we’ll consider that,” he cut in at this point.
Under the brand Hamilton at Lloyd’s, Syndicate 3334 writes seven classes of business: accident and health, contingency, financial institutions, property direct and facultative, professional indemnity, space and treaty reinsurance.
Viewing fac as direct, reinsurance represents 25% of the total, O’Donohoe noted. “There are times to ramp up on reinsurance and vice versa. If we look at possibly adding some marine capability, and political risk added to war and terror
While conceding that marine is one of those lines most beset by soft pricing, Duperreault noted: “I think it has long-term positive profit characteristics, but short-term not so good.”
Duperreault stressed the need for patience, despite his ambitions for growth. “If you get the right people with the right following, there are ways to enter a market without having to buy your way in or burn your way in. But you can’t expect to be a giant player; you have to pick your spots, take your time and build it brick by brick. If you have patience you can enter these markets,” he said.
Another strategy employed by Hamilton at Lloyd’s is its membership of consortia. “We may lead a space consortium; it’s a possibility being discussed,” said O’Donohoe.
Hamilton at Lloyd’s has already joined a liability consortium and a warranty and indemnity consortium, both of which are led by Ironshore, and also gets aviation reinsurance business through another consortium.
“Lloyd’s gives you that opportunity to access business that you might not see from other places,” said Duperreault, noting its international reach. “We’re in China, for example, and we see that business through Bermuda, but is it more effective to access that business through a Lloyd’s China operation? Yes, I think so.”