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13 September 2014 Reinsurance

Global ambitions

Formed late last year, the brainchild of industry veteran Brian Duperreault, Hamilton Insurance is a relative newcomer to the industry. But from a standing start, it has an offering and outlook that is already setting it apart in the industry as it eyes establishing a global profile quickly.

Kathleen Reardon, promoted in April to the position of chief executive officer of Hamilton Re, the group’s Bermuda-based property casualty reinsurer, explains that its first unique proposition comes from the investments it is making that will allow it to leverage the potential of big data for the insurance industry.

Through the company’s relationship with Two Sigma Investments, its asset manager, it plans to apply the scientific method-based approach used by Two Sigma to the challenges faced by the risk transfer industry globally.

“We believe big data has the potential to revolutionise the industry and that is something we intend to explore fully,” Reardon says. “Clients and brokers are excited about that prospect. Eventually, this approach will allow us to deep-dive into exposures and develop a very different perspective on things. There is certainly a buzz around the company because of the potential of that.”

Going hand in hand with the development of that offering, is the company’s expansive approach to its physical infrastructure and presence.

While Reardon says its current base on Bermuda represents the perfect market from which to launch, she reveals that the company is already considering office launches in several parts of the world in the long term.

Reardon says Hamilton Re could consider opening offices in Europe, Asia and Latin America, and she says that establishing a US platform and a presence in the Lloyd’s market are also plans for the group as a whole.

In the meantime, however, the company is looking to continue to develop its global client base and form relationships with new clients.

“The upcoming renewals are certainly important for us. We are using that time wisely to explain to people what we are offering and build the message out further around big data analytics,” says Reardon.

She acknowledges that the reinsurance industry is not enjoying a favourable pricing environment right now, and says it illustrates the strength of Hamilton’s offering that it is comfortable launching in what is effectively a soft market. She also hints that the company may offer its own alternative forms of capacity sooner rather than later in its development.

“The reinsurance industry is not at its peak but it has always been cyclical so in terms of launching, why not now? We have the right people and the right products in place. In fact, the industry is a lot less cyclical than it used to be. It is more a case of gearing your offering to different appetites in the market,” she says.

Reardon says that as clients become more sophisticated in their demands, the company will ultimately look to match these. She says the company will explore fully collateralised products, possibly via sidecars, while also exploring more use of other capital markets instruments.

“The reality is that alternative capital now represents a large part of the reinsurance industry and most clients consider this aspect of the market during buying discussions even if they do not go ahead. Very few traditional companies manage third party capital in this way, whereas we are well positioned for either scenario in the long term,” she says.

As Hamilton Re cements its proposition on both the traditional and alternative sides of the market, it will also ultimately benefit from its offering around leveraging big data, she says.

“We are still in our infancy but we anticipate that within six months we will be able to start offering additional analysis in this field. The market needs innovation in this area and clients globally need better underwriting capacity—ultimately clients will benefit,” Reardon says.

“We are an underwriting company but we have an asset management strategy that brings something unique to the table. Data analysis is of massive interest. We are only offering traditional products at the moment but this could change in the future as we explore alternatives for clients.”

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