Breadth of Endurance offers Blue Capital stability
The re/insurance market must aim to expand and achieve a greater saturation of insurance buying globally, Adam Szakmary, the recently appointed chief executive officer of Blue Capital Management, told PCI Today.
Szakmary, who also serves as portfolio manager of the investment manager, believes that re/insurance companies have a responsibility to also wear a risk management hat to support their clients while ultimately trying to develop products that expand the marketplace.
However, he warns that the industry must be cautious of products that are not fully vetted for this environment.
“Cyber insurance is in its infancy and I applaud the people looking at this right now. But there are a number of unresolved questions, such as how quickly will you be paid back? The availability of information is probably in government hands right now,” he explained.
“This is a specialty market product and the industry needs talented underwriters who have access to information that provides for the incubation of that marketplace.”
He added that to select risk, quantitative and qualitative information should be looked at but he was concerned that within the cyber space adequate information was not currently available.
And he warned that insurance shouldn’t be a product that replaces risk management.
Szakmary praised the acquisition of Montpelier Re by Endurance, stating that “Blue Capital was fully integrated three days after the close of the transaction”.
The larger breadth of Endurance has allowed Blue Capital to become more stable and offer longer term value to its clients, he said.
“Generally, mergers and acquisitions (M&A) are not always a comfortable situation. However, our capital structure has created continuity and a seamless rollover of capacity,” said Szakmary.
“All capital is not created equal and 50 percent of our capital is permanent in nature, with two listed vehicles on London and New York.”
Given the scale of the ACE/Chubb deal, Szakmary is unsure whether he would see another transaction like this in his lifetime. However, he believes there is great opportunity for small and medium-sized reinsurers in the space.
“As re/insurers push for a market share, consolidation is unlikely to go away unless there’s a large catastrophic event or potentially a black swan event,” he explained.
In the future, Blue Capital will ensure it continues to provide value, while leveraging both sides of its parental ownership by offering multiple products.
Szakmary said: “It’s about creating and maintaining strong relationships across multiple product lines in a better managed risk environment.
“Being a part of the larger Endurance group allows us to provide a product that wasn’t there before for Endurance. Additionally, we can now offer products across the insurance reinsurance spectrum that we didn’t have before the acquisition.”
