Topsail Re mulls forming sidecar to leverage $1.5bn opportunity
Dislocation caused by the exit or retraction of key players and subsequent capacity shortfalls in the US programmes market combined with hardening rates has given David Johnson (pictured), chief executive of Topsail Re, a dilemma. It is a time of potential opportunity for the reinsurer—but he is wary of deviating too far from its model of cautious growth based on long-term relationships.
“All our collateral comes from large well known US banks.” David Johnson, Topsail Re“The market needs more capacity right now; we have received enquiries from brokers worth more than $1.5 billion in market replacement premium. But we’re working out if we want to handle that. We’re focused on creating a balanced book of business, so we have to look at these opportunities and consider what makes sense,” he said.
Johnson is circumspect with good reason. The privately-held reinsurer was formed in 2018 with investment from three high-net-worth individuals, including Johnson. Its core ethos is to develop a sustainable, long-term business model to serve the interests of its shareholders.
Johnson was previously a veteran reinsurance broker with JLT Re and the president and chief operations officer of Axiom Re.
Other key team members include Jay Bishop, who was formerly head of the regional practice for Arch Re; Robert Harnatkiewicz, who has also held senior roles at JLT Re and Axiom Re; Jacqueline May, who joined from Beach Re and has been associated with Axiom Re, Aon Re, and Willis Re; and Brian Green, who had previous roles at Axis Re and Arch Re.
Those hires mean Topsail has built out significant underwriting and actuarial teams with previous roles at Arch Re, RenaissanceRe, Swiss Re, SCOR, and Zurich among others. More recently, RobLee Womack took the role of senior vice president of underwriting. His CV contains stints with Argo Group, NewCo Re, Qatar Re, and Endurance Specialty.
Seeking balance
Although Topsail Re is domiciled in the Cayman Islands, it has elected to be treated as a US tax-paying entity under section 953(d) of the US tax code. As such, Johnson describes it as a traditional reinsurer that happens to be based in Cayman. But, because it is not AM Best-rated, it still has to post collateral under Schedule F, which addresses the admitted/non-admitted status of a reinsurer and the related collateral being held, so that its clients get credit for their reinsurance.
