Hamilton Re to enter property fac market in US

Bermuda-based Hamilton Re will enter the property and facultative insurance market in the first quarter of 2016, Kathleen Reardon, the company’s chief executive, told Monte Carlo Today.

The company will initially target business in North America. “From day one we have been a company that has been happy to diversify and not rely on one channel for business. We are thinking big and acting big when it comes to a diversified product range,” Reardon said.

This was evidenced by the decision to buy a Lloyd’s syndicate in April. And Reardon said it will also shortly unveil a new “star casualty underwriter” in Bermuda joining them from a Lloyd’s syndicate.

She also revealed that Hamilton Re is willing to play its own part in the current mergers and acquisitions (M&A) mania.

“There are some attractive companies that could give the Hamilton Insurance Group a start with a new strategy or which have a different product range or operate in another region. We would look at it,” she said.

“Some people are questioning the valuations of some M&A strategy but if shareholders feel it that it is a solid decision and gives them what they need then it’s a sensible thing to do.”

Reardon added that post-merger uncertainty was also leading to a new talent pool being available for competitors.

“M&A is going to continue and that is offering some opportunities to pick up talent,” she said.

But she stressed that the company is focused on organic growth for now, writing “volatile, severity-driven” business as well as seeking even greater diversity.

There are plans eventually to list the company. Reardon said: “It’s something we will be looking at in the future. We are a highly liquid company that operates on both sides of the balance sheet.”

Reardon also said that the reinsurer is “comfortable” with where it sits in relation to the investigation by the US Treasury’s Internal Revenue Service (IRS) into what it sees as hedge funds masquerading as reinsurance companies for tax purposes.

She stressed that Hamilton Re is not a hedge-fund-backed reinsurer and added: “We are focused on building a franchise with a global platform and I am comfortable with our strategy now and in the future.”

Hamilton Re is owned by several private equity companies, including Blackstone, as well as its founders.

US authorities are considering imposing a minimum standard for reserves in an attempt to differentiate between an insurer engaged in genuine underwriting and what it has termed “passive foreign investment companies”.

The Association of Bermuda Insurers and Reinsurers (ABIR) has written to the US Treasury arguing that if it goes down that route it should adopt a “bright line safe harbour test” of a 15 percent reserve-to-asset ratio.

Reardon said Hamilton Re is supportive of efforts by the ABIR on this front.