Gallagher Re ‘ready to invest’ in Bermuda

Gallagher’s acquisition of the treaty reinsurance business of Willis Towers Watson at the end of 2021 was a monumental move, transforming Gallagher Re overnight into one of the world’s largest reinsurance brokers. And Bermuda is a decisive piece on the company’s global chessboard, says Tom Wakefield, UK chief executive officer of Gallagher Re, who holds responsibility for the territory.

Talking to Bermuda:Re+ILS during RVS 2022 in Monte Carlo, Wakefield said: “The main message from us is, we’re not going to sit here talking about our integration or our target operating model. We don’t need to because it’s now lined up in a way that allows us to execute with clients better than we’ve ever executed before.”

Together with Gallagher’s existing reinsurance operations, the combined businesses trade as Gallagher Re from more than 70 offices across 31 countries, but Bermuda has always been a priority.

“In the couple of years before the sale of Willis Re, there had been some stagnation around focus in terms of resource, and one of the areas where we’re going to take our time to get it right is Bermuda,” Wakefield said.

In June, Gallagher Re named Ben Radford, previously executive director of Willis Re, as its incoming head of Bermuda.

“There will be other investment and hires in that space, but we want Ben to get his feet under the table to work out the landscape, and we’ll be there to support him,” Wakefield said.

Radford’s main task is cementing “connectivity with the group”, Wakefield added.

“The reason that Ben is such a great candidate, aside from his own individual capabilities, is that he knows our business, he knows the people, he knows the clients around the globe, in our International and North American business as well as of course in the London market.”

Gallagher Re already has a strong and longstanding capability in Bermuda, Wakefield stressed, but the focus is shifting beyond catastrophe risk.

“We’ve done our research, we’ve been out to the Island, we’ve spent time with the carriers and with the clients, and the feedback we’re getting is that they want a more global multiclass offering, because it’s an evolving market and no longer 90 percent cat risk,” he said.

The company already has strong cyber, non-marine and retro capability in Bermuda, Wakefield said, but it also wants to capitalise on Radford’s experience in casualty and property.

“We have huge amounts of casualty business on the Island, without currently having on-the-ground casualty capability, so this is one of the areas that we’re looking to match up and align around our global operating model, which was rolled out as part of the integration process,” Wakefield said.

“We will invest, we are there to stay, because we see huge value in that marketplace. But we want to get it right and not have to unwind something because we rushed into decisions,” he added.

One of those decisions is whether to locate casualty expertise in Bermuda, he continued, “but it’s fair to say we will be more multiclass and will be more linked in globally to our overall business”.

One decision is set in stone, however: “We’ve got no desire to replicate any other broker’s model,” he said.

“The Bermuda market has evolved significantly, and largely around the product mix, and that’s what the market is looking for from a broker in Bermuda. It values a broker that really understands the underlying subject matter and how to connect the business globally.”

An intricate market

Broker-led analytics is crucial. Wakefield explained: “When we talk to entities about their capital and how they’re thinking about reserve risk, we’re not going to be trying to build what I would call run-of-the-mill cat capability for research based in Bermuda, because the cost of doing business there is extremely high. We want to focus on the people that can go and help clients and help reinsurers, and be in that conversation, which includes analytics, but probably doesn’t include the wider research piece.”

Historically, both Gallagher Re and Willis Re had focused on a “London market property type play”, he said, and it takes time to make changes in Bermuda because of, for example, the need to apply for work permits.

Bermuda is itself an “intricate” market, he added, but many of Gallagher Re’s relationships with Bermuda are not with people who actually live there.

“Bermuda is a really exciting market: the way in which Bermudian companies manage capital is very impressive and we want to make sure we have a relevant presence there, but for the right reasons and with the right people, focused on differentiating the clients there,” Wakefield said.

“In addition, there’s been an increase in inter-island trading, with companies buying reinsurance from each other. That’s something we’re mindful of as we plan the makeup of our Bermuda office.

“It’s been very exciting to get Ben down there, because he has a really good read on that market. He’s worked in the casualty team, he’s worked in the property retro team, and he’s worked in the property team. He’s done longer tail lines of business as well as shorter tail lines business. So we will rally around Ben, and then get his opinion on how we want to build our operation out,” he concluded.