Banyan Risk moves to capitalise on D&O opportunities

Cracking a market as fiendishly technical and tricky as directors and officers insurance (D&O) isn’t easy. But that hasn’t deterred New York-listed reinsurer SiriusPoint and long-standing industry executive Tim Usher-Jones from setting up Banyan Risk, a new managing general agent (MGA) based in Bermuda that is jointly owned by the pair, targeting the D&O market.

As the industry remains awash with capital despite the twin hits of the COVID-19 pandemic and a series of high-profile catastrophe losses, it hasn’t been easy to spot opportunities for new market entrants. That isn’t the case for SiriusPoint chief operations officer and president of insurance Prashanth Gangu, however.

Gangu joined SiriusPoint at the beginning of 2021 from Oliver Wyman, the consulting arm of Marsh McLennan, where he ran the Americas insurance practice, working on business strategy and transformation with insurers as well as advising other players such as private equity and venture capital firms on their acquisition strategies.

He has plenty of experience in spotting market opportunities, and since heading to SiriusPoint, Gangu has wasted no time in getting new projects off the ground—no easy task in an industry still finding its feet after the pandemic, while being overrun with capital.

Speaking to the Re/insurance Lounge, sister publication Intelligent Insurer’s online, on-demand hub for interviews and panel discussions with industry leaders, Gangu said that given the enduring attractiveness of the industry for investors, D&O was one of the few areas which offers significant opportunity for growth for new players.

“Broadly speaking, we like areas where there is a market dislocation,” he said.

“We look at D&O and, more broadly, the casualty space as offering the right environment and very good characteristics that allow for new companies to get started—companies that can come in, be very responsive to clients, and provide custom solutions. Banyan fits in that bucket.”

MGA is an ideal setup

Within the D&O market there are a few niches which have caught the eye of Usher-Jones, Gangu and the team as particularly ripe for new competition.

The market surrounding the initial public offerings of new companies, as well as special-purpose acquisition vehicles (SPACs), are two areas where Banyan believes there are significant opportunities for growth, as well as more specialised areas such as life sciences.

For Gangu, the opportunity for SiriusPoint to team up with and support entrepreneurs such as Usher-Jones means that structuring the business as an MGA is the ideal option for both parties.

“Banyan Risk is set up as an MGA, we like the MGA model. At SiriusPoint we own a majority stake. But everyone on the management team has a stake, and it’s established in a way that means we increase their ownership stake over time.

“The idea is that we want to support entrepreneurial talent—and the insurance industry—and give them a platform to grow. We have platforms all over the world, and we want to lean in on people such as Tim, who are creating fantastic businesses.”

Another crucial part of the firm’s structure and future growth plan is its decision to domicile in Bermuda.

For Gangu, the appeal of the Island is clear for an innovative startup such as Banyan Risk, given the relative ease of setting up new companies and investment structures, its proximity to the US market, and the supportive regulatory environment put in place by the Bermuda Monetary Authority (BMA).

“We are domiciled in Bermuda, and we like the regulatory structure and business-friendly environment for new companies to get started. Bermuda creates an environment that embraces talent.

“In many ways, Bermuda has been at the forefront of innovation. The regulatory regime shows how easy and quick it is for people to get approvals and broad support from the BMA.”

Ultimately, Gangu believes, despite the abundance of capital in the industry, there are plenty of opportunities for new ventures such as Banyan Risk to come to market. For SiriusPoint, the strategy is to stay agile and partner with the best talent in the industry to provide market-leading services.

“There is plenty of capital in the market, and more coming in by the day, on the risk capital side in terms of balance-sheet risk, and on the investment side from venture capital and private equity. The industry is awash with capital.

“And even though we are big enough to matter, we like to think of ourselves as small enough to move fast.

“Our real orientation is how to lean in on entrepreneurial talent in the insurance sector. We want to go out there and look for highly skilled people with fantastic track records. We want to align our incentives with these teams and help them grow.”

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