Class of 2020

Dual advantage: what sets Mosaic apart

When Mosaic Insurance launched in February 2021, it promised the market something different. The Bermuda-based global specialty insurer’s co-founders and co-CEOs, Mitch Blaser and Mark Wheeler, explain how Mosaic is delivering on that promise.

“We began with no legacy on any front—a clean balance sheet and all new, cloud-based, plug-and-play technology.”
Mitch Blaser, Mosaic
“As a member of Lloyd’s, we share those benefits, and can allocate capital to countries and products easily.”
Mark Wheeler, Mosaic

In your interview with Bermuda:Re+ILS last year, you said: “We think we can achieve strong growth no matter what the market does.” What did you mean by that?

Mitch Blaser: Our business is not an opportunistic play. We want to build a company that stands the test of time. The concept of our model is agnostic to COVID-19 or changing markets—it looks beyond current conditions with a view to enhancing conventional models of the past.

A number of insurance companies that started up in Bermuda around the same time as Mosaic follow a traditional hard-market approach—property cat and large reinsurance plays to capitalise on the attractive rate environment. While this model can be successful for a period, it’s categorically not what we are about.

Mark Wheeler: What sets Mosaic apart is our hybrid structure and focus on six specialty business lines. We’re also very discerning about the types of risks we write. The business lines we chose have proved to be consistent across insurance cycles, requiring talented and technical underwriting.

Mosaic is able to leverage the Lloyd’s brand across geographies, together with its ratings and licences, through the unique coupling of our Syndicate 1609 and our syndicated capital management agency.

Capital deployed through our network of underwriting hubs globally allows us to write on behalf of both ourselves and other insurers. It’s an agile, capital-efficient model that makes economic sense.

Technology also sets us apart: our insurtech platform sets a new standard for agile, real-time operations and processing of risk transactions. Most of all, Mosaic is a business whose fundamental focus is long-term. We’re in it for the long haul and our aim is to be independent, make our own decisions, lead the markets we’re operating in, regardless of market cycles.

As a member of the Class of 2020, how do you measure success?

Blaser: We’re proud of our success to date and our team’s achievements align with our plan. We accomplished a lot in our first 12 months. The big wins included securing Lloyd’s approvals that enabled worldwide licences and financial strength ratings, and entering a joint venture with DXC Technology to build a pioneering insurtech operating platform.

We established corporate headquarters in Bermuda and five service companies accessing regional markets—in Bermuda, Canada, continental Europe, the UK, and the US. We opened three physical offices, in Hamilton, New York, and London, and recruited 80 employees across regions and fields of expertise.

Underwriting got under way in all six units, and by year’s end, we’d already received more than 10,000 submission requests for insurance policies from prospective clients. We also opened a Box (127 & 127B) on the Underwriting Floor at Lloyd’s, created a brand identity, and launched a corporate website.

We’re not resting on our laurels in year 2. We have a robust business plan and goals, with more staff and new geographies in our sights. We have signed an innovative and transformative deal with SiriusPoint, making it a strategic investor and acquiring its managing agency at Lloyd’s—which accelerates our ambitions.

You have a syndicate + agency approach. Why?

Wheeler: We believe it’s the best of both worlds—the balance-sheet model and the managing general agent (MGA) model.

Combining syndicate + agency avoids capital bloat, gives us global agility, and allows us to efficiently match capital—both proprietary and trade-partner capital—with risk that we source around the world.

Our capital and ratings are centralised through our Lloyd’s syndicate. So, rather than having separate, risk-bearing balance sheets in different parts of the world with committed capital that may or may not be deployed, we can channel capital as needed to specific geographies. Mosaic’s is an innovative and capital-efficient model for an insurance company today.

You said you were ‘taking Lloyd’s virtual’—was that a first for Lloyd’s?

Wheeler: It’s about spreading risk. There’s huge value in syndication; it’s how London works—it’s in the Lloyd’s DNA. As a syndicate, we’re able to leverage the great value of Lloyd’s ratings, licences, and brand heritage by accessing business and writing on our Lloyd’s paper and through our syndicated capital programme around the world: in Bermuda, New York, Chicago, Toronto, and Asia.

Lloyd’s has a 340-year-old market, it’s got A-plus paper, and about $50 billion in revenue. As a member of Lloyd’s, we share those benefits, and can allocate capital to countries and products easily. It’s a unique model, and one that has won the support of Lloyd’s and the market generally.

You are a specialty insurer of many lines. Have you rolled them all out?

Wheeler: We hired underwriting chiefs, built respective units, and started underwriting in all six divisions—political risk, political violence, transactional liabilities, cyber, financial institutions, and professional lines—last year, as planned. We intend to add environmental liability to our business some time in the future.

What are Bermuda’s credentials to become the centre of climate risk finance, and will you participate in that market?

Blaser: Bermuda is well-placed to take on this focus and be a global leader in this area—due to the fact it’s a small, isolated island with its own history of resilience against hurricanes, and also home to some of the world’s largest re/insurers of natural catastrophes globally.

It makes sense, given Bermuda’s well-regulated market, its reputation as a top financial services centre, and its ecosystem of banking, auditing, and other services.

It’s also very relevant to what companies are now making a priority for environmental, social, and corporate governance (ESG) concerns around the world. Mosaic is engaged from the important ESG perspective, and because we have a Bermuda-based headquarters and belong to the local community in this respect. But we do not underwrite any climate risks in our business.

You described ‘steep technical barriers to entry’. What were they and how are you overcoming them?

Wheeler: The lines of business we selected were carefully chosen. Criteria included the fact each was not a type of business that could be commoditised or easily modelled as, unlike natural catastrophe, auto, and homeowners’ insurance, there aren’t large databases around the losses we write. Instead, each line relies on acute expertise to underwrite well—and that requires the right people.

We’ve therefore placed great focus on hiring world-class talent in each line, people who bring top-tier reputations and deep experience in their spheres of excellence. Mosaic’s team comprises a diverse group of people who represent the best intellectual capital across the wider market right now. A good example is that all our transactional liability underwriters are ex-corporate lawyers—that’s a different underwriting threshold.

You plan to ‘enhance conventional insurance models of the past’. What were they and how will you do that?

Blaser: Mosaic is neither a traditional carrier with multiple balance sheets in different regions, nor an MGA. We’ve taken the best pieces of both models and put them together (like a mosaic!), while eradicating what we perceived as the frailties.

So, through our syndicate, we enjoy a single P&L across geographies, which allows for agility in underwriting. We also have claims-settling authority, and control over form and rate, which provides clients with stability and comfort. So, our structure effectively takes the best parts of both models and puts them together.

You said the COVID-19 pandemic, hardening rates, and geopolitical and technological exposure ‘provided tailwinds we didn’t expect’. How have you managed them?

Blaser: The current industry landscape certainly provided tailwinds we didn’t expect when we started. The COVID-19 pandemic, coupled with an unprecedented hard market (we’re now entering the 18th quarter of rate increases), has provided us advantages we couldn’t have predicted.

As a new company, we began with no legacy on any front—a clean balance sheet and all new, cloud-based, plug-and-play technology. We also brought decades of experience together, a strong track record of expertise, and invaluable relationships that have driven our debut success.

Wheeler: We selected all our business lines for their underlying growth trajectory and their relevance to both current and future global trends. It’s no surprise the products are, in fact, globally relevant. What’s extraordinary is that all these products are in far greater demand now than they were pre-COVID due to their political, cross-border nature.

In an environment driven by worry about cross-border transactions, demand is higher today than it would have been. Cyber is a good example: when you thought about cyber insurance two years ago, it was an interesting grey area; now it’s absolutely fundamental.

There is now the war in Ukraine, sanctions against Russia and rising inflation—how are you adapting to those new factors?

Wheeler: We’re watching what’s happening very carefully. The volatility and unpredictability in markets worldwide is bringing unprecedented challenges, but that also provides a company like Mosaic a chance to prove itself.

Uncertainty coupled with our lack of exposure gives us an opportunity to leverage our expertise and offer capacity in complex business lines that may need it more than ever. Inflation, social inflation, cyber warfare, and physical warfare, amid a continuing pandemic—there’s a lot to unpack from a risk perspective. It will take time for much of the impact from current events to unfold. But Mosaic is ready to serve clients and capital partners.

At the Bermuda Risk Summit, what were the big takeaways?

Blaser: Having the Bermuda market come together again, in person, for the first time in two years was a big achievement and helped share knowledge and crystallise national messaging around the Island’s number-one industry. The opportunity to attract overseas delegates and media and communicate updates on current industry trends and conditions was also helpful, as the world begins to normalise following two years of pandemic impact.

The Bermuda market has been active and, in fact, growing throughout that period, thanks to the credibility of the Bermuda Monetary Authority, coupled with the agile nature of our people and business, but to be able to hold physical meetings and attract brokers, clients, and board members back here again to engage in person is vital for the Island’s economy.

The Summit did a good job of highlighting talent and trends—our own global head of cyber, Yosha DeLong, was a great example. She spoke about current cyber risk challenges, noting how the Bermuda market has a lot to offer in products and agility in this space.

Image Credit; / Ehrman Photographic

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Spring 2022

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