“We will continue to invest in our talent and focus on our use of tech and data.”
Stephen Catlin, Convex Group
How much capital did you raise and how?
Convex launched in April 2019 with $1.7 billion of equity capital from a number of investors. Commitments for an additional $1.5 billion of equity and preferred equity capital were secured by the end of 2020 bringing the total capital raised to just over $3.2 billion.
Who are the main investors?
The initial capital came from the Convex management team, Onex Partners V, Onex Corporation’s large-cap private equity fund, PSP Investments, and a consortium of co-investors. The additional $1.5 billion raised in 2020 was supported by the same investor group as well a number of new Onex co-investors and Sixth Street, a leading global investment firm.
Have you hired any new key figures/senior management to deploy?
In 22 months Convex has welcomed more than 300 people, and we have made excellent strides in realising our ambition to develop a world-class company for the 2020s.
“The rating tide had turned and we were in a position to start the new business.”
What is your initial business plan for how you will deploy the money?
We wrote over $1 billion of premium income in 2020, split between insurance and reinsurance.
Taking into account our clients’ needs and appetite, capital will be deployed to support the growth of our insurance and reinsurance functions in London and Bermuda.
From the outset we wanted to build a world-class specialty insurer and reinsurer which was legacy-free and technologically backed with the support of long-term capital. We will continue to invest in our talent and focus on our use of tech and data, all of which will provide Convex with a strong foundation as we build a sustainable, competitive advantage in the current market.
Once it is safe for our colleagues to return to the office, there will be an opportunity to strengthen our cultural advantage as well. This means spending a lot of time with our people, thinking primarily about how we can embed and align our culture with Convex’s wider strategy and purpose.
We’ve completed the easy part—we have the capital, the talent and the expertise, and current market conditions provide increased opportunities; but the key now is maintaining sustainability in preparation for future marketplace phases.
Why did you feel now was a good time to raise additional capital?
2019 was a year in which we felt the rating tide had turned and we were in a position to start the new business. The hardening market and gradually increasing rates created an opportune moment to raise additional capital, ensuring we had the capability to truly take advantage of market conditions.
Why did you choose Bermuda?
Bermuda is an established and valuable re/insurance marketplace, and from the outset we wanted Convex to become an important partner and support the Island. Its strong and respected regulator, agile and nimble way of doing business, and proximity and access to the US makes Bermuda an attractive choice for many industry startups to domicile.
As the go-to market for multiple products and significant placements, particularly in areas of the market we want to be involved in, Bermuda is certainly an excellent place for Convex to do business. The leadership team at Convex has a long history with Bermuda, so when came time to choose a home for Convex, it was the natural choice.
“Bermuda is certainly an excellent place for Convex to do business.”
What has been your experience of Bermuda so far?
We are working in a familiar marketplace. Our team consists of people who have strong and lasting relationships across the market. They are engaging with clients and brokers who know and respect their knowledge and expertise. From the very beginning the regulator has been extremely supportive, which has made doing business straightforward and efficient.
As we continue to build our presence on the Island, we will look to hire and invest in the abundance of local talent and we are developing graduate training schemes and internships.
What are your predictions for reinsurance market conditions in 2021?
The market is likely to continue to harden throughout 2021, 2022, and potentially into the next five years. Reserve strengthening in casualty classes and the impact of COVID-19 has had a marked impact on current conditions and will affect the longevity of the hard market.
What are your medium-term objectives as a business?
We are already starting to see traction in terms of underwriting and portfolio administration and our teams are producing new business and innovative solutions. We have largely completed building out the lines we want to be involved in, and our rate of recruitment will now begin to slow.
Our focus is centred on maintaining sustainability in all aspects of the business and building on our technological capability and use of data to become a top quartile performer; an insurer of the future that puts clients at the heart of everything.
Image courtesy of Shutterstock / Damir Khabirov / 279photo Studio
In association with:
A Bermuda:Re+ILS Special Report