Few expected that Stephen Catlin and Paul Brand’s insurance and reinsurance venture — Convex — would have wanted to get involved in the marine market when it was first mooted at the start of this year.
At the time, the hull and machinery and cargo insurance markets were making faltering attempts to recover from recession. The trend was for companies to exit rather than enter the marine market.
But, more recently, after the company was officially launched, rate improvements appear to have tempted Catlin and Brand to take a gamble on marine in a bid to catch an upswing in the market.
Any doubts over the partners’ intentions towards marine appeared dispelled this summer when they recruited Antares Underwriting’s head of marine, John Potter.
The company has also taken on Steve Hawkins, head of upstream energy at AXA XL, in another move that touches on the marine and offshore markets.
However, industry sources say it is difficult to assess at this stage just how committed Convex will be to marine.
Convex has all of its $1.8bn of financing in place, but it is early days for the company. It is still working out of a WeWork, short-term serviced office in London. Underwriting activity has been limited while the company’s succession of big-name new recruits, headhunted across a range of speciality markets, work out their gardening leave.
Convex has joined the International Underwriting Association, which represents the non-Lloyd’s of London market in the UK capital.
Coy on its intentions
Convex itself is coy over its intentions in the marine market and did not respond to requests for comment.
The only clues come from a statement in which it said: “Convex will underwrite insurance and reinsurance for complex speciality risks across a diversified range of business lines from Bermuda and London.”
And brokers suggest the marine class fits well with Catlin’s aim to target recovering markets.
“There is evidence of pricing momentum in many classes and we are well equipped to prosper in a challenging market,” Catlin said in a statement about the company’s strategy.
Both Catlin and Brand have extensive experience in marine underwriting and built up a leading marine portfolio at XL Catlin before it merged with AXA.
Catlin was a key insurance provider to some of the shipping industry’s biggest players, including Maersk Line, and it participated in the International Group of P&I Clubs’ $3bn reinsurance programme.
But a key concern among observers is over how Convex’s arrival could affect the recovery of the marine market. Catlin has said he wants to create the “insurance company of the future”, without giving away much detail on what that will involve.
One industry source, who claims to have been given some insight into Catlin’s strategy, says he wants the firm to be ultra competitive. The source says Catlin is “attacking the market from the efficiency angle”.
Rivals say they are more concerned about how price competitive Catlin will be as much as any innovations it might bring to the market.
Marketing should not be a problem as Catlin’s name carries considerable weight in the insurance markets. With $1.8bn of secure financial backing, it also has an AM Best rating of A- excellent.
But it also enters the market without any legacy claims, which will make it highly price competitive against existing providers.
Most worringly, for Convex’s competitors, Catlin says it can access even more capital to fund further expansion.
