Lloyd's insurer Inigo targeting up to $1.5B in premium for 1st phase
New Lloyd's of London insurer Inigo Ltd, which opened for business at the start of this year, is aiming to write gross written premium of between $1 billion and $1.5 billion in the first stage of its development, according to co-founder and CEO Richard Watson.
"If we don't get somewhere between those [figures] in year three to four, we'll have missed a trick," Watson said in an interview. "I will be disappointed."
Inigo was one of a handful of insurers and reinsurers that started underwriting at Jan. 1 to capitalize on rising rates in certain insurance and reinsurance lines. The new company officially announced its launch in November 2020 with $800 million of capital from a range of investors, including Caisse de dépôt et placement du Québec, Enstar Group Ltd., J.C. Flowers & Co. LLC, Oak Hill Advisors LP, Qatar Investment Authority, Stone Point Capital LLC and Inigo's management.
Inigo's three founders — Watson, CFO Stuart Bridges and Chief Underwriting Officer Russell Merrett — are all alumni of Lloyd's insurer Hiscox's top team. Watson worked at Hiscox for 33 years, culminating in a seven-year stint as chief underwriting officer. Inigo has its foundations in Lloyd's managing agency StarStone Underwriting Ltd. and one of its syndicates, 1301, which Inigo bought from Enstar and Stone Point in a deal that closed in March. Enstar and Stone Point retained Syndicate 1301's old liabilities, giving Inigo a clean slate.
Inigo started 2021 with plans to write an even split of insurance and reinsurance business and $400 million of capacity. Watson said he thinks the company is "going to write every bit of that."
Premium income from the retrocession and risk excess-of-loss parts of Inigo's reinsurance offering have been lower than expected, Watson said, but has exceeded expectations in areas such as directors' and officers' liability and property direct and facultative on the insurance side.
"The disappointment has been primarily on the reinsurance side because most of us would have thought the market would have hardened slightly more than it has," Watson said.
Inigo will "certainly" aim to increase capacity for the 2022 year, Watson said, although he did not give a figure, saying it would be "somewhere in between" the 2021 capacity and the target range.
Inigo's expansion plan comes as Lloyd's continues to push for underwriting profitability and get tougher on serial underperformers, while allowing better performers to grow. Watson said Inigo has been "very clear" with Lloyd's CEO John Neal about its growth aspirations and he had been "very supportive" of that.
Good pricing conditions in the reinsurance and specialty insurance markets will only last so long, and there are already reports of price increases starting to slow down. That said, Watson expects "a fairly strong market" for at least the next two to three years.
"I just don't feel like there is the flood of capital continuing to come in that is going to encourage crazy behaviour," he said
Keeping it simple
The growth Inigo seeks is "entirely plausible" in its current business lines, according to Watson.
"I don't feel any pressure to go and chase five other lines of business and upend those markets in a desperate attempt for top-line volume," he said.
The company is also keen to keep its focus on a few lines where it knows it can get adequately paid for the risks it takes on. Even so, Watson said it is possible that the company would add one or two lines of business where there is a large enough premium pool and where there are lasting prospects for profitability. The company has been examining one line in particular, according to Watson, but he did give further details other than to say it was "closely aligned" to what Inigo already does.
Equally, the company is not on the hunt for more capital to fulfil its current growth plans. CFO Bridges said that while the company had investors who he felt would "happily increase their stakes going forwards," the $800 million capitalization "was with the growth plans Richard outlined in mind going forward."
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