Each Year at its Legacy Transactions and Networking Forum AIRROC awards its “Person of the Year” to someone who has had a significant impact on the run-off industry. This year, for the second time in its history, AIRROC awarded this honor to a team of industry professionals. This award acknowledges the team at Fortitude Re whose vision, hard work, and legacy expertise has made them Bermuda’s largest multi-line composite reinsurer. To put their accomplishments in perspective, we asked them to answer some key questions about their success.
Questions from AIRROC:
1. What was the most challenging aspect of your work in forming the current Fortitude Re entity?
The challenges in legally and operationally separating Fortitude Re from its former parent were enormous, though not unexpected, and we were grateful to have AIG’s dedicated commitment to, and cooperation in, that process. As a newly-independent entity, we needed to hire and align staff, stand up new IT infrastructure and financial systems, fully build out all our operations, and constructively engage our regulators and other stakeholders – all while helping facilitate a successful capital raise process. We accomplished all this on schedule and under budget, which is a great testament to the strength of, and collaboration within, the broader Fortitude Re team.
2. What do you enjoy most about the current team environment?
We’re deeply committed to collaboration and teamwork, and we’re fortunate to have a great mix of very seasoned insurance professionals and younger talent in the organization. We work hard but we celebrate our accomplishments. Our team embraces the challenges of building and refining a world-class organization and we welcome all constructive input to inform that journey. We have our occasional healthy debates, but we genuinely like and respect each other and we’re all aligned around our mission and purpose.
3. What challenges/opportunities for your company and for the run-off industry do you see in the future?
The run-off industry has crossed an important threshold in that legacy transactions are now largely embraced in C-suites and boardrooms as key strategic elements of sellers’ capital and reserve management, and strategic planning playbooks. This has transpired during a hard market in which sellers are particularly motivated to redeploy capital and management attention into profitable, forward-looking opportunities. That rising tide raises the profile for, and likely lifts the boats of, all of us in the legacy industry.
This pivot has, of course, attracted investor capital to the legacy space and has given rise to a host of new market entrants —including Fortitude Re. We expect to see some increasing differentiation and specialization in which legacy reinsurers will find and define their space in the market in a way that plays to their respective strengths. In the meantime, we’re hopeful that the market retains appropriate underwriting and pricing discipline.
4. When you describe to someone who is not in the run-off business what you do for a living how do you describe it?
The legacy market provides insurance and reinsurance counterparties breathing room to focus on the growth and innovation necessary to protect people and organizations from the unpredictable. Fortitude Re, in particular, facilitates those efforts by way of a very large, rated, composite balance sheet, through which we can service both P&C and life and retirement business. We help insurers under pressure from investors and boards to improve profitability, reduce management distraction, and release trapped capital, while always ensuring appropriate and responsible treatment of our clients’ stakeholders, including policyholders and claimants.
5. How can the industry attract new talent to the run-off space?
Although many legacy veterans ended up in the business by circumstance or accident, the industry now offers up an attractive long-term career choice in a dynamic, growing market. Legacy reinsurers, like Fortitude Re, are generally smaller, more collaborative organizations in which younger, newer talent can quickly gain exposure to many aspects of the insurance and reinsurance business. We’re pleased by the good work AIRROC, and other organizations are doing to position the industry as appealing for younger and more diverse talent. We’re no longer “your parents’ insurance industry!”