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Topsail Re pushes past $100mn in written premium

Cayman Islands start-up reinsurer Topsail Re is on track to write in excess of $100mn of premium in 2019 through business onboarded in its first six months of operating as it looks to take advantage of improving pricing and terms to build out its portfolio of business, The Insurer can reveal.

The privately held reinsurer was launched late last year by former JLT Re and Axiom Re executive David Johnson ahead of the 1 January renewal season.

At that time, Johnson indicated that Topsail would primarily write quota shares, property cat, per risk and proportional business as well as property cat retro.

In an interview with The Insurer, Johnson revealed that the portfolio built to date has “stayed on course” with the initial plan and is spread across multiple lines, but approximately 45 percent had been auto-related as the reinsurer looked to grow off a low volatility base.

Less than 20 percent of its book has been derived from non-standard auto (NSA) quota shares, with several insurtech-related standard auto deals accounting for another 20 percent, and commercial auto deals adding 10 percent.

General liability quota shares have generated approximately 5 percent of its book, with net line property quota shares another 10 percent.

The remainder of the portfolio was driven by property-related deals including quota share, per risk and cat, and catastrophe retro. 

Johnson said that Topsail Re had done business with reinsurance broker giants Guy Carpenter, Aon and Willis at 1 January, as well as Beach and JLT Re before its acquisition as it closed around ten deals at the key renewal date.

It has since added business from TigerRisk, BMS, and Trean placements as well as increasing its deal flow from the big three.

“Topsail has been well received by the market. We’ve had strong interest and we believe our timing has been exceptional,” he said, pointing to the distress seen in lines of business including commercial and personal auto.

The start-up has written several program deals but the majority of its book so far has been generated from fully risk-bearing traditional insurers rather than fronting and issuing carriers.

Although Topsail is currently projecting over $100mn in written premiums in 2019, it has contracted closer to $150mn in premium, and expects to write a number of other deals through 2019 that will further elevate its top line by year-end.

Johnson said that Topsail had also been profitable in Q1, despite the very low level of earned premium at that stage.

Improving terms

The executive, who as a broker specialized in placing coverage for regional carriers, said that terms are now significantly tighter for personal and commercial auto deals, leading to better alignment of interest.

“As a broker I did not see the deal terms we are seeing now. We’re seeing much better alignment of interests for the reinsurer in the sliding scale on deals. The deals generally are not getting done otherwise with several reinsurance markets having exited the market,” he observed.

Even on program business there is a greater alignment of interest as some fronting carriers begin to take risk.

Johnson said the reinsurer’s underwriting approach is based on flexibility as it looks to offer a different view and “craftier” solutions than its larger rivals. “The key differentiator for us is that we are a nimble, creative, and responsive organization which allows us to be provide value to our counterparties. We have backed our mantra of trying to support the people that are reasonable buyers of reinsurance and looking at us as long-term partners,” he added.

The company has no set parameters for deal size. “It doesn’t matter about the size. If it’s a good deal and good counterparty, we want to build the book,” said Johnson.

Topsail Re has significant headroom for further top line growth and is aiming to reach annual written premium levels in excess of $300mn within the next four years.

The company will also consider acquisitions as it looks to build out its platform.

At its launch, the reinsurer said it had seeded capital in place from ultra-high net worth investors and would be treated as a US tax paying entity despite its Cayman Islands domicile.

Johnson was previously executive vice president and North America executive committee member at JLT Re, and was formerly president and COO of Axiom Re, which was bought by Beach & Associates from Brown & Brown in December 2014.

His co-founder at Topsail is a two-time NBA All-Star David Lee, who was most recently affiliated with private equity firm Social Capital Corporation.

Johnson was initially joined by two former Axiom Re colleagues: Robert Harnatkiewicz and Jacqueline May.

Harnatkiewicz came over with Johnson from JLT Re, with May most recently at Beach Re.

Johnson told The Insurer that Topsail Re has since added staff, underwriting, analytics/cat modeling and compliance.

Topsail set up a Greensboro, North Carolina-based underwriting services arm to market on behalf of Topsail Re.



David Johnson