Speaking at the Insurance Insider London Market Conference yesterday, Mosaic co-founder and co-CEO Mark Wheeler said that rather than being remembered for having an impact on capital, the newest crop of carriers will have a different effect.
“It’s much more about the tech impact, and in particular how it will speak to risk selection, sharing data and process efficiency that is going to be a hallmark characteristic for us,” said Wheeler.
He added that for Lloyd’s player Mosaic, the lack of either its own balance sheet or a tech legacy was “a big competitive advantage”.
Capital and competition
Inigo CEO Richard Watson said the new carrier had not had to “slice the legs from under the market” to find participations due to a retraction of capacity in the last year.
[We were] pushing on an open door
“There were loads of carriers who were taking their line down from $100mn to $25mn, or from $25mn down to $5mn, so there was a massive number of programmes and policies that couldn’t get home,” he said.
“When I hear that question around impact, what I normally hear is ‘are you going to carve the market to death?’ We didn’t get the money and come into the market so we could halve the rates that are currently being charged.”
“[We were] pushing on an open door.”
A new wave of talent
Beat Capital CFO Paul Rayner said a “more substantial” area of impact for the class of 2020-21 was on talent, in offering people more choices.
“We are in an industry where companies get bigger and consolidate…and the knock-on impact is there are less places for people to work where they’re in an intimate environment and they’re at the early-growth stage of that business,” he said.
RPC partner James Mee added that the impact on talent could be seen at established carriers as well as within start-ups.
“When there is change and people start moving around, the existing businesses also have an opportunity to repurpose and to promote new people as a new wave of talent in those businesses as well,” he said.
Inigo’s Watson added that the crop of start-ups gave talented staff a way to progress when they could not see a bright future at their current employer.
“We have found a strand of super smart 30-somethings, who are typically sitting below a white, male 40-year-old, who is sitting behind a white, male 50-year-old, who are going nowhere fast, and the smart, more typically female 32-year-old is stuck going nowhere,” said Watson.
“If I can give that smart 32-year-old an opportunity to accelerate their career, I am very happy raiding all my competitors.”
Wheeler said that Mosaic began by designing its structure and products and then pursuing the right staff. Of the roughly 100 people now working for the business, around 20% did not work in the industry a year ago, he added.
Beat’s Rayner added that to give capital providers confidence, start-up leaders would naturally need to come from within the sector.
“To raise capital, you need to have a track record, so by default some of the people you are going to form a start-up behind have to be from the industry because they have to be able to demonstrate that they can do their job,” he said.
Entrepreneurialism through the cycle
The panellists agreed that the heightened investor interest in the sector seen in 2020 is beginning to wane.
Wheeler said: “If you take something like [Conduit executive chairman Neil] Eckert’s spectacular IPO, that couldn’t happen today.”
He added that while there is still a pipeline of start-ups yet to come, with five new Lloyd’s syndicates in the offing, “the start-up express is about to leave”.
Rayner added that external investor interest is ebbing, but pointed out that entrepreneurialism is present in some forms throughout the market cycle.
“Most private equity firms who wanted to come into the industry have made their bets now,” said Rayner.
The start-up express is about to leave
“There are always start-ups through the cycle. We go through these private equity start-ups, then there are trade-based start-ups at Lloyd’s which we saw in 2010 to 2015, and then amongst all that there are segmental start-ups for classes of business which lend themselves more to MGAs.”
Mee added that in this latest wave of activity, private equity is “very definitely back” as investors were looking to take on balance sheet risk.
