Brian Duperreault’s reinsurance start-up Mereo has won the backing of Susquehanna as its cornerstone investor, as it works to finalise its ~$1bn capital stack in time for a 1 January launch, this publication can reveal.
Sources said former Securis and IQUW executive Neil Strong will become president, as well as CEO of Mereo ILS, with former Fidelis executive Richard Holden becoming deputy CUO, as the start-up builds out its leadership team ahead of launch.
Reinsurance start-ups have been faced by a fundraising desert over the last two years as PE houses held back owing to concerns about exits, the ability to create franchise value in reinsurance, and concerns about underwriters’ grip on cat risk. This comes despite reinsurers putting up ROEs in the 20s and 30s through an 18-month period of outsized returns.
However, Mereo is now inching towards the start line, a year after this publication revealed that former AIG, Marsh McLennan and Ace CEO Duperreault was targeting a comeback as executive chairman of the start-up vehicle.
Sources said Mereo was also close to securing backing from a number of strategic partners, and had live discussions with a range of other potential financial investors including hedge funds, PE houses and family offices.
Susquehanna is a quantitative trading business that houses a PE and venture capital arm which has been lined up to back Mereo.
As revealed in December, Mereo’s CEO is former Aegis London chief David Croom-Johnson, who retired from the top-decile Lloyd’s performer in 2022 after seven years in charge. He will also initially be CUO of the Bermuda-domiciled class 3B reinsurer.
It is understood that, alongside its target 1 January launch, Mereo is looking to have an ILS fund up and running on day one.
Mereo has an A- preliminary financial strength rating from AM Best, and as it prepares to secure its final rating and to seek Bermuda Monetary Authority approval for launch, it has retained a range of advisors including Appleby, Wilkie Farr, EY and SRS. The business was already working with Kinmont and Price Forbes Re’s capital markets unit on the capital raise.
Other members of the team include former Hamilton CFO Jonathan Reiss, who will become CFO at launch, while continuing his position with SRS in Bermuda. Lawrence Minicone will serve as chief investment officer, with Jason Miller becoming chief commercial officer.
JLT veteran Derek Walsh will become chief legal counsel, with Federico Waisman as chief analytics and risk officer.
Speaking exclusively with this publication ahead of Monte Carlo last year, executive chairman Duperreault said the start-up would focus on “underwriting, underwriting, underwriting”.
As previously reported, it is understood that Mereo is looking to originate business from around 20-30 classes of business, creating a highly diversified book. These would include a portfolio of classes such as auto, workers’ compensation, professional liability, commercial property, casualty, crop, marine, surety, energy, reps and warranties, medmal, cyber and A&H.
A range of start-ups that tried to take advantage of reinsurance market dislocation following years of underperformance have either repeatedly delayed their launch or downed tools entirely. John Doucette shelved his plans and joined MGA Amynta.
Chris Fagan and former Catalina colleague Mayur Patel have still been working on their start-up in recent months, as have former Axis executive Steve Arora and retired Hannover Re CEO Willy Zeller.
However, in all cases fundraising has been an uphill struggle and timelines have been extended.
Cathal Carr – the latest to the start-up game with Oak Re – has secured Lloyd’s approval for 1 January, but this is subject to a capital raise Evercore is currently conducting.
Mereo declined to comment.