(Bloomberg) -- An insurance venture led by industry veterans Greg Hendrick and Dinos Iordanou is starting up with $1 billion in equity capital provided by Carlyle Group Inc., Hellman & Friedman LLC and management.
Vantage Group Holdings Ltd. will begin by providing reinsurance, with plans to later underwrite other coverage as well, according to Hendrick, who will be chief executive officer. Iordanou, who previously led Arch Capital Group Ltd., will be non-executive chairman.
Hendrick and Iordanou are forming a new reinsurer at a relatively good time for the market. Reinsurers have been pointing to better pricing and terms and conditions, Wells Fargo & Co. analyst Elyse Greenspan said Nov. 13 in a note to clients. Strings of catastrophes from 2017 until this year, coupled with man-made losses such as airplane crashes and an increase in loss costs broadly, have made the timing more attractive, Hendrick said.
“All that was brewing and that’s what Dinos saw before Covid hit, and then when Covid hit, it became clear that that was not the changing moment -- it was the last straw in the back,” Hendrick, the former CEO of Axa XL, said in an interview. “We’re going to step in right now when others are stepping back to fill a void that brokers and customers need.”
Iordanou reached out to Hendrick the day after he left Axa XL with a pitch for a new insurer. The former Arch executive said he preferred to start from scratch instead of trying to remodel an existing company and plans to build a venture that lasts many years.
“I had the urge to get back into the business in some way,” Iordanou said. Starting a new business “allows us to sort of make our own painting.“
The company plans to begin with reinsurance coverage including property catastrophe and specialty risks, according to a statement Thursday. Vantage, which has already hired some staff with backgrounds that range from work at Goldman Sachs Group Inc. to Sompo Holdings Inc., plans to add more employees including ones to focus on the build-out of the insurance portion.
Hendrick and Iordanou “have a history of running both reinsurance and insurance sides of the business,” Hunter Philbrick, a partner at Hellman & Friedman, said in an interview. “We’re going to come out of the gates quickly here with reinsurance, but the real long-term, more durable franchise” comes from building an insurance venture.
Reinsurance has long attracted alternative capital. Hedge fund managers including David Einhorn and Dan Loeb started reinsurers years ago, with the aim of generating stable underwriting profits and realizing more upside from the investments. But those models have come under pressure in recent years as losses piled up and investments have struggled.
Vantage will aim to focus on the underwriting side of the business and plans to keep its investment portfolio “pretty vanilla,” according to Hendrick. The business will couple technology and data analytics with a focus on underwriting to help it perform in all market environments, according to Brian Schreiber, head of Carlyle’s insurance solutions business.
“Timing is very important in these kinds of insurance enterprises, when you get them started and when you get your capital deployed, but it’s not everything. It’s really about being able to select and price risk and manage capital efficiently through the cycle,” Schreiber said. “We are very focused on Vantage being an underwriting driven business. And with Dinos and Greg, you have two executives who have a proven ability and track record of having done that throughout cycles.”
