The renaming of Inver Re in both London and Bermuda and Equinox Re in the U.S. follows the simplification of Ardonagh Specialty’s multiple brands in 2023.

Inver Re was launched in 2021, bringing together teams after the acquisition of BGC’s insurance business in November 2021. Since its inception, the reinsurance broker has grown across Bermuda, the U.S. and London welcoming specialists and launching several teams to become a large independent broker in Bermuda.

“Price Forbes is renowned for its rich heritage in London, Bermuda, and global marketplace,” said Wallin. “Price Forbes Re will build on more than 100 years of specialist insurance broking by creating a reinsurance specialist business that is energetic, entrepreneurial, progressive, and bold.”

“In an increasingly complex world, success in business relies more than ever on effective and strategic risk management and Price Forbes has a reputation for partnering with clients around the world who are looking to understand and balance today’s risk and plan for the future,” added Wallin.

Bonard added: “Our approach breaks from traditional reinsurance models to provide the agility needed in today’s fluid, rapidly changing world. As Price Forbes Re we will continue to bring a fresh perspective to a market increasingly lacking flexibility and draw on a rich history of driving innovation in risk management.”

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A recent whitepaper authored by Johansmeyer explains that while traditional insurance usually requires historical data around penetration, premium spend and losses, parametric re/insurance however, does not have to deal with these constraints.

Unlike traditional insurance, parametric covers rely on an external source of data to indicate the magnitude of a triggering event.

As a result, parametric re/insurance could be an effective gamechanger within a region that witnesses so many natural disasters, like Asia.

The whitepaper highlights how generally in Asia – excluding Japan, South Korea, and other wealthier states in the region – data shows that 1,267 natural catastrophe events took place during the ten-year period ending in 2023, which impacted nearly a billion people.

At the same time, climate change appears to intensify this risk and amplify the impact in the years ahead, ultimately exposing some of the most vulnerable people in the world to increased, more frequent and more powerful natural disaster events.

The surge in natural disaster activity also brings forward further costs for remediation, a major issue that threatens to extend the suffering associated with disasters, and straining the economies least able to bear further expense.

Johansmeyer notes that the costs of managing natural catastrophes are already high, and according to estimates in natural disaster database EM-DAT, the past decade has cost the Global South states in Asia more than US$400 billion, adjusted for inflation.

Therefore, if you take the 2014-2022 average and use that for 2023, then the ten-year total stretches above $460 billion, a incredibly high figure.

Going back to parametric re/insurance, the whitepaper showcases how Inver Re, previously has helped its clients in Türkiye secure parametric reinsurance protection for earthquake risk.

Another key aspect of parametric re/insurance which is highlighted, is that parametric covers require a magnitude measure, which protects capital providers from such issues as political risk, moral hazard and adverse selection – all of which have been identified as causes for concern with regard to insurance in developing markets.

As well as this, Johansmeyer notes that parametric risks are relatively easy to model and understand, which ultimately makes this approach easier for reinsures to accept than traditional re/insurance.

“It’s not just the flow of capital that’s fast with parametric re/insurance. Access to protection is faster as well. Unlike
traditional re/insurance, the fact that parametrics are easier to model can accelerate decision-making and reinsurers’ appetite for diversifying risks – especially in Asia – provides further incentive to support the region. Investing in the Global South improves the productivity of global reinsurer capital, contributes to sustainable profitable growth and provides a foundation for future market expansion,” the whitepaper reads.

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According to ASR, the agreement will double its parametric capability for smallholder farmers, natural perils and renewables, with the prospect of further expansion in the future.

ASR noted that its parametric approach to reinsurance “facilitates the flow of capital” to support vulnerable populations.

“The region has already benefitted from efforts in recent years by ASR’s parametric division, providing resilience and paying for claims on weather, climate, and seismic risks, as exemplified through ASR’s Mozambique Cyclone Parametric Reinsurance Program,” ASR observed.

Dr Raveem Ismail, Head of Parametric Underwriting, ASR, commented, “This partnership really is a step forward. Although there have been efforts to increase the flow of reinsurance capital into Africa over the past decade, few have come in the context of a commercial entity specifically focused on risks in the region.

“ASR is fully committed to Africa and the Middle East and we are delighted to be able to double our parametric capabilities.”

Tom Johansmeyer, Global Head of Index, Inver Re, added, “It has been an honour and a pleasure to support this new partnership. While many are shy of the challenges associated with risks in the Global South, the opportunity is significant, and creative thinking can make it more attainable.

“This partnership, built on the strength of ASR’s index development and deal sourcing capabilities and both party’s commitment to Africa and the Middle East, should serve as a model for expanding worldwide reinsurance support for risks in the Global South.”

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Rance’s remit in his new role will include being responsible for Credit, Marine, Cyber, Parametrics, Motor, and Group Solutions.

Most recently, Rance served at Gallagher Re as the Managing Partner and Head of Global Mortgage. Before that, he spent a decade as Head of Global Mortgage at JLT.

He has an extensive career spanning 35 years and has held the roles of European managing director (MD) for US mortgage insurer, Radian and MD for Structured Transactions at mortgage insurance specialist Genworth.

Prinn commented on the appointment, “It is fantastic that Inver Re has attracted someone of Steven’s calibre to create its Specialty Division and lead the growth of our credit proposition.

“In the past, Steven has headed up the UK’s first government-backed mortgage insurance programme and led the development of mortgage insurance schemes for housebuilders. The skill he brings to Inver Re will hugely support our growth journey as we cement ourselves as a reinsurance broker that truly offers something different to the market.”

Rance commented: “This is an exciting time to join Inver Re and I have an opportunity to build on the early success of the organisation and develop a Specialty team which will harnesses the skills of some hugely talented people. I was attracted to the Inver Re business as its relationship to Ardonagh means it can leverage the scale of that business while also focusing on bespoke and specialist work for its reinsurance clients.

“In addition to setting up the Specialty division, I am also looking forward to realising the opportunities for Inver Re in the credit space which will help support home ownership, house building and, in turn, the wider growth of our credit business.”

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According to the firm, Marsh will be running Ardonagh Specialty’s Bermudian business operations alongside CEO Chris Bonard, while simultaneously building out Inver Re’s retro capabilities.

Marsh joins Ardonagh from Gallagher Re, having most recently held the position of Chairman of its Bermuda office following the acquisition of Willis Re, where he’d previously spent 26 years in various roles including Chairman, CEO and Deputy CEO of the Global Specialty division.

Commenting on the new role, Marsh said, “I’m incredibly excited to be joining the team at Inver Re and join their mission to build a client-focused alternative to the big three.

“The combination of an agile start-up mentality with the power of Ardonagh behind presents a compelling opportunity to shake up the market.”

Chris Bonard added, “It’s great to have Jonathan on board to help us expand our retro team, drive new business – and continue to build a responsive and agile option for clients.

“He’s well known and respected across the industry and brings with him a wealth of experience and expertise that will help us achieve our ambitious growth plans.”

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Shumway joined Hyperion X, which later became Howden, from JLT Re in 2019, which followed Marsh McLennan’s acquisition of JLT Group earlier that year.

During his time with Howden, Shumway served as Executive Director, Head of Advisory, HX, and most recently as Managing Director of Howden Capital Markets.

Prior to his more than three year stint with JLT Re, Shumway spent over 13 years at reinsurance broker Guy Carpenter in a variety of roles, including Senior Vice President, Head of Strategic Advisory – APAC, and Managing Director, Head of Strategic Advisory – APAC.

Earlier in his career, Shumway spent more than three years with AM Best as a Credit Analyst, and more than one year at KPMG US as a Consultant.

In his new role at Inver Re, Shumway will be based in London.

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In its Unpicking North Atlantic Hurricane Risk report, Inver Re also highlights the need for an ongoing re-balancing of the discussion between hazard and exposure within a reinsurance context.

This is needed, the report states, despite all the analysis that has been done and directed towards modelling the impact of the change in hurricane severity and the acknowledgement that anthropogenic global warming has increased the severity of North Atlantic hurricanes.

Inver Re said: “Changes in hazard due to climate change is only one part of the picture. Changes in exposure mean more people living in coastal communities in the US than ever before, and inflation driving replacement costs to record levels.”

“Inver Re analysis at the end of the 2022 hurricane season estimated exposure effects could have twice the impact of hazard effects due to climate change on hurricane losses between now and 2030. That is assuming a worst-case scenario of two degrees of global warming by 2055 (RCP8.5), under an intermediate scenario (RCP4.5) exposure effects could have four times the impact,” the report stated.

Adding: “This is not to suggest that it is not critically important to mitigate potentially catastrophic effects of climate change within a broader context. But specifically within the context of North Atlantic hurricane risk, changes in exposure are a more significant driver of the increasing cost of these events.”

Hurricane risk is broken down into three components: vulnerability, hazard, and exposure, analysts explain. The vulnerability of a built environment is complex. Properties in the US are being constructed under improved building codes, ensuring built environments are more robust to repeated hazards.

In time, improvements to the built environment should negate the effect of historical building regulations. Moreover, changes in the building code and other mitigation and climate adaptation measures will hopefully help to mitigate the effects of hurricane risk in the future.

But right now, analysts highlight, changes in hazard and exposure will likely have a more material impact on hurricane risk.

With hurricanes, the primary hazards are: windspeed, precipitation and storm surge. According to the report, studies have found that windspeed has increased because
of the impact of climate change on oceanic factors such as sea surface temperatures (SSTs).

It is less clear whether relative precipitation has increased to date. Although changes in hurricane translation speed could have contributed to hurricanes dropping more water it is not clear what, if anything, has caused this, analysts noted.

Regarding exposure, there has been significant population growth in the eastern coastal states of the US, particularly Florida. According to the report, growth has been enabled and encouraged by political factors including the National Flood Insurance Program (NFIP), low taxes and good job opportunities.

Consequently, there is significantly more property in the way of landfalling hurricanes in the US, and population growth is expected to continue.

Additionally, annual US replacement cost inflation averaged 10.8% in the two years up to the start of the 2022 hurricane season and outpaced CPI at a compound annual rate of 2.1% since 20129. COVID-19 had a significant impact on this, but replacement cost inflation outpaces CPI even after normalising for these effects.

This means that the value of the buildings exposed to hurricane hazard has increased significantly, not only in absolute terms but in real terms too.

“Changes in hazard and exposure interact to have a multiplicative effect on economic losses. As the reinsurance industry has experienced, the product of severe hurricane events, replacement cost inflation and demographic trends have made it extremely difficult to accurately predict and price hurricane risk.,” Inver Re’s report explains.

Inver Re’s data analysis revealed in the report demonstrates a clear relationship between windspeed, precipitation, storm surge and economic loss.

The broker has used this data to developed a top-down model that is able to capture a significant amount of the variance within this set of 164 historic events.

Inver Re said: “Assuming 2 degrees of global warming by 2100, we have broadly applied the results by Knutson et al. 2020, approximate changes in storm surge based on projected sea-level rises and projected inflationary and demographic trends to estimate the relative effect of hazard and exposure on economic losses out to 2030.

Taking an average Category 1 hurricane event making landfall in Florida, assuming 2 degree global warming by 2100 (RCP4.5) and continuation of inflationary and demographic trends since 2002, there is a 0.5 probability that economic losses increase by more than 28% by 2030.

“For an increase of 28% or more, the impact of climate change on hurricane hazard is estimated to account for roughly a fifth of the increase with inflationary and demographic effects accounting for the remaining 80%,” the report found.

“Assuming a worst-case scenario of 2 degrees global warming by 2055 (RCP8.5) there is a 0.5 probability of losses increasing by more than 36%, with the impact of climate change on hurricane hazard estimated to account for just over a third of the increase in this case.”

Inver Re concluded: “In our view, this demonstrates the need for the ongoing rebalancing of the discussion between hazard and exposure within the context of North Atlantic hurricane risk. Fundamentally, it is essential that as a starting point underlying exposures are accurate and up to date, and rate changes reflect underlying inflationary dynamics. Assuming these criteria are met, reinsurers will be much better equipped to navigate a changing North Atlantic hurricane risk.”

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Johansmeyer’s appointment as Inver Re’s Global Head of Index was announced earlier in the year. He joined the broker from Verisk, where he had worked for 11 years, most recently leading its Property Claim Service (PCS) business.

While holding this role, he oversaw the creation, expansion and adoption of loss indices – third party data sources which trigger when a claim is paid out.

Johansmeyer holds an MA in global diplomacy from the University of London where he completed a dissertation in political violence and is completing a PhD in international conflict analysis focusing on cyber insurance and economic security at the University of Kent.

His research has been published in academic journals and provided a foundation for new approaches to risk and capital management in challenging lines of business.

Johansmeyer commented: “I’m excited to be part of Inver Re, and to build out something really special. The industry loss index business has become large, intricate, and vibrant over the past five years, due to the dual developments of increased worldwide loss activity, and the proliferation of loss indices during that period. The next era of development requires the combination of specialty market knowledge and ILW capabilities that Inver Re is uniquely equipped to deliver.

He continued: “From demonstrably world class weather modelling to robust and growing analytical capabilities, Inver Re’s knowledge, experience and research is already translating into actionable intelligence. Our integrated practice will further clients’ understanding of how to use risk transfer capital more efficiently while respecting risk appetite, profile and tolerance.”

At Inver Re Johansmeyer will report to Kevin Stratton, Inver Re CEO Bermuda Specialty & P&C. He will also be working closely with Gareth Davies, Managing Director of Parametrics based in London, and Chris Bonard, CEO of Ardonagh Specialty Holdings Bermuda, to bring together Inver’s capabilities across ILWs, parametrics, analytics and modelling.

The move to broker Inver Re means that Johansmeyer is the first PCS leader to leave for a position in the marketplace.

“Global indices, like capital markets and other verticals, rounds out Inver Re’s offerings as a full-service broker – and Tom at the helm means we’ve got the best of the best driving our delivery and growth. He literally invented many of the PCS indices still in use, and his in-depth knowledge of how loss reporting agencies work gives Inver Re a significant advantage for delivering the tightest ILW wordings to clients,” said Bonard.

Adding: “Bringing together different practices to drive innovative client solutions is at the heart of Inver Re. The walls between categories of reinsurance, such as capital markets, loss index catastrophe bonds and parametric cover are breaking down. Our global index business will tightly interlock with our adjacent practices to bring each client an integrated program.”

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He said: “From the client feedback that I get, there are many brokers that do a good job for their clients at renewal, new or at prospect, but then they sort of disappear for a number of months.

“A lot of them do have operational models where they don’t quite get the team that they met at pitch and inception. They are sold to by the ‘A team’ who then venture away for 10 months and come back closer to renewal. It’s a more junior or off shore team who actually handle the day to day.

“So from an Inver perspective, whether operating in London, Bermuda, the US, etc. having that consistent weekly contact from the team you meet and providing that service is therefore much more important.”

Moving forward, Prinn then focused his attention towards the London Market.

He stated that the London Market “thrives in a harder market”, pointing towards the differentiations and innovations that London is known for, and that those factors become “more important within a hard market.”

“I feel that London is a very credible market to be in. Now we also have a big operation in Bermuda and you also need to interact well between London and Bermuda as well as other markets.

“But you do that by having a structure and an organisation that allows for that to happen.”

Prinn added that due to Inver Re being a scale up and remaining nimble, but also sitting within the $13bn premium Ardonagh group allows for that to take place.

“I think there are a number of brokers in the industry where the P&L of the company does not allow for innovation because a lot of the teams are very dedicated on their own P&L and they don’t have that dynamic interaction, and it needs to be there to really provide that level of service to your clients.

“And I believe that better services comes from the collaboration between those smaller teams who are remunerated on the overall success of Inver Re, and not on their own individual P&Ls.”

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“The situation is getting worse, and could have a big impact on the market, potentially leaving thousands of property owners without viable cover options,” Bonard told Reinsurance News when asked about the trend of re/insurers cutting exposure to parts of the property catastrophe sector, in a recent interview.

He explained that while everyone is heavily focused on the reinsurance buying of property cat, if you pay attention to the amount of third-party MGAs and how much capacity on property cat is held by them under binding authorities in the U.S. and London markets, it’s a real issue.

“This ultimately feeds into the reinsurance market, and when you see Farmers’ latest move, for instance, it’s not a surprise. It’s likely we’ll see a domino effect of similar caps and caution from others, too,” said Bonard.

In early July, Farmers Insurance became the latest in a growing number of primary insurers to cap new homeowners’ policies in California, citing severe weather events, inflation, and mounting reconstruction costs.

U.S. primary insurance giant State Farm also announced plans to cease underwriting commercial and residential property in the state, which followed a similar move by Allstate in 2022.

Of course, the issue extends further than just California, with Florida also experiencing cutbacks from both primary insurers and traditional reinsurers, again driven by the elevated loss experience and inflationary impacts.

Currently, reinsurance broker Inver Re is “actively in capital raising mode,” explained Bonard, but the reality is that, at the moment, “capital is very, very guarded about putting money to work on the balance sheet for property cat.”

“The real issue is they just haven’t made any money. People look at the market and they all understand the rate index, they understand that portfolios are better – but a lot of them are just asking themselves, ‘Why would I take that to my investment committee right now?’,” said Bonard.

“We are seeing little raises, but if you look at the global capital index there’s still less capital today than there was, and it is definitely not coming into property cat,” he added.

At some point, stressed Bonard, things will change, but market dynamics mean that you’re going to see a very hard property market.

“We see it on our insurance side. The team is very seasoned, and our insurance property brokers feel it is as hard now as it was 1993,” said Bonard.

What’s more, Bonard doesn’t see any signs of a white knight entering the market to alleviate the pressure.

“Even if you did see a couple of white knights ride to the rescue and decide to write the market for the next couple of years, it’s not sustainable. And then when you look at the MGA space, I think there’s definitely a lot more pain to come,” he said.

Adding: “There are so many variables currently at play. Whether it’s hyperinflation, war in Eastern Europe, or global warming. There’s a lot of things going on and the insurance industry has got to change and adapt how it looks at today’s risks. As a result of that, I think we’re seeing some quite interesting things.”

One example of this from the challenging and changing market environment, according to Bonard, is that it’s fuelled greater interest in things like self-insurance and parametrics, the latter being an area in which Inver Re has expanded its expertise in recent times.

“We’ve made a big investment on parametrics. The interest we are seeing on that today is quite remarkable compared to the last decade. People are taking it seriously now, and I think it’s a combination of a number of factors.

“Part of it is people just getting more used to basis risk exposure, which let’s be honest, they’ve got more used to with ILWs and ILS. So, it’s been evolving over the last ten years or so. And the hard market means people get even more comfortable with basis point risk.

“Plus the products, providing risk/return works for the carrier and the capital really works for the buyer, so they’re more cost effective ways of addressing some problems,” said Bonard.

“Ultimately insurance has to evolve with the environment, and we’re right at that point of change. As well as pain, there’s also plenty of opportunity.”

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