Setting up down under

Liberty Mutual Reinsurance has landed in Australia, focused on a broader product range and superior service

By John Deex

The reinsurance arm of giant US-headquartered insurer Liberty Mutual has been writing business in Australia for 16 years – but by opening an office here it hopes to turbocharge the local operation.

Mark de la Mare was recruited from Aon last year to lead the Sydney-based Liberty Mutual Reinsurance team, in what the company describes as a “significant development”.

Previously, Australian business was written on Lloyd’s paper through managing general agency ARUS, with property catastrophe the primary focus.

Now, with boots on the ground, but still using Lloyd’s, LM Re says it can more effectively respond to client demand for a broader product suite.

“Setting up the office now really just shows the dedication of LM Re to the region. We’re here for the long term,” Mr de la Mare tells Insurance News.

“Being on the ground allows us to really support our cedants and our brokers and provide more holistic service.”

He says it’s the best of both worlds – with access to group global expertise, it can offer casualty and specialty in addition to property; and with the local base it has the opportunity to speak to clients, cedants and brokers “every day”.

“We find out what the issues are, and we can react and provide the right solution, or help them with any guidance they need.

“It’s really important being here, really important being on the ground talking to them and being able to offer more.”

Head of treaty property UK and Asia-Pacific James Green says after starting to write local business in 2009-10, LM Re faced immediate challenges.

“We walked straight into several New Zealand earthquakes and virtually every peril in Australia. But being Liberty, we didn’t suddenly run for the hills. We are very risk aware and not risk averse.”

He pays tribute to the “loyal” ARUS team of John Bubb and Richard Wareham, but says an agency agreement always comes with limitations.

“It was a non-binding MGA, so they had no underwriting authority whatsoever. All business was referred back to London. It was quite an onerous process, but it still worked brilliantly. We were able to grow and establish a bigger footprint, but only in property.

“So when it became clear we needed to expand further, we needed to find someone local, with local access, who could then also plug into our network in the other offices, so we could offer a broader product base.

“After 16 years, there came a time when we needed to think about the next step, and also succession planning had something to do with it, which is where Mark came in.”

Head of international and global markets Peter Smith says LM Re globally is a significant business, writing more than $US3 billion in premium last year across “pretty much all lines” apart from life.

And he says bringing that global strength to the local operation is a major reason for moving away from the MGA model.

“What we need to do, and what we want to do, is bring the capability, the strength, the depth, the breadth of what we have, not just within LM Re, but within our global group, to each market in which we operate.

“And the only way for us to do that effectively is to have that single … source in the local area that we can call our own.

“This is about giving a message to the market that this has been a market of choice. It’s a market that we want to be in long term. This really cements that ambition.”

He says the market is changing quickly in terms of what it wants from reinsurers.

“There’s a very clear message to us over the past few renewal seasons that we can’t just be pigeonholed around property. We can’t just be pigeonholed around specific players, although we’ll always have a focus point. It’s about how we bring solutions to the clients holistically. That, I think, is where we’re going to see most traction, and that will be building out from the property base we’ve established to both specialty and casualty.”

Chief underwriting officer Chantal Rodriguez says LM Re’s global underwriting teams have expertise across cyber, parametrics, credit and surety, “to name just a few”.

“With Mark and the team on the ground, we can work with our clients on that broader spectrum.”

Asked whether the reinsurance market is moving into a soft phase, Ms Rodriguez declines to put a label on conditions.

“I think it’s less about whether rate is going up or down,” she says. “It’s more about the diligence of discipline around being risk aware, as we said earlier. Not risk averse, but risk aware, and taking that into account.”

Mr Green stresses that “unprecedented” natural catastrophes are occurring with concerning regularity.

“There’s still a lot of uncertainty in the marketplace about loss events, and frequency of those loss events, so reinsurers will be focused on that going forward.

“I can’t say whether we’re entering a softening cycle or a hardening cycle. We are in part of the reinsurance market and we will respond accordingly.”

LM Re says it plans to build the local team. Since Mr de la Mare’s appointment, underwriter Hannah Fitzpatrick has joined, and others will be added.

“I’m not saying it’s going to be enormous team, but we do plan to build out that capability around Mark,” Mr Smith says.

“We’ll need to work out what the priorities are, and make sure that we retain our intellectual knowledge, in order to pass it on in the future.”