Mereo Insurance, the Bermuda-based start-up with former AIG CEO Brian Duperreault as its Chairman, has now finalised a $700m+ capital raise for its equity balance-sheet we understand, gaining an ‘A-‘ rating from AM Best, while the company also deployed around $250m in capacity from its insurance-linked securities (ILS) fund at the January reinsurance renewals.
Mereo Insurance has adopted a balance-sheet agnostic approach to utilising managed institutional investor capital in ILS structures alongside its own equity, to deploy into insurance and reinsurance opportunities.
The Mereo ILS fund strategy has a goal to compound returns for its investors, while mitigating risk to capital, allocating to more accessible and to off-market investments, investing in direct insurance, reinsurance, retrocession and catastrophe bond instruments.
Seeking alignment between its equity capital investors and those supporting its ILS fund, Mereo aims to align the best from traditional and alternative reinsurance worlds to maximise capital efficiencies, and ultimately deliver the returns backers want to see.
With the Mereo Insurance Limited balance-sheet now capitalised to the tune of more than US $700 million in equity and rated, the company is also expected to benefit from internal fronting leverage, while utilising its multi-capital sources to generate efficiencies and closer alignment between risk capital and risk cedent.
The company received a preliminary credit rating from AM Best back at the end of January 2024, but launched its first underwriting capacity deployments through the Mereo ILS fund at the January 2025 reinsurance renewals.
The company now has its ‘A-‘ credit rating from AM Best, with the rating agency emphasising Mereo’s “very strong” balance-sheet and an expectation that its premium growth is likely to be “rapid in its early years.”
Mereo sees reinsurance market conditions as both cyclically and secularly attractive at this time, while also having an ambition to unlock the potential of reinsurance-linked investments through its Mereo ILS division.
Over $700 million has been raised in aggregate at an initial close of the fundraising for Mereo’s balance-sheet, we are told, while the Mereo ILS Opportunities Fund has already deployed around $250 million into property catastrophe reinsurance and retrocession at the recent renewals, we understand.
The Mereo ILS Opportunities Fund, the first ILS fund strategy from Mereo ILS, is a diversified open-ended fund and is primarily allocated to opportunities in illiquid property insurance, reinsurance, retrocession, catastrophe bonds and industry loss warranties (ILWs).
With this initial $250 million of limit deployed by the Mereo ILS Opportunities fund, the company is said to have additional committed ILS capital lined up for deployment at the April and mid-year reinsurance renewal seasons.
We also understand that the company is launching a Mereo Diversified ILS investment strategy, which will enable investors to allocate capital to a diversified quota share of the balance-sheet company as well.
Susquehanna International Group (SIG), the Andover Companies and Ares Management are the lead investors in Mereo’s equity balance-sheet fundraising.
“The current hard market in reinsurance presents an unprecedented opportunity for investors,” Brian Duperreault, Chairman of Mereo commented.
Adding that, “With attractive risk-adjusted rate levels across the P&C market, as well as a need for more capacity, Mereo is uniquely positioned to deliver solutions that meet the growing demand for reinsurance while providing attractive returns to our investors.”
The equity backed reinsurance company, Mereo Insurance Limited, intends underwrite a diversified reinsurance portfolio with an equally weighted mix of Specialty, Property and Casualty and has a target to write $520 million of premium in its first full underwriting year, it is said.
“I am delighted that we are entering the market at an exciting and dynamic moment allowing us to produce a diversified and balanced portfolio of specialist reinsurance businesses across a broad spectrum of property, casualty and specialty classes to meet our investors’ needs,” explained David Croom Johnson, co-Founder and the CEO of the Mereo Insurance balance-sheet. “I am excited that Mereo has finally launched and I would like to thank our clients and brokers for their support and patience.”
“We are pleased to be able to work with an experienced team in a new venture like Mereo,” added Scott Rosen, Partner at Ares Management. “Through our flexible capital solution, we look forward to supporting their growth and strategic ambitions as a trusted reinsurance counterparty.”
“Andover is proud to partner with the talented Mereo team who have a strong track record of success,” Charles J. DiGrande, President and CEO of The Andover Companies also commented. “This investment is an excellent addition to the Andover portfolio because of the diversified nature of Mereo’s writings and the cultural alignment of our firms.”
Neil Strong, formerly of IQUW ILS Ltd, Securis Investment Partners and Execution Noble, is the CEO of insurance-linked securities (ILS) management division Mereo ILS.
Mereo sees its two offerings, of a rated Bermuda-based equity balance-sheet, and its Mereo ILS fund, as distinct yet complementary, enabling it to address clients needs for increasing amounts of risk transfer, while also aiming to deliver attractive returns to investors.
In getting to this now fully-operational stage, Mereo was supported by advisors including: Guy Carpenter; Willkie Farr; Lockton Re; BMS Group; Kinmont Advisory; Price Forbes Re; and Appleby.
More details on other names behind the Mereo Insurance operation can be found in an earlier article here.
