Pioneer launches prop cat reinsurance startup with institutional backing

Demonstrating another way that institutional investors and capital markets money can make its way into the reinsurance sector, underwriting agency Pioneer Underwriting is launching a property catastrophe reinsurance startup with the help of backing from a range of investors.

Pioneer Cat will begin underwriting this month, according to a statement from Pioneer, with David Carson, formerly of Hardy Underwriting, responsible for kicking off the firms venture into the property catastrophe reinsurance business.

The statement says that Pioneer has established its first investment agreement with a range of institutional investors, mostly U.S. based. It appears that Pioneer are seeking to capitalise on the interest being shown by capital markets investors in the catastrophe reinsurance space by launching this startup.

Through Pioneer Cat, the investors will gain access to property catastrophe reinsurance business from the Lloyd’s market, where the firm will be largely operating we understand, with an experienced Lloyd’s underwriter at the helm. Carson will bring clients with him to Pioneer Cat we would imagine, through his long-standing relationships, which should give Pioneer Cat access to attractive reinsurance business from the start.

CEO of Pioneer Underwriting, Darren Doherty, commented on the startup and appointment of Carson; “This is an extremely exciting venture for Pioneer and the appointment of David Carson shows the calibre of industry professionals who are reallocating their business to us.”

David Carson added; “Helping to establish a new business unit focusing on property catastrophe reinsurance underwriting and bringing together my long-standing trading relationships with the significant amounts of capital currently available around the world is a challenge that I am really looking forward to.”

Pioneer Cat will underwrite global property catastrophe reinsurance business, although we understand it will have a strong U.S. focus. It aims to generate premium income of £15m in the 2013/14 underwriting year via long-standing business relationships with brokers as well as some retrocession.

Starting up at Lloyd’s with the backing of the capital markets and an experienced underwriter with core relationships in property catastrophe reinsurance business is a very smart way to grow the Pioneer Underwriting stable of businesses. It will make Pioneer Cat easier to expand, or indeed contract, as the prop cat market changes and rate opportunities present themselves. For the investors, this is just another way to access the reinsurance-linked investment asset class.