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Mitch Blaser founded private equity-backed Mosaic Insurance Holdings Inc. in Bermuda in February to focus on specialty risks. The company’s main underwriting vehicle is a Lloyd’s of London syndicate, but it also plans to partner with third-party capital providers. Mr. Blaser’s long career in insurance has included nearly 30 years at Marsh & McLennan Cos. Inc. After some time at Swiss Re Ltd., he joined Ironshore Inc. in 2007, where he also worked with his co-CEO at Mosaic, Mark Wheeler. He recently spoke with Business Insurance Editor Gavin Souter about the concept behind Mosaic and its strategy. Edited excerpts follow.
Q: What are the challenges of starting up multinational operations in the middle of a pandemic?
A: Some are the obvious ones of just not being able to sit around a table — especially with Lloyd’s, which is 300 years old and it started in a coffee shop so everything’s been face-to-face. But the world has done a great job adapting. It’s not that the office is dead and we’ve lost what we had before, it’s more about we’ve gained the ability to operate in a virtual environment. We now know how to get together, coalesce around ideas and make things happen virtually that we just didn’t do before.
I found the biggest disadvantage was more on the admin side, when you need signatures and the actual documentation for what you’ve already agreed to. People have started having to create legal documents behind the documents to support the fact that you don’t have a wet signature. We found ways to get it done but it slows you down a bit on the admin side.
Q: You have about 45 people on staff, but how many have you actually met?
A: When you’re focusing on starting a new company you think about the people you know, so I’ve met about three-quarters of the team at some point in my career.
Q: Now that you have operations up and running, what’s your strategy?
A: The underpinning of our hybrid model is the talent that we are able to attract and hire, in parallel with the building of our technology platform. Not having a legacy infrastructure is almost as important as not having a legacy balance sheet.
The centerpiece of our model is our Lloyd’s syndicate, so getting that up and running was absolutely critical and that’s been one of the time-consuming things that we’ve done on a virtual basis. In terms of the initial focus those are the key boxes that we want to be able to tick, so that we can get our underwriters underwriting and align our partners on the capital side.
We are talking to different types of capital to support us, between consortiums and trade capital, and we’ll also have some less traditional capital supporting us.
Q: What are the lines of business you are starting with?
A: We are focused on seven lines of business and these are highly specialized. They are really difficult lines to be in, they require a high technical knowledge to write the business, they are very relevant in terms of today’s economies and we expect they will be critical to the new economies going forward so the demand and risk will grow.
Cyber is an example; it’s a tough line but if you have the right people who know how to support the line and you are able to build that business, you would think of it not only being relevant today but it’s not going away anytime soon.
Political violence is another one. Who would have thought a year ago that the U.S. would be a big market for political violence coverage? The world is changing dramatically. Political risk, which is basically governments behaving badly, faces the same kind of issue.
For transactional liability, each month seems to set a record for mergers and acquisitions, so that will probably be our biggest line. We’ll also be in financial institution lines and professional liability.
Another way to think about these lines of business is that they are lines that brokers typically have problems placing.
Q: Isn’t there something to be said for balancing a book of business with less volatile lines?
A: There is a degree of volatility in these lines, but there’s not the frequency, and they are usually noncorrelated risks. These are typically more isolated activities and events and our reinsurance program takes the top off our exposure. So you have less frequency and you can control the severity in these lines of business. It also comes back to the technicalities in the underwriting, too.
Q: Are you looking to expand the number of classes of business?
A: We will be opportunistic. If a business opportunity is there — we’ve already looked at a few and there may be one that we follow up on — that fits our model, that has a niche area of focus, that requires really technical underwriting and talent capability, we have an opportunistic model for those situations. That does not mean we are looking for x, y or z, but if x, y or z shows up and it fits the model, we’ll pull the trigger. It comes down to people.
Q: People look at private equity-backed companies and think they’ll last about five years before there’s a recap or a sale or an IPO. What’s the story with your private equity backing?
A: With Golden Gate Capital, we have a perpetual fund structure, so they are long-term holders. It’s so hard to predict what the future will bring, but the ability to have that flexibility is huge so we can monetize if that becomes a critical opportunity for some reason or they can hold for up to 20 years. So we have a ton of flexibility in how we work together, in how we build the company and eventually monetize.
Q: Most companies have one CEO, but you have co-CEOs. What’s the thinking behind that?
A: We worked together for years. One of the hats I wore at Ironshore was CFO, and I got to know Mark really well that way. We worked together building the international franchise of Ironshore. We have a very close friendship as well as a partnership, and we seem to be able to leverage each other’s strengths — he can focus a lot on the underwriting side, and I can focus on the running of the business side. It’s a great complement.