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Torus finds its launch in '08 was well-timed

Torus finds its launch in '08 was well-timed

Despite setting up operations in the midst of the worldwide financial crisis, Hamilton, Bermuda-based Torus Insurance Holdings Ltd. has found its timing wasn't all bad. The group is planning to expand. Clive Tobin, chief executive officer, recently spoke with Business Insurance Senior Editor Michael Bradford about Torus' arrival in the global marketplace.

We actually launched as a U.K. insurer with a particular focus on energy. We have a Bermuda holding company.

Our largest shareholder (Greenwich, Conn.-based First Reserve Corp., which provided $720 million in equity funding) had done a lot of work studying the energy sector and found there was a considerable opportunity for energy insurers. Torus was started on the basis of long-term trends in energy—it was not the typical Bermuda company startup following a catastrophic event.

Q: How difficult was it for Torus to get established as the global financial crisis took hold?

The financial crisis created a serious impact on some of the largest insurers, and that presented a much bigger opportunity than we had expected.

We expanded to become a global insurer and reinsurer, which was different from our original plan to operate in Bermuda and London. Our goal is to operate in wholesale markets that are recognized for their regional expertise.

We are focusing on energy and high-quality local business in U.S. and Europe. Bermuda is a part of our operation, but our primary focus is to base our business onshore.

Q: Has Torus' first year of operation gone as you expected?

In our first year, we were surprised by the demand of opportunity. Our vision expanded dramatically and we were able to bring in a senior executive team.

The credit crisis drove the market to much greater syndication. Prior to the crisis, significant blocks of business were written with a few key partners. As those partners got into trouble, business began to be placed with a lot more people. As a result, Torus saw more opportunities.

Q: What did you find challenging about creating a startup insurer?

One of the critical things in the first year is whether you can attract a management team that will be able to build a viable and thriving company.

You only get one chance to get it right; you want to make sure that you get the company launched and it doesn't falter.

Q: There is debate that Bermuda is losing some of its prominence as a marketplace. What are the advantages of locating an insurance or reinsurance company there?

Bermuda is recognized for its underwriting expertise in a variety of markets.

As a result, there are certain blocks of business that target Bermuda, such as excess liability and catastrophe reinsurance. Bermuda is recognized as a leading cat reinsurance market.

There is a small, tightknit underwriting community in Bermuda and the exchange of ideas there allows for strong underwriting practices.

Q: Is the island's luster as an insurance marketplace dimming?

Bermuda has always been recognized as a laboratory for innovation and it will face some challenges to retain that prominence.

It has a well-deserved reputation for its expertise. Its reputation has been built on innovation and it needs to foster this. The old model of startup cat reinsurers is not one that is liked by investors.

We see Bermuda continuing to have catastrophe expertise, but it will have to write on behalf of third parties such as sidecars. While the current economic crisis has seen sidecars disappear, I have absolutely no doubt that that vehicle will return and grow.

I don't think investors want to see their capital subject to as much volatility as in the past.

They want to make sure that the expertise used to generate fee income is used on other people's capital.

Q: Is Torus planning to expand in its second year of operation?

Our U.S. network is Jersey City, Chicago and Houston. Later this year, we will be in Atlanta and Los Angeles or San Francisco.

We've got huge support. We have 70 people in London, 30 in the U.S. and 25 in Bermuda. We will have 60 in India by the end of the year providing technical support. We've got a lot of momentum.