Mitch Blaser founded private equity-backed Mosaic Insurance Holdings Inc. in Bermuda in February to focus on special risks. The companyâ & # x20AC; & # x2122 ;s main insurance fund is a Lloydâ & # x20AC; & # x2122 ;s of London syndicate, but it also plans to partner with third – party ventures. Mr. Blaser's long career in insurance has spanned nearly 30 years at Marsh & McLennan Cos. Inc. After a time at Swiss Re Ltd. he joined Ironshore Inc. in 2007, where he also worked with his 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 multinational operations in the midst of a pandemic?
A: Some are the obvious ones just can not sit around a table ̵
I thought the biggest downside was more on the administrator side when you need signatures and the actual documentation of what you've already agreed to. People have begun to need to create legal documents behind the documents to support the fact that you do not have a wet signature. We found ways to get it done but it slows you down a bit on the administrator side.
Q: You have about 45 people on staff, but how many have you actually met?
A: When you focus on starting a new business, you think of 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 underway, what is your strategy?
A: The basis for our hybrid model is the talent we can attract and employ, in parallel with the construction of our technology platform. Not having an older infrastructure is almost as important as not having an older balance sheet.
The core of our model is our Lloyd's syndicate, so it was absolutely critical to get started and it has been one of the time consuming things we have done virtually. When it comes to the original focus, these are the key boxes that we want to be able to tick, so that we can get our insurers to sign up and adapt our partners on the capital side.
We talk to different types of capital to support between consortia and trading capital, and we will also have a little less traditional capital to support us.
Q: Which industries do you start with?
A: We focus on seven industries and these are very specialized. They are really difficult lines to be in, they require high technical knowledge to write the business, they are very relevant to today's economies and we expect that they will be critical of the new economies in the future so that 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 can build that business, you should keep in mind that not only is it relevant today but it will disappear at any moment.
Political violence is another. Who would have thought a year ago that the United States would be a major market for political rape? The world is changing dramatically. The political risk, which is basically that governments behave badly, faces the same type of problem.
For transactional liability, each month seems to set records for mergers and acquisitions, so that will probably be our biggest line. We will also have financial institutions and professional responsibility.
Another way of thinking about these industries is that they are lines that brokers usually have trouble placing.
Q: Is there nothing to say to balance a business book with less volatile lines?
A: There is some volatility in these lines, but there is no frequency, and they are usually uncorrelated risks. These are usually more isolated activities and events and our reinsurance program takes the peak of our exposure. So you have less frequency and you can control the seriousness of these industries. It also comes back to the technical aspects of the warranty.
Q: Do you want to increase the number of business classes?
A: We will be opportunistic. If there is a business opportunity – we have already looked at some and there may be one that we are following up – that fits the model, that has a niche focus area, that requires real technical guarantee and talent, we have an opportunistic model for these situations. This does not mean that we are looking for x, y or z, but if x, y or z appears and it fits the model, we pull the trigger. It comes down to people.
Q: People look at companies that support private equity and think they will last for about five years before there is a summary or a sale or an IPO. What's the story of your private equity support?
A: With Golden Gate, we have a perpetual fund structure, so they are long-term holders. It is so difficult to predict what the future will bring, but the opportunity to have that flexibility is enormous so that we can make money if it becomes a critical opportunity for some reason or they can last for up to 20 years. So we have a lot of flexibility in how we work together, in how we build the company and eventually make money.
Q: Most companies have a CEO, but you have a CEO. What is the idea behind it?
A: We worked together for several years. One of the hats I wore at Ironshore was CFO, and I got to know Mark really well that way. We worked together to build the international franchise in Ironshore. We have a very close friendship as well as a partnership, and we seem to be able to use each other's strengths – he can focus a lot on the insurance side and I can focus on the operation of the business side. It is an excellent complement.