Ariel Re eyes bigger business as it secures stability at Lloyd’s

Ariel Re is aiming to write bigger business but without straying away from its core strengths, as it seeks to increase its efficiency at Lloyd’s and deliver a more competitive pricing strategy.

That is according to Tim Shreeve (pictured), Ariel Re’s head of platform development. He said the reinsurer is in no rush to enter new lines or territories following its acquisition by private equity investors, and is confident on growth and third-party capital, with some exciting product plans in the areas of cyber and clean energy in the pipeline.

“We see opportunities to write a larger but similar portfolio. We are optimistic about the conditions in the lines we write and are planning to do more of the same things,” Shreeve told Intelligent Insurer.

He was commenting in the context of Ariel Re’s  launch of a Lloyd’s managing agency less than two years after leaving the Argo abode for Pelican Ventures/JC Flowers, and  the return of its former chief executive Ryan Mather. It has stated it wants to become a “premier manager of reinsurance risk”.

At the beginning of October, the company announced that it has obtained approval from the UK Prudential Regulatory Authority, the Financial Conduct Authority and Lloyd’s to establish  Ariel Re Managing Agency (ARMA) at Lloyd’s of London and commence the new operation. ARMA took over the management of Ariel Syndicate 1910 together with SPA 6117 from Argo Managing Agency.

“Having an integrated managing agency setup has always been part of a strategic discussion at Ariel even under prior ownership,” Shreeve said. “After the Pelican takeover, knowing that we would have to go down a third-party route again without our own agency, it brought the plans back to the fore. We decided to proceed with an application in early summer 2021.”

Shreeve says the company’s “strategic plans changed with the transaction” in a positive way and are now better aligned with its overall strategy on growth and cost management.

“Ariel has been able to scale its portfolio meaningfully since the Pelican transaction as well as integrating the Apollo 1969 cat portfolio that was written into its SPA 6133,” he said. “We are at a premium volume where the benefits of having an agency are clear and the economics make sense.”

Strategy

In terms of Ariel’s strategy, Shreeve explained that it looks at reinsurance company expense ratios and seeks to deliver a “more competitively priced underwriting product” to investors. “Having control over our managing agency expenses at Lloyd’s will be a key component of this,” he added.

“We operate a non-aligned syndicate, managing capital on behalf of multiple investors. This was a big factor in why having our own managing agency is important,” Shreeve noted. “We were able to join as a member because our managing agency acts as a fiduciary on behalf of these investors. We think that this enhancement makes our product comparable, and hopefully better, than some of the competing offerings in the insurance-linked securities (ILS) space outside of Lloyd’s.”

Shreeve confessed that he believes the third-party capital support at Lloyd’s is “under-represented vs. that in Bermuda”, and voiced support for the new Lloyd’s London Bridge 2 protected cell vehicle established to bring fresh alternative capital into the market and boost its competitiveness.

Ariel Re has long-standing ties to the London re/insurance market, but since taking control of its own syndicate, Shreeve said, the company is enjoying “a more classic Lloyd’s model with the majority of our capital from third parties”.

“The shift in Ariel strategy since Argo is our position as a manager of risk rather than a holder. Having the calibre of ownership we do has certainly helped make it possible to hit our strategic goals to date as well as attract third party investors,” he said.

Shreeve highlighted that the company is working on some exciting product opportunities in its cyber reinsurance and clean energy portfolio that he hopes will become core as those markets mature and expand.

He was quick to point out that Ariel Re has managed to put together top-class talent “on a tight timeline” to drive further its ambitious plans at Lloyd’s and the London Market.

“Through the hiring process, we naturally found the best candidates we wanted to join us and who allowed the company to beat its requirements for diversity under the regulatory regime.

“We are supporters of these regulatory changes and hope that it accelerates progress with diversity and inclusion within our industry. It is about creating awareness not just of how important it is but also the benefits it brings to your business when your colleagues represent a much broader cross-section of the communities we work within,” he concluded.