Doucette targets HNW backing and rating for potential $1bn 2023 start-up

The proposed start-up led by John Doucette and Bob Cooney is engaging in key fundraising meetings with potential high-net-worth (HNW) investors and has received a preliminary rating from AM Best as it moves closer to a launch as a multi-strategy reinsurance vehicle, The Insurer understands.

According to sources, the venture has made significant progress on the operational side and is in various discussions with potential capital providers, thought to be focused on the HNW community.

Although details of the business plan have not been confirmed, it is thought to involve what has been described as a multi-strategy fund-style approach that would have a traditional property and casualty portfolio (including cat), but also operate in areas like life and annuities, credit and other risk transfer related products.

It is understood the structure would involve a rated balance sheet, but also some form of segregated approach that would allow investors to tailor their participation in different risk areas according to their appetite.

This publication revealed back in May that former Everest Re reinsurance CEO Doucette was set to reunite with industry veteran and Max Re founder Cooney to explore plans to re-emerge with a reinsurance start-up that would be likely to target a circa $1bn capital raise.

The move comes at a time when the reinsurance market is fast transitioning, with a strong demand-supply imbalance in property driving increasingly hard conditions and demand also up across a range of other lines in part driven by inflation.

It is widely expected that an initiative currently in the process of fundraising would look to be active in time to participate in the key 1 January renewals.

Sources previously said that rather than go the traditional private equity or institutional investor route for a new venture, the seasoned duo of Doucette and Cooney were set to engage with a sponsor to access ultra-HNW individuals in a bid to raise money for the vehicle.

It is thought that that process has now advanced, with active engagement with the HNW investor community.

Meanwhile, the new venture is understood to have been working with Aon on developing a structure that is expected to include a Bermudian presence, rating agency process, modelling and other functions prior to launch.

According to sources, Aon’s newly launched Strategy and Technology Group has performed an advisory role which includes structuring the proposed business in a way that is beneficial to HNW/family offices.

Max ties

Doucette was hired by Cooney in 2000 shortly after launching Max Re, which was eventually renamed Max Capital before merging with Harbor Point in 2010 to create Alterra Capital. The business was subsequently acquired by Markel in 2013 for $3.1bn.

The well-regarded executive held various positions at Bermudian Max Re, including president and CUO of the P&C reinsurance division.

Cooney left his position as Max Re chairman and CEO in 2006. Doucette left two years later to join Everest Re as executive vice president, eventually rising to CUO of reinsurance in 2012 and then president and CEO of reinsurance in 2016.

At Everest Re he oversaw meaningful growth in the company’s reinsurance platform as well as its third-party capital management business.

Along with Everest Insurance CEO Jon Zaffino, Doucette was viewed as the leading internal candidate to replace Dom Addesso as group CEO when he retired at the end of 2019.

But that role was instead handed to Chubb’s Juan Andrade, who took the reins at the start of 2020.

Zaffino left later that year for Ascot, but Doucette stuck around until last May, when it was announced the executive was leaving Everest Re to “pursue other opportunities”.

Jim Williamson, who had been group COO, took over as head of the Bermudian’s reinsurance division with immediate effect.

Cooney had a brief stint at Aon and has held a number of board positions as well as his role as managing partner of Bermuda-based investment and private equity advisory firm Aureo Capital, which focuses on the insurance and reinsurance industry.

Doucette could not be immediately reached for comment on this article.

The Insurer comment

Despite what looks like being an increasingly attractive pricing environment for reinsurers at 1.1 – particularly in cat – the consensus so far at Les Rendez-Vous is that an influx, or class of new capitalised rated reinsurers is unlikely to emerge in the near term to rebalance the demand-supply equation.

There are some isolated examples, such as mooted fundraising efforts by former Verto Syndicate 2689 CEO and Endurance executive Peter Mills for a hybrid reinsurance fund and origination platform.

The traditional source of capital for start-ups – private equity – does not appear to have appetite at this stage for new pure-play reinsurers, given where publicly traded companies in the sector are valued at.

And there is also scepticism around investor appetite for alternative reinsurance vehicles including ILS funds outside of the cat bond arena.

But the model mooted for Doucette’s venture appears to be different from a pure-play P&C reinsurer, with a multi-strategy approach.

And the HNW investor base being targeted is very different from the institutional and private equity capital usually sought by start-ups. Nothing is done until capital is successfully raised, of course, but the innovative approach may yet find favour…