When Torus Insurance was founded by first Reserve, headed by Clive Tobin in 2008, the worst effects of the financial crisis were just beginning to bite, but they bit pretty hard. The company, although well run, and successful in some areas, had to deal with straightened circumstances. Eventually it was acquired by Bermuda-based run-off specialist Enstar and Stone Point Capital. The deal was finalized on April 1, 2014.
Tobin left Torus concurrently with the acquisition announcement and was succeeded by Dermot O’Donohoe, who had headed Torus International. He talked to the IJ earlier this year on what the changed structure means to the company, and what its future plans are.
“We’ll continue some run-off operations,” O’Donohoe said, but we’re also looking for more organic growth and more opportunities in mergers and acquisitions.” He indicated Torus would “remain active in the Lloyd’s market,” and would be seeking to expand in Western Europe and the U.S.
He described the parts of the business that would be gradually run off as “closing down underperforming lines,” essentially those where “there’s no business left.” Torus aims to “have a selective and clean balance sheet, where capital [investment] can achieve the highest returns.” The strategy emphasizes the business areas where Torus has been successful and where the company sees future growth.
The sectors that O’Donohoe aims to concentrate on in the U.S. include professional liability and D&O for public and small to medium sized companies (SME’s), law firms, media and management consultants, financial institutions and health care firms.
Torus is also considering growth in the U.S. casualty sector. “We’re looking at U.S. data – the rates and the forms – analyzing the frequency and the severity as well as the loss costs,” O’Donohoe said. “We’re relying on the clients’ data as well as our own.” It will continue to offer a broad range of specialty products to its international clients, including marine, avaition energy, healthcare and excess casualty.
Torus also continues its activities in the property sector, “particularly direct and contingent business interruption claims affecting supply chains.” Some of those risks will be placed through the Lloyd’s Syndicate 1301, which Torus acquired from Broadgate in 2011. Exactly a year ago today Torus received approval from the UK Financial Services Authority and Lloyd’s to launch its own Lloyd’s managing agency, Torus Underwriting Management Limited – TUML. Torus also received approval to expand the Syndicate in December with a stamp capacity of £180 million ($300 million).
“We’re also looking at terrorism, specifically war, marine and aviation,” O’Donohoe said; indicating that the uncertainty over the future of the U.S. TRIA Program, which is due to expire on January 1, 2015, could lead to greater interest in terrorist coverage.
Part of the redirection accompanying the acquisition by Enstar involves running off and eventually closing down most of Torus’ Bermuda-based reinsurance operations. O’Donohoe also indicated that the company is scaling back on direct operations in Asia and Latin America, although it will continue to write business through Lloyd’s in both China and Singapore.
In essence O’Donohoe expects to be overseeing a leaner more focused company, but one that is well capitalized, backed by substantial funds to make sure that its operations continue and grow.