Exclusive Member of Reinsurance Class of 2025: Duperreault’s Cedar Trace

There are certain traits of hard reinsurance market cycles: prices rise, terms and conditions tighten, and new Bermuda reinsurers are formed to help fill capacity needs — known in the past by the market as the “class of 1992,” “class of 2001,” or the “class of 2005.”

At least that was previously the pattern. During the current hard market, however, there hasn’t been a spate of new entrants – in Bermuda or elsewhere. Only several new reinsurers have been able to find investors with the appetite to provide sufficient financial support that would be needed for underwriting a substantial property/casualty business. The class of 2025 is mainly limited to Cedar Trace’s Mereo Insurance and Lloyd’s reinsurer Oak Reinsurance.

Mereo Advisors – a Bermuda holding company that was renamed Cedar Trace Ltd. – began reinsurance underwriting as Mereo Insurance in January 2025. The company is led by industry veteran Brian Duperreault, the former executive chairman of American International Group (AIG).

At last week’s reinsurance Rendez-Vous de Septembre, there were rumors (once again) that reinsurance executives were at the meeting seeking investors to help them form three more reinsurers to create a “class of 2026.” But as always, the devil is in the detail as well as the amount of money that can be raised from investors. (The domiciles of the startups were said to be Bermuda and London).

Similar rumors about Mereo, Oak Re and Alpine Re were heard at last year’s RVS – but only Mereo and Oak Re had successful fund raising and were able to launch. Alpine Re wasn’t able to get the funding to launch a $1 billion startup, so it threw in the towel – at least temporarily. (OAK Re’s parent, OAK Global, announced this month it will launch a new syndicate to write retrocession business with an appetite for property and specialty classes in January 2026).

Some attendees at this year’s RVS meeting questioned the timing of possible 2026 startups, given the softening pricing seen during this year’s renewals.

But Cedar Trace’s Executive Chairman Duperreault said the timing of the formation of Cedar Trace and Mereo Insurance has worked well because the market continues to be strong across a lot of lines of business. “It’s good to be an underwriter in specialty, casualty and property right now. So having this across-the-board strategy is helpful,” he said.

In an interview with Insurance Journal, Duperreault described the reinsurer’s strategy as broad based and multi-class. “We are writing 25 different classes of insurance business, such as marine, aviation, energy, and property, on a risk-weighted basis,” which creates a portfolio balancing effect and provides “a pretty steady result.”

“Each one of the 25 is going to go up and down, particularly if they’re in the more volatile portions of the business,” Duperreault continued.

“However, if you put them together with good risks, it balances out, and your loss ratios are actually quite steady over a long period of time,” he said, explaining that there will be a lot of growth in some lines and not much growth in other lines, which balances out to create growth at industry levels.

Cedar Trace’s growth will probably be a little bit above GDP in the early days, but for the long term, Duperreault expects “a steady, profitable business.”

“Over time, if you put a good set of risks together in a balanced portfolio, you’re going to have an average loss ratio and it’s not going to vary very much. It’s like an index fund, an investor index fund.”

Not Reliant on Hard Market

He explained that Cedar Trace’s strategy is not a hard market strategy, so it’s not like the company needs the hard market to continue. “The important thing was would we be able to launch and get a broad-based business in a relatively short period of time and this market is allowing us to do that.”

He emphasized that it’s impossible to call anything in this world with 100% certainty, “so having that portfolio balance protects us. And as long as we’re launched and we are, I’m very comfortable riding out this wave, whichever way it goes.”

Underwriters only have a couple of tools, he said. “One is risk selection, and another is portfolio construction and spread. So we turn away risks that aren’t priced right, and the pricing takes care of itself.”

The company’s initial plans were to write what Duperreault calls an “aspirational” $520 million during the first year, which he said could be possible if the company writes a full year that includes the January 2026 renewals. “But we’ll see. The important thing is the business is good, sustainable, profitable and size isn’t as important as that.”

The other positive aspect of the current market for reinsurers is that there is a lot of demand from ceding companies because risk is exploding, he added.

Limited Investor Appetite for Startups

Duperreault attributed the general lack of interest by investors to support reinsurance startups (to create a class of 2023 or 2024) to the sector’s inability to attract long-term capital. (Traditionally, the “class of XXX” terminology has referred to Bermudan reinsurance startups but is now being used by many pundits for global formations).

“Most of the investors don’t want to take long-term balance sheet risks,” he said, noting ILS investments are “hot” because investors want to know at the end of the year, if they had a good year or a bad year.

Indeed, AM Best Ratings has indicated that investors have many additional avenues available to deploy their capital, which didn’t exist in the past.

The existence of a robust ILS market has “diminished the franchise value of property-catastrophe business to investors,” AM Best said in a July 2024 report, titled “The 2023 Reinsurer Class – The Class That Never Was.” (See related article: What Happened to Reinsurance ‘Class of 2023’? Hard Market Defies Age-Old Patterns.)

“Investors today appear much keener to allocate funds to shorter-term ILS instruments to capitalize on the hardened underwriting conditions, rather than a rated balance sheet,” said the report.

There’s only a very small group of investors who want to take on longer-term risk, Duperreault said, noting that Cedar Trace was able to find a few investors “who understood what we were trying to achieve.” “What we presented was a portfolio approach with the balance that has internal protections.”

Duperreault said that those investors who listened to the pitch, understood it, and really liked the company’s strategic plan.

He said the company’s portfolio balance was an attractive story to a few wise Cedar Trace investors, which he described as “a nice group who are there for the long haul,” which is a “wonderful thing to have for an investor.”

“They’re not in and out types,” Duperreault noted.

At inception, Cedar Trace raised nearly $700 million from several investors and also launched an ILS fund in 2024 with $250 to $300 million of capital. Investors include Ares Management Corp. (an alternative asset manager); Susquehanna International Group (a quantitative trading firm); and Andover Cos. (a mutual insurance firm).

“I do think our story itself helped attract our investors in a great way,” he said. “I think our management expertise helped. Putting those two together, we were able to find enough investors to launch our company. And we’re the only ones.”

AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to Mereo Insurance with a stable outlook.

“Initial capitalization in 2024 and retained earnings through the forecast period are expected to support Mereo’s premium growth, which is expected to be rapid in its early years, based on projections,” AM Best said in a Feb. 10, 2025 ratings announcement. “The company’s capital is anticipated to be managed through the use of reinsurance and potentially third-party capital. Investment risk is projected to be low given its conservative investment portfolio, which will remain matched closely to the evolution of the liability profile, supporting stability in future balance sheet metrics.”

AM Best went on to say that “Mereo’s senior management team is composed of individuals with extensive experience and strong track records in the industry.”

And, of course, one of those individuals is Duperreault, who previously served as executive chairman for AIG’s Board of Directors and as CEO of AIG from 2017 to 2021. Before joining AIG, he had a 30-year career working in senior executive roles at Hamilton Insurance Group, March & McLennan Companies and ACE Ltd.

Other veteran executives include:

• Lawrence Minicone, chief executive officer of Cedar Trace. Minicone previously served as the head of Research at Tekmerion Capital Partners, a systematic global macro hedge fund.
• David Croom Johnson, non-executive director, who was formerly CEO of AEGIS London, a successful Lloyd’s managing agency.
• Neil Strong, president of Cedar Trace and CEO of Cedar Trace ILS, who most recently was the CEO of IQUW ILS Ltd.
• Richard Holden, chief underwriting officer of Cedar Trace ILS, was previously CUO of Fidelis Insurance Bermuda and global CEO of Reinsurance and Capital Management.
• Derek Walsh, chief legal officer and chief operating officer of Cedar Trace. Previously, Walsh was COO, general counsel and co-founder of Acacia Holdings, a Bermuda-based investment business specializing in insurance linked securities, focusing on investing collateral for reinsurance contracts.
• Federico Waisman, chief analytics and risk officer of Cedar Trace, most recently served as head of Underwriting Management at IQUW where he led the portfolio optimization, pricing, exposure management and underwriting support divisions.
• Jonathan Reiss, interim chief financial officer of all Cedar Trace entities. He also is a managing director at Strategic Risk Solutions (SRS).

Topics Reinsurance