By Chris Munro

March 26 - (The Insurer) - Mereo executive chairman Brian Duperreault has said it is “almost natural” that the reinsurer will support the fast-growing MGA and programs market as it develops a diverse and balanced portfolio of business.

The newly launched reinsurer opened for business earlier this year.

Having been two years in the making, sister title The Insurer reported that Neil Strong-led ILS platform Mereo ILS Opportunities Limited went live ahead of the January 1, 2025, reinsurance renewals after it completed an initial fundraising.

That was followed in February by the announcement that Mereo Insurance Ltd had launched after securing equity backing from Susquehanna’s private equity arm and The Andover Companies, along with a preferred equity investment from Ares Management Alternative Credit Funds.

Sources close to the startup previously told The Insurer that AM Best A-minus rated Mereo Insurance launched with more than $650 million in capital and has ambitions to expand that to $1 billion.

With the reinsurer now assuming business, Duperreault, in an interview shortly before the launch of a new biography, told The Insurer that Mereo plans to develop a portfolio across 25 lines of property, casualty and specialty business from cedants based around the world.

MGAs and programs seeking reinsurance capacity behind fronting carriers will be a part of that portfolio mix, Duperreault said.

Former Ace, Marsh McLennan, AIG and Hamilton leader Duperreault has worked with MGAs before during a career that stretches back more than 50 years.

Referencing the MGA market, Duperreault said “there’s quite a wide spread of good and bad”.

“But the ones that are good, they have a niche, they've got control of a set of risks … that are well selected and they're well priced. They're a great source of diversified business for us,” Duperreault explained.

“It's almost natural that (we) would have some MGA business coming in addition to the standard cedant sources,” he stated.

Duperreault said any MGAs that Mereo partners with will have to be “good and professional” and be “doing something that we have a home for within our structure”.

“And if that's the case, then we'll be a long-term player,” he stated.

Duperreault said supporting MGAs has “always sort of been dangerous business” because “you’re giving your pen to somebody else”.

To minimise the risk involved, the executive said capacity providers must “have a healthy set of controls around the process”.

“But it's like anything else. If it's reinsurance, then you're underwriting the underwriter. And so in an MGA case, you're underwriting the underwriters in the MGA.

“Are they any good? Are these people worthwhile? Are they solid individuals? Are they professional? Do they want a business that goes on forever? And if you can find those, they're great partners. Some people just don't have the patience to look that hard.”

Duperreault said his “natural tendency” is “to be quite cautious about the MGA market”.

However, Mereo’s executive chairman said the MGA market has evolved in recent years and become more professional.

“Because of the changes I'm drawn to it a little bit more maybe than I would have (been),” he said.

“They've become a lot more professional. (But) even the good ones have issues because the capital provider is being much more cautious,” Duperreault noted.

In years past MGAs were confident of finding a replacement in the event that a capacity provider pulled their support, but that is no longer the case, said Duperreault.

“(The capacity providers aren’t) as hungry to get the premium as they used to be. And so the MGAs have to be more professional. They're being forced to create captives – their own vehicles where they have their own money at risk,” he said.

“There's been a lot of good things that have happened that keep us in better balance (with the MGAs) and that's why we have it as part of our source of risk,” Duperreault noted.

Mereo has been launched as a pure-play reinsurer, and Duperreault said the startup has no interest in establishing “some large, expensive primary writer”.

However, sourcing MGA business means Mereo will have a primary insurance play.

“If you do the MGA business, you're sort of halfway to a direct participation, as opposed to an indirect through reinsurance,” he said.

The new company has a management arm, Mereo Advisors Limited, for which Duperreault serves as executive chairman, with Lawrence Minicone as CEO and Strong as president. Mereo ILS Opportunities Limited is led by Strong as CEO.

At Mereo Insurance, Duperreault serves as executive chairman.

Former Aegis London CEO David Croom-Johnson serves as Mereo Insurance’s co-founder, CEO and CUO. He is supported by ex-Fidelis and Amlin executive Richard Holden as co-founder and deputy CUO.