Nearly two decades after selling a major reinsurance company, a well-known industry veteran is launching a new brokerage at a time when the entire sector faces disruption on multiple fronts.
Reinsurers are seeing headwinds from capital competition and consecutive years of major catastrophe losses across the globe, yet the rise of insurance-linked securities and other forms of alternative capital has kept prices in check. Against this backdrop, Ted Blanch started Florida-based COIN Re to help primary carriers find ways to save money on reinsurance cover.
Despite the constrained pricing conditions, Blanch does not agree with any perception that the market for reinsurance has softened.
"It's always a hard market," Blanch said. "Sometimes, it's harder than others."
Michael Cashman, president-marketing, left, and Ted Blanch, CEO, of COIN Reinsurance
Source: S&P Global Market Intelligence
Reinsurers might be inclined to argue otherwise, said CFRA research analyst Cathy Seifert, but she pointed out that perspectives can vary depending on the viewpoint. For a primary carrier, she observed, "a 10% rate increase is a lot."
COIN Re's entry into the marketplace has been facilitated by the disruption of the traditional reinsurance business model by alternative capital such as ILS, Seifert said. The company will likely find clientele among smaller, regional carriers that might not have access to the reinsurance expertise of larger rivals, she added.
Blanch said COIN Re will be capable of taking on primary insurance clients of all sizes, but will focus initially on the Florida catastrophe market, which hosts a number of state-specialized carriers. COIN Re plans to broker reinsurance and ILS coverage in partnership with The Beach Group Ltd., which has a platform that will give the new company the sophisticated offerings of larger competitors, he added.
The company plans to offer competitive fees and will have the flexibility to scale back certain services, such as analytics, if carriers do not want them or cannot pay for them, said Michael Cashman, COIN Re's president of marketing.
"We're willing to unbundle those services in terms of what the client really needs and wants," Cashman said in an interview.
COIN Re will also offer equity stakes to its clients, who will be majority shareholders, Blanch said.
"I think it creates about as close an alignment of interests as you can get between the broker and the client," Blanch said, explaining that the arrangement is intended to buck an industry tendency to have brokers represent both reinsurers and primary insurers.
However, Brian O'Neill, an executive vice president in the national catastrophe package at global broker JLT Re, said customers are always the sole interest of its business. When a broker is negotiating as an intermediary between a reinsurer and a client, the client should always come first, he said.
"The broker should be trying for the best deal for the client," he said in an interview. JLT Re might occasionally represent a reinsurer for a retrocession deal, but in those instances, the reinsurer is the client, O'Neill noted.
The COIN Re startup represents the latest of many tours for Blanch in the reinsurance sector. He worked for Florida-based E.W. Blanch & Co. for more than four decades, beginning in 1958, soon after his father founded the company. He was CEO from 1977 until 2000; the company sold to Benfield Group in 2001.
Blanch subsequently ran a reinsurance consultancy, Ted Blanch & Associates, and has been an executive or partner for various insurance and reinsurance businesses.