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Running off with the milkman

Dear friend,

What a wonderful world we still live in — some see opportunities, when others only see gloom.

Energy insurer Torus has announced its impending launch in London this week, with a $720m fanfare. Maybe would argue with the timing, but no-one can fail to be impressed by the scale or boldness of the move.

In a world of increasingly dull ‘black box’ trading in so many sectors, it’s nice to see that it still takes two views too make a market.

And when exactly is the best time to start up anyway?

Received wisdom dictates that it comes after a major loss, when the market is mis-pricing true risk — and this is what has happened in practice in the waves of ’86, ’93 and ’01 and ’05.

But whenever studies have been done on this subject, it has been shown that as long as you are adequately capitalised, and (crucially), you can attract the right calibre of people, it makes not a blind bit of difference when you start out.

It ain’t when or where you start, it’s where you finish that counts.

And here’s a quick (unrelated) thought inspired by Axis’s appointment of a Benfield man to the post of chief risk officer.

Brokers never really mind when their staff are poached by insurers or reinsurers.

Well, I suppose bang the boardroom table once or twice when they first find out, but then they realise they can’t really complain and then they eventually think about the potential benefits and come round to the idea.

Relationships always come first, and if handled well, such moves are usually a brilliant way of deepening that relationship.

It’s always nice to have some old friends embedded in strategically useful places.

When the time comes to dish out the reinsurance orders, such little advantages can make all the difference between hitting budget and languishing out in the cold.

I suppose it’s a bit like your wife running off with the milkman, you might be angry at first – but think of the free yoghurt and all that extra cream!

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