Convex GWP set to reach ~$5bn in 2024 as growth continues

Convex Group expects to write in the region of $5bn this year with ~$2bn contributed from reinsurance, according to the CEO of the 2019 London-Bermuda start-up.

Speaking at the annual industry congress in Monte Carlo, Convex co-founder Paul Brand confirmed that reinsurance now contributes circa 40 percent of its global portfolio, which is on track to grow substantially from $4.21bn in 2023.

“We would expect to be around $5bn in 2024. There's a bit of the year to run through but the plan for the year is around that figure and I would expect us to meet it,” he said.

The firm’s organic growth has been impressive considering it is only five years old, albeit the launch was well-timed into hardening markets.

Nonetheless, Brand told The Insurer that the milestones the business has reached, including premiums, are “almost perfectly” in line with its original pre-launch forecasts.

“We always believed that the business could scale significantly if we did it properly,” he said. “And that’s what we have done.”

He continued: “We've always had an aspiration for our portfolio to be broadly split 60/40 between insurance and reinsurance. We leant slightly more heavily into reinsurance in the very early phases of the business but now we’re executing and maintaining that portfolio balance.”

As previously reported, Convex has enjoyed rapid growth since its launch in 2019 under the leadership of Stephen Catlin and Brand, a partnership which oversaw the build-out of Catlin Group prior to its $4bn+ acquisition by XL in 2015.

Headcount across London and Bermuda has now grown to in excess of 454, with “front of house” functions such underwriting, claims and portfolio optimisation accounting for around 60 percent of employees.

And Brand expects that number will continue to grow modestly as Convex solidifies its position as a top-five underwriter in its chosen core lines of business, namely aerospace, energy, and its largest segment, property and casualty, including marine liability. He added that its fresh start means the carrier is not saddled with legacy operations and can be more nimble in adopting new technologies.

“I'm a big believer in the mantra of ‘unless it requires judgement, automate it, outsource it and almost forget it,” he said. “AI is an extension of that for us and we’ve been working with generative AI long before it became fashionable.”

He explained that AI enables Convex to not only make better underwriting decisions and innovate faster but also cut costs – three factors that will be front and centre in the run-up to 1 January.

Brand, who succeeded Catlin in the CEO role in June 2022 after serving as deputy CEO, told The Insurer that he expects his reinsurance underwriters to remain resistant to rate reduction pressures at 1.1 even if 2024 proves to be another strong earnings year.

“We're not in a market where we can feel as though we’re out of the woods. Just because we’ve seen carriers publishing combined ratios in the 80s and 90s doesn’t mean that we’ve made it,” he said, adding that firmer pricing conditions in reinsurance will need to continue for some time.

“This market needs to sustain itself and demonstrate results for a little while longer,” he added.

Convex – majority owned by private equity firm Onex – earlier this year posted its second year of underwriting profit at $255mn, with net income attributable to common shareholders of $503mn.

He added that cedants are increasingly looking for certainty from their reinsurance partners, highlighting that many insurers “have long memories” and won’t soon forget the opportunism of some markets in the capacity-tight renewals of 2022-23.

“We buy a lot of reinsurance, what we like is speed and certainty of appetite. We don't want our reinsurance carriers to flip-flop on strategy from one year to the next,” he said. “And more broadly, it appears that our industry seems is slowing down. There’s an unhelpful dynamic present within some reinsurers around internal negotiation – a decision is negotiated between cedant, broker and reinsurer and then has to be renegotiated by the reinsurance underwriter and their own team.

“As carriers, we should be spending all our time thinking about how we negotiate with our brokers and our clients, we should be very clear about what we're likely to want to do.”