Mereo lines up PE Susquehanna house as lead backer as it targets 1.1 release

Brian Duperreault’s reinsurance startup Mereo has won Susquehanna’s backing as a lead investor as it works to complete its roughly $1 billion in capital in time for its Jan. 1 launch, may disclose this publication.

Sources said former Securis and IQUW director Neil Strong will become chairman as well as CEO of Mereo ILS, with former Fidelis director Richard Holden becoming deputy CUO as the start-up builds its leadership team ahead of launch.

Reinsurance startups have faced a fundraising desert over the past two years as PE houses have been held back by concerns about exits, the ability to create franchise value in reinsurance and concerns about insurers’ control over cat risk. This is despite the fact that reinsurers raised their ROEs in the 20s and 30s through an 18-month period of extraordinary returns.

However, Mereo is now heading to the starting line, a year after this publication revealed that former AIG CEO Marsh McLennan and Ace Duperreault were eyeing a return as executive chairman of the startup.

Sources said Mereo was also close to securing backing from a number of strategic partners and was in live talks with a number of other potential financial investors, including hedge funds, PE houses and family offices.

Susquehanna is a quantitative trading business that houses a PE and venture capital arm that has been lined up to support Mereo.

As revealed in December, Mereo’s CEO is former Aegis London boss David Croom-Johnson, who is stepping down from Lloyd’s top performer in 2022 after seven years at the helm. He will also initially be the CUO of the Bermuda-domiciled Class 3B reinsurer.

It is understood that alongside the January 1 launch target, Mereo is looking to have an ILS fund up and running on day one.

Mereo has a preliminary financial strength rating from AM Best and, as it prepares to secure its final rating and seek approval from the Bermuda Monetary Authority for the launch, has retained a number of advisers including Appleby, Wilkie Farr, EY and SRS. The company was already working with Kinmont’s capital markets unit and Price Forbes Re on the capital raise.

Other members of the team include former Hamilton CFO Jonathan Reiss, who will become CFO at the launch, while continuing in the SRS position in Bermuda. Lawrence Minicone will serve as chief investment officer, with Jason Miller becoming chief commercial officer.

JLT veteran Derek Walsh will become chief legal counsel, with Federico Waisman as chief analytics and risk officer.

Speaking exclusively to this publication before Monte Carlo last year, executive chairman Duperreault said the start-up would focus on “underwriting, underwriting, underwriting.”

As previously reported, Mereo is understood to be looking to start business from around 20-30 business classes, creating a highly diversified book. These would include a portfolio of classes such as auto, workers compensation, professional liability, commercial property, casualty, crop, marine, warranty, energy, reps and sureties, medmal, cyber and A&H.

A number of start-ups that have tried to take advantage of the dislocation in the reinsurance market after years of poor performance have either repeatedly delayed their launches or dropped the instruments entirely. John Doucette abandoned his plans and joined MGA Amynta.

Chris Fagan and former Catalina colleague Mayur Patel have continued to work on their start-up in recent months, as have former Axis director Steve Arora and Hannover Re CEO Willy Zeller.

However, in all cases, fundraising was an uphill battle and deadlines were extended.

Cathal Carr – Oak Re’s latest start-up play – has secured Lloyd’s approval for January 1, but this is subject to a capital increase that Evercore is currently undertaking.

Mereo declined to comment.