HartRe Canada Business Picked Up by Endurance

The Hartford Financial Services Group Inc. has sold the renewal rights to much of its US$700 million global property and casualty reinsurance business under HartRe to Bermuda-based Endurance Specialty Holdings Ltd. A statement released by Endurance says the deal will involve about US$400 million in annual premium, of which business written by HartRe Canada is included. The terms of the international deal have not been disclosed.

Mike Rende, general manager of HartRe Canada, confirms that negotiations included the Canadian book of business, which based on the company’s 2002 return amounts to just over $17 million in net written premiums. Rende notes that no indication has been given by Endurance to what percentage of the Canadian book is being sought after. The majority of HartRe Canada’s property-based treaty business expires at the end of the year, which until then covers will still be carried under The Hartford Fire Insurance Co.’s “paper”.

Rende also confirms that an offer of employment has been made to him by Endurance to “develop the business in Canada”. He points out, however, that Endurance is currently not a licensed reinsurer in Canada, and as such, his position will depend on securing a work visa in Bermuda. Initially, Rende says he will be based in Bermuda. “I’m about to leave for a meeting in Bermuda, and afterward I’ll have a clearer picture of what their plans are. But, technically speaking, I’m currently not employed by Endurance.”

A statement released by The Hartford says that the decision to sell the renewal rights to its reinsurance business was due to the fact that “HartRe lacks the necessary scale to compete effectively”. Ramani Ayer, CEO of The Hartford comments, “we feel that a professional reinsurer such as Endurance will be able to build off the strong platform we’ve created [in HartRe]”. The withdrawal by The Hartford from reinsurance will have little impact on the operational infrastructure of Hart Re Canada, Rende notes. The company began downsizing its business last year to bring its book back to a profitable underwriting position. The company shed about 35% of its premium volume in 2002, Rende says, which involved mostly “long-tail” casualty treaties. “The 2002 underwriting result was vastly improved,” he adds.

The take-up of Hart Re’s business in the U.S. by Endurance is a more streamlined process, Rende observes, as the latter already has a licensed operation under Endurance Reinsurance Corp. of America. The operations of the Endurance group were recently upgraded by rating agency A.M. Best to “A (Excellent)” from “A- (Excellent)” based on strong capitalization and underwriting and risk management controls. Regarded as being one of the “Bermuda start ups” following the 9/11 terrorist attacks, Endurance is listed on the New York Stock Exchange with shareholders’ equity of about US$1.5 billion.