Father and Son & Co.

I've got a lot of time for Bob Clements. He's the brains and financial brawn behind Ace, XL Capital, Mid-Ocean, Arch Capital and Ironshore--all among Bermuda's largest insurers and reinsurers, or part of companies larger still--and, oh, yes, he started Integro too.

By Roger Crombie

In the last few years, Bob (the name he prefers) has worked with his son John, who introduced him to the notion, some years ago, of finding the money before you find the opportunity, the better to steal a jump on those who know a good idea when Bob comes up with one.

His relationship with Marsh & McLennan dates back to 1959, when he joined the casualty department of the company's Toronto office. In 1975, he moved to New York to work with the management of Marsh & McLennan. In 1984, as president of that company, on a Concorde flight, he sketched out an idea to Robert Newhouse Jr. that would change the fate of island nations.

Serial Deal Sealed? (08/01/11)
Teeing It up (08/01/11)
Alternative Risk (08/01/11)
A Series of Fortunate Formations (08/23/11)
Dialing Into Captive Profits (08/01/11)

Clements and Newhouse started two large association captives, formed in the Caymans and managed from Bermuda, that would ease the serious dislocation in the excess liability markets that arose in the mid-'80s. The two companies, Ace and XL Capital, were funded with $750 million between them. At June 30, 2007, they reported shareholders' equity of $26.7 billion and total assets of $131.2 billion. The rule with Clements seems to be: If he builds them, they will grow.

He rose to be vice chairman of Marsh McLennan Cos. in 1991 and president in 1992, and two years later founded Marsh & McLennan Risk Capital, now known as Stone Point Capital. In 1993, he and Newhouse formed Mid-Ocean Reinsurance, sparking a $4 billion stampede of new capital in the property-catastrophe reinsurance business that remains a core competence of the Bermuda market. (Newhouse went on to become chairman of Axis Capital Holdings in 2001, a company that writes both insurance and reinsurance with extraordinary skill.)

In the mid-'90s, Clements established the Trident Funds for Marsh and other investors, private equity pools that would sponsor the formation of new companies when market conditions permitted. For the prop-cat market, the Trident Funds were a different business model: pre-event funding. In 2000, missing the feel of heading an operation, Clements left Trident to convert a U.S. reinsurer he led, Risk Capital Re, into Arch Capital Group. The events of Sept. 11, 2001, propelled the company into business, and it has thrived.

In the wake of Eliot Spitzer, Clements pere et fils saw opportunity where others saw only problems. Father and son formed Integro, a new force in the brokering community, with $300 million of private equity capital, principally rounded up by John.

Not content with having prospered in reinsurance and brokering, late last fall the two men started Ironshore, a $1 billion property/casualty insurance company.

The organizations that the duo builds are seeded with packages of clean capital and smart management, a regulator's dream. Bob and John find executives that help shape their ideas, and then usher in the funding. The two remain part of the company as it grows, offering advice and strategy, as consultants to their creations.

Bermuda brings a greenhouse effect to bear on nascent ideas, allowing them to prosper faster than anywhere else in the world. Bob the builder creates companies, and they just grow and grow. He doesn't strike you as a master of the universe, or an architect of the global economic system: He just does his job better, and on a grander stage, than the rest of us. He is full of enthusiasm and wit, and fairly crackles with ideas. He likes those around him to tell the truth.

Like I said, I've got all the time in the world for Bob Clements.

ROGER CROMBIE is a Bermuda-based columnist for Risk & Insurance®.

September 1, 2007

Newsletter Sign-up