1966: Intercontinental Re, with new capital of $23 million.
1986: ACE, $250 million. Exel (now XL Capital), $500 million.
1993: Mid-Ocean Re, $770 million.
2001: AXIS Capital Holdings, $1.7 billion.
It's not that these are all the companies Robert J. Newhouse, Jr. had a hand in building; it's that every one was a milestone in the development of the Bermuda market.
Among those who know and have worked with him, Newhouse comes across first and foremost as the quintessential ideas man, with the uncommon ability among such men of putting meat--billions of dollars, in this case--on the bones of his ideas. "Every time you turn around, Bob Newhouse is doing something new," says Michael I.D. Morrison, chairman of Allied World Assurance Holdings.
Newhouse was born into what has become a capital markets dynasty in Orange, N.J., on Feb. 17, 1925. His father was an insurance man; his three sons are in insurance and banking. After the Navy in World War II and Princeton, he spent eight years learning his trade at his father's insurance business, Newhouse & Sayre, in New York City.
N&S acted as U.S. and Canada marine and aviation underwriting managers for the Home Group and The Employers Group, and as excess-and-surplus-lines brokers, underwriters and reinsurance brokers. Newhouse started in the claims department and went on to become an assistant underwriter.
"Later on, I wanted to do more in the reinsurance business and decided that the best firm that I could get a job with was Guy Carpenter, then part of Marsh & McLennan," Newhouse recalls. Carpenter hired him, and he stayed for 16 years.
He served as president of Marsh from 1976 to 1988 and vice chairman and a member of the office of the chairman from 1988 through 1990, when he retired. He consulted for Marsh thereafter. Bermuda was not the only market where he led the firm: "Bob became chief emissary for their London and international dealings," says Michael Butt, chairman of AXIS Capital.
"It was Bob Clements who created ACE and XL, but without Bob Newhouse's decision, as the head of Marsh & McLennan, it could not have happened," says XL Capital president and CEO Brian O'Hara. "Bob took a risk as much as anyone in the commitment to building these businesses in Bermuda which, at the time, was suffering from a less than positive image in the world marketplace, due to dramatic failures (the insolvencies of companies such as Mentor Insurance and Cambridge Re) in the Bermuda insurance market."
Marsh enhanced the Bermuda market several times in the years that followed. In 1986, Newhouse and Clements formed School, College & University Underwriters (or SCUUL), an excess liability insurer for educational institutions. Marsh was also instrumental in raising the $250 million needed to start finite-risk reinsurer Centre Reinsurance, the brainchild of Steven Gluckstern and Michael Palm.
"Whereas ACE and XL were formed to solve specific problems, Mid Ocean, under Bob's leadership, established the first multiline reinsurer," O'Hara says. "That gave Bermuda enhanced credibility, particularly in the London market, where Bob had the best relationships I had ever known an American broker to have. One of his accomplishments that impresses me most is that he did something that very few brokers can do. He made a successful transition to the underwriting side of the business."
Six days after Sept. 11, 2001, AXIS president and CEO John Charman and Jeff Greenberg, then at MMC Capital, sat down to map out plans to jump-start what had been until then, in Charman's words, a "meandering idea." Newhouse joined AXIS as chairman, after a period of reluctance.
"The key was that Charman and I both felt that it was the first time in the history of the business that both the insurance and reinsurance businesses were going to be in a crisis, from the standpoint of capacity, at the same time," Newhouse says. "At the last minute, Jeff Greenberg put the arm on me, because of 9/11, and said that Marsh had to show it was still in business and still flourishing, and had to get an announcement out that they were forming this company. He wanted me to become chairman of it and to work with John, whom I have known for years."
Newhouse duly served as chairman for AXIS for an inaugural year, and subsequently consulted in a range of capacities, before retiring for the umpteenth time.
Newhouse is "a man of great integrity and great ability, who should be honored and praised," says Brian Duperreault, former chairman of ACE.
"Bob is one of the smoothest, most able negotiators that I've ever met," says O'Hara. "He would always make you feel like you got the best of him when you knew it was the opposite. He is the consummate professional and, above all, always a perfect gentleman."
ROGER CROMBIE is a Bermuda-based columnist for Risk & Insurance®.
January 1, 2008
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