Fairfax celebrates Odyssey’s landmark 25th anniversary
Odyssey Group has hit a milestone anniversary in 2021 with the (re)insurance group celebrating its 25th year of operation as a standalone entity under the ownership of Fairfax Financial.
Prem Watsa (pictured centre) had founded Toronto, Canada-based Fairfax in 1985. His plan had been to build a property and casualty-focused (re)insurer that would also have an investment management services platform alongside it.
Odyssey’s origins can be traced back to a fateful call that Watsa received from Jim Dowd, then CEO of Skandia America Reinsurance, in late 1995. Dowd asked Watsa whether he was interested in buying the firm’s Canadian platform.
Watsa said yes, but asked whether Skandia would be interested in selling its entire North American business rather than just the Canadian operation.
In May 1996, Fairfax acquired Skandia America, Skandia Canada and Hudson Insurance Company. Skandia America was rebranded to Odyssey Reinsurance Corporation, and the initial foundations were set for the business to grow into the Odyssey Group operation that this year is celebrating its 25th anniversary.
Andy Barnard (left) soon joined the nascent Odyssey Group from Transatlantic Reinsurance as CEO, while Jim Migliorini was appointed CEO of US insurance platform Hudson.
Brian Young (right), the current Odyssey Group CEO, and Joe Guardo had both previously worked with Barnard, and also joined the business.
In September 1996, just two months after Barnard had joined Odyssey, Fairfax acquired Paris-based Compagnie Transcontinentale de Réassurance, or CTR. That deal put Barnard at the helm of a business with a global reach and that generated $500mn of premium.
The acquisition of New York Stock Exchange-listed TIG Holdings in April 1999, and its two main subsidiaries – the Dallas, Texas-based TIG Insurance and Stamford, Connecticut-sited TIG Reinsurance - really pushed Odyssey to become a (re)insurance powerhouse.
TIG deal brings Wacek to the business
The addition of TIG Re made Odyssey’s reinsurance operations one of the largest in the US brokered reinsurance market. Notably, the TIG acquisition also brought TIG Re president and CEO Mike Wacek into the Odyssey fold. Wacek remains with the business today as executive vice president and chief risk officer.
In October 1999, TIG Re was renamed Odyssey America Reinsurance Corporation and its Stamford headquarters became the head office for the overall group’s reinsurance business.
The TIG Re deal also gave Odyssey the Lloyd’s operation Newman Syndicate 1218 which was subsequently rebranded to Newline.
In June 2001, Odyssey went public and listed on the New York Stock Exchange, although Fairfax retained a 74 percent ownership stake in the business. The 11 September terrorist attacks later that year had a profound impact on the (re)insurance industry, and ultimately spurred Odyssey’s growth.
At the time of going public, Odyssey was writing some $800mn of premium, but by 2005 that had soared to $2.5bn.
In 2009, and with Odyssey having negotiated the financial crisis far more comfortably than many of its peers, Fairfax decided to change tack and raised $1bn through an offering of its own stock, which was then used to buy back the reinsurance business’ publicly held shares.
When the delisting came into effect on 28 October 2009, Fairfax’s buyout price for Odyssey was $65 per share. Its shares had first gone public at $18 a piece in June 2001.
In the years since Odyssey went private, the business has continued to grow both organically and through acquisition, as well as broaden its footprint and operations around the world.
Most notable growth has been at Hudson
The most notable growth stems from Hudson Insurance Group, Odyssey’s US insurance business, which represented 42 percent of the group’s 2020 gross premiums written.
Hudson’s story is far from ordinary. It had served as an internal vehicle for several years, but in the late 1990s it emerged by entering delegated underwriting authority agreements. That decision, along with renewal rights and staff acquisitions in the medical malpractice and surety segments, secured its footing.
After Christopher Gallagher was appointed CEO in 2009, Hudson rose to new heights. Growth by acquisition led to the formation of many of its present businesses, including crop, commercial auto and professional lines including D&O. It further evolved by creating products for niche markets and building underwriting operations from scratch.
The smallest of Odyssey’s three operating platforms, Newline Group, has its headquarters in London and serves as Odyssey’s Lloyd’s and international insurance platform.
Despite the challenges facing the broader (re)insurance industry, Newline has managed to report an underwriting profit every year from 2013 through to 2020.
Newline’s geographical footprint includes Australia, Singapore and Malaysia, and in 2015 it entered Shanghai via the Lloyd’s China platform.
Expansion to North America began with Canada in 2018, followed by Mexico City through the Lloyd’s representative office in 2019.
Also in 2019, Newline elevated its branch office in Cologne by launching a European platform. That unit – called Newline Europe Versicherung AG, but better known as Newline Europe – was established so the business could continue servicing its clients throughout Europe post-Brexit.
Having entered its 25th year as part of Fairfax, Odyssey has developed into a global company that writes business in more than 100 territories around the world, and has a network of 30 offices in 13 countries.
The company is divided into 35 units across its Odyssey Re, Hudson and Newline operations, 19 of which are focused on reinsurance and the rest to insurance. Today, it employs more than 1,200 staff across five separate divisions: North America, Latin America, EuroAsia, London Market and US Insurance.
Across its 25 year history, the company has only had two CEOs. Barnard served as CEO until 2011 before handing over the reins to current CEO Young in 2011.
“We started from humble beginnings, but together as a team and with the support of Fairfax, we have patiently built a great company,” Young said.
In 2020, Odyssey saw its gross premiums written increase by 15 percent year on year to $4.3bn, and despite the impact of Covid-19 and heightened catastrophe activity, the (re)insurer still managed to post an underwriting profit of $189.9mn and a combined ratio of 94.7 percent, of which four points related to the pandemic.
“It’s been amazing to watch the Odyssey story develop. It just keeps getting better and better, and there are no limits to what Brian and his team can achieve,” Watsa said in a newly published book celebrating Odyssey’s 25th anniversary.
“[Odyssey] is the crown jewel of all the Fairfax companies. It’s our key. It’s the gem. We’ve had a lot of successes, but Odyssey’s the biggest one.”
Odyssey reflects in Enduring Momentum
To commemorate reaching its 25th year, Odyssey Group commissioned a book reflecting on its history as well as the people that have helped build the business into the global (re)insurer that it is today.
Called Enduring Momentum, the book also includes the thoughts and feelings of some of the company’s staff about what Odyssey represents to them and what it is like to work for the business.
Based upon the legend of Ernest Hemingway’s six word story (the novelist is alleged to have bet a group of fellow writers he could write a story with just six words), Odyssey challenged staff in January 2020 to share their sentiments on the company in such a manner.
As Odyssey Group president and CEO Brian Young noted, “the response was overwhelming”.
Among the many submissions were those from Brian Quinn, CEO North America, OdysseyRe; Eileen Reis, claims support, Hudson; and Stephen Bruce, a pricing actuary at Hudson.
Quinn’s six word story read: ”Patient capital, timeless principles, continuing success”. The contribution from Reiss was: “Diversity in a culture of productivity”. And Bruce wrote: “Without audience, do the right thing(s)”.
Across the vast number of submissions, the six most commonly used words in all of the stories were: Success, Community, Challenge, Team, Value and Giving.
A copy of Enduring Momentum can be downloaded by clicking here.