Covering up

From a small Lloyd’s syndicate to an international powerhouse in the space of a decade. Joanne Harris on how the Catlin Group achieved its rise to prominence

Just over a decade ago Daniel Primer joined a small Lloyd’s syndicate as its only in-house lawyer. Now he heads the legal department of an international listed company writing more than $1bn (£547.4m) of business each year.

The Catlin Group was established in 1984 by Stephen Catlin as an underwriting agency specialising in marine insurance for Lloyd’s Syndicate 1003. With Catlin at the helm, the syndicate grew to a capacity of £170m by 1995.

In that year, Bermuda company Western General Insurance invested in Catlin Group, enabling further growth. Another syndicate was then formed, capitalised entirely by Catlin Group. This has since taken on the capacity of Syndicate 1003 from Lloyd’s Names.
The group began to expand overseas in 1999, establishing offices in Malaysia and Singapore, before acquiring underwriting agencies in the US and opening a branch in Bermuda.

By 2003 the group took the view that there was opportunity outside traditional Lloyd’s markets and set up Catlin UK. This arm of the group writes commercial business and professional indemnity, with around £2m of the solicitors’ market for 2004.

Shares in the Catlin Group were floated on the London Stock Exchange in April this year, with the IPO raising £110m.

Primer has been involved in all the major stages of the Catlin Group’s growth. He arrived in London in 1993 on secondment from Rogers & Wells in Los Angeles, where he was a sixth-year associate.
“It was a good move,” he says succinctly, adding that the culture shock was “quite bizarre”.

The three months soon stretched into six, and before Primer knew it he had been appointed as Catlin Group’s corporate counsel. He has remained in that role ever since. He also became company secretary when the company listed.

Primer has managed all the company’s major growths and acquisitions over the past 12 years. He now has a legal staff of 12, spread across the UK, the US and Bermuda.

Catlin Group’s principal adviser is Ashurst. Originating from a relationship between insurance star Jeremy Hill (who decamped to Debevoise & Plimpton earlier this year) and Catlin Group investor Western General, Ashurst has been working with the group for 10 years and undertakes all of Catlin’s corporate work.

In 2001, Catlin Group set out to raise capital through the sale of interests to a consortium of investors. Ultimately, the group raised $500m (£273.7m) capital over eight months. The deal was due to be concluded in New York, with Fried Frank Harris Shriver & Jacobson advising on US issues.

Over the course of several days, Primer, his Ashurst team and the consortium discussed a deal in Fried Frank’s offices, only to see the negotiations fall through.

“I sent the lawyers home after the deal went dead,” explains Primer. He stayed in New York, intending to use his time in the US to visit friends and family.

But at noon the next day, Primer heard that the deal was back on. He hurried back to the table and sat alone facing the investors, with Ashurst helping out via videoconferencing facilities. The deal was successful, and the capital was used to build Catlin Group further.
At the end of 2003, the group floated. “That was not as difficult a process as the private equity,” Primer says. Ashurst again advised, and the IPO ran exactly to timetable, with shares floating on 6 April this year.

“The big challenge is not being distracted from running the company,” Primer says, reflecting on the IPO. “You can’t take your eye off the business. A big part of the reason that we were successful was the culture. We’ve had a culture of success. The challenge is: how do you retain what was good about the culture while addressing the demands of being a much larger public listed company?”

Part of Primer’s culture is being exacting in his standards. He says Ashurst has “a team of people we have got very comfortable with”. Nevertheless, that does not mean Ashurst – or the range of law firms that take on Catlin Group’s claims work – can rest easy.

“I’m a proponent of testing the law firms. We expect to be treated as their most important client,” Primer says, adding that he carries out a rolling review of advisers.

He is also critical of the way the insurance industry carries out its legal work, saying the quality of contractual drafting is “very low”.

“It’s lost the insurance industry billions of dollars over time,” he adds, pointing as an example to the confusion over the number of ‘events’ claimed for in the World Trade Center policies.
Another concern for Catlin Group is the after-effects of this summer’s hurricanes, although the true cost will not be seen for some time. New regulation is also an issue, as Lloyd’s takes over from the Financial Services Authority as the industry regulator.

Six months after its IPO, Catlin Group has settled comfortably in the FTSE 250 and, with hurricane season past, the forecast seems good. And for Primer, too, it is back to business as usual.
Daniel Primer
General counsel
Catlin Group

Catlin Group
Sector Insurance and reinsurance
Revenue $1.2bn (£656.8m)
Employees 290
Legal capability 12
Legal spend $1m (£547,000), excluding claims
General counsel Daniel Primer
Reporting to Group chief executive officer Stephen Catlin
Main law firms: Appleby Spurling Hunter in Bermuda and Ashurst (corporate); Barlow Lyde & Gilbert, Clyde & Co, Ince & Co and Reynolds Porter Chamberlain (claims)