Posted on 07 Sep 10
Robert Clements, founder of many of the commercial property & casualty insurance industry’s most successful ventures and transformer of how capital is applied to insurance market shortages, passed away on Saturday, September 5.
Bob was the architect of insurance broker Marsh & McLennan’s focus on global specialization, which enabled it to become the largest insurance broker in the world. Bob was also instrumental in the formation of numerous insurance organizations in response to industry needs including ACE, XL, Mid-Ocean Reinsurance, Arch Capital Group, Integro, and most recently, Ironshore. He also stimulated the formation of Advisen’s Front Page News.
Bob’s career in insurance started with Marsh & McLennan in 1959, when he joined the casualty department of the company's Toronto office. In 1975, having proved himself an out of the box leader he moved to New York to work with the management of Marsh & McLennan, where he led some of Marsh’s first moves into specialization. By 1984 he had led Marsh to acquire CT Bowring in London, creating the first international broker, but he didn’t stop there. In 1985 during a period known as the “casualty capacity crisis” in the commercial insurance industry, he took his first steps in applying capital to industry capacity needs. In that year, on a Concorde flight, he sketched out an idea to a colleague, Robert Newhouse Jr. that would change the course of the insurance industry.
Clements and Newhouse started two stock insurance companies, breaking with a past of mutualization, knowing that the capital markets would be key to capital flows in the future. ACE and XL Capital were formed in the Cayman Islands and managed from Bermuda. These new companies also established a marketplace in Bermuda which now accounts for $90 billion of the insurance industry’s capital. The two companies were funded with $750 million between them. Bob remained active with XL Capital Ltd. until 2002 when he retired from its Board of Directors.
Bob rose to be vice chairman of Marsh & McLennan Cos. in 1991 and president in 1992. Two years later he founded Marsh & McLennan Risk Capital (now known as Stone Point Capital), and served as its Chief Executive Officer until 1996. In 1993, he and Newhouse formed Mid-Ocean Reinsurance, sparking a $4 billion rush of capital in the property-catastrophe reinsurance business.
In the mid-'90s, Clements established the Trident Funds for Marsh and other investors, which were private equity pools to sponsor the formation of new companies when market conditions permitted. In 2000, Clements left Trident to convert a U.S. reinsurer he led, Risk Capital Re, into Arch Capital Group. He served as the Chairman of Arch for a number of years.
In 2005, Clements joined forces with his son John to raise $320 million to form a new insurance broker – Integro Insurance Brokers. The capital raising for Integro was the largest private equity transaction of that year. Bob served as the non-executive Chairman of Integro until the time of his death.
In 2006, Clements and his son John recognized the need in the marketplace for additional property catastrophe insurance capacity – leading to the formation of Ironshore Insurance Ltd with a $1 billion capital base. Bob served as the non-executive Chairman until the time of his death.