Mereo Insurance has commenced underwriting the first excess casualty energy policies acquired through a renewal rights transaction with Everen Specialty Limited (ESL).
The transaction, structured between ESL and Cedar Trace, the insurance, reinsurance and asset management group strategically aligned with Mereo, became effective June 1, 2026. ESL's underwriting team and systems supporting the portfolio have transitioned to Cedar Trace, with Carla Greaves, former ESL chief underwriting officer, leading the unit.
A third-party administrator arrangement with ESL has been put in place to maintain continuity of claims handling services, the company said.
Mereo launched in 2025 with backing from investors including Ares Management, Susquehanna International Group and Andover Companies, raising nearly $700 million in initial capital and deploying about $250 million to $350 million through an ILS fund.
David Croom-Johnson, a partner at Cedar Trace and Mereo's chief executive officer, said: "The transaction supports our vision to become a leading global insurance and reinsurance business, and reflects our commitment to develop high-quality primary insurance business."
Meanwhile, Everen Specialty was formed in 1986 at a time when commercial markets had ceased to provide adequate directors and officers and excess liability coverage for energy industry risks. It has operated as a Bermuda-based insurer focused on the energy sector for four decades since.
Robert Foskey, president and CEO of Everen Group, said priorities throughout had been continuity for insureds requiring large casualty limits, a soft landing for the ESL underwriting team and a partner that would maintain expected service standards, adding that the transaction "keeps meaningful excess liability capacity on-island."
The transaction carries particular relevance given the conditions driving demand for Bermuda excess casualty capacity.
In the US, litigation costs have driven up liability claims by over 57% in the past decade, with thermonuclear verdicts, or claims exceeding $100 million, becoming increasingly common, with 27 such claims recorded in 2023 alone. Major insurers have responded by reducing line sizes, with a number constricting from $100 million to $75 million or from $75 million to $50 million, while Bermuda market excess liability insurers have similarly trimmed their lines.
Within the energy sector, conditions are uneven. Primary liability market capacity for the North American energy sector has been broadly stable in 2025, but auto liability remains a persistent exception, continuing to see high single-digit to low double-digit rate increases due to claims inflation and a rise in litigated claims.
The oilfield services sector remains the most challenged casualty market. Excess liability in energy is stable for most segments, though capacity within the first $25 million remains cautious due to lawsuit abuse issues, and contractor injury claims continue to drive large losses into excess layers.
That backdrop helps explain why Bermuda's excess casualty market has been expanding. Excess casualty insurance terms and conditions have remained tight amid continued pressure from nuclear verdict trends, litigation finance and social inflation, driving insureds toward Bermuda for additional capacity. Rate increases of 10% to 20% were recorded in early 2025, driven by capacity constraints and rising litigation costs, with average deployed limits falling to between $10 million and $15 million, roughly half their historical levels.
Mereo is not alone in seeing the opportunity.
Mosaic launched its own Bermuda excess casualty unit in January 2026, and QBE has also established a presence on the island, with both citing similar market dynamics. In Q1, 22 casualty insurance markets are trading in Bermuda, with attachment points now starting from as low as $5 million, reflecting a market that has broadened considerably.
