Shareholders of one of the last local reinsurers swept away by the industry shake-up of the late 1990s – Reinsurance Australia Corporation (ReAC) – have voted to change the company’s name to Calliden Group.

Five years after losing $480 million and being forced into run-off mode, the company has applied for a new licence and plans to operate as an insurer in the personal lines market later this year.

Calliden CEO Nick Kirk says there is a valuable niche opportunity in the SME and specialised personal lines sector. The company will target businesses with turnovers of up to $20 million and fewer than 20 employees; businesses like sole traders, not-for-profit groups and niche personal insurance customers.

Last week Mr Kirk told ReAC shareholders Calliden’s target market has an estimated premium pool of more than $5 billion. Unlike the larger corporate sector, the SME market hasn’t had a high degree of fluctuation in premium rates and profitability.

He says Calliden’s research has identified an under-serviced niche. “While insurance brokers are building capabilities in this area, it could be problematic for the major insurers.”

He says distribution will be solely through brokers “who have a focus and capability in this niche”.

“Our analysis has found that due to consolidation in the insurance broking industry, Calliden can build partnerships with a limited number of intermediaries while still providing 80% to 90% coverage of the target market,” Mr Kirk said.

ReAC’s self-managed run-off is almost complete. Calliden Group has $40 million in capital and expects to raise an additional $10 million.

The company plans to write more than $60 million in the first 12 months and to reach an annual premium income of $200 million within five years.