It was no surprise that US casualty was one of the dominant themes of the recent Q3 earnings season.

Late last month we highlighted some of the themes that were expected to drive discussions as another record attendance descended on San Diego for the WSIA Annual Marketplace 2024.

Nothing lasts forever. The good times always end. Or so conventional wisdom goes.

Five years ago, the wider US commercial P&C insurance market was in the throes of a broad firming that led to a lengthy hard environment, as carriers exercised limits shortening and an aggressive push for higher rates almost in lockstep across multiple lines.

Much of the market commentary so far in 2024 has been around shifting conditions and whether they may herald a slowdown of the significant growth seen in recent years in the E&S sector.

Property casualty leaders remain bullish about the E&S space but have noted shifting dynamics as property rate increases slow while submissions remain strong for casualty.

John Doyle’s comment on Marsh McLennan’s earnings call last week that the firm is not looking to build a third-party wholesale business at its recently launched Victor Access arm is likely to have been viewed positively by large wholesalers fearful of the broking giant’s ambitions.

Late last August, just before the WSIA Annual Marketplace, this publication highlighted the importance of "guarding the goose that laid the golden egg”, as we put it.

Anecdotal evidence of a meaningful acceleration in E&S property pricing increases through the last couple of months of 2022 has been proven out in the latest REDY Index data from broker CRC Group, with the firm warning adjustments to terms and conditions and pricing should accelerate through 2023.

Last summer, ahead of the WSIA Annual Marketplace, this publication raised concerns about the threat of regulatory risk for the fast-growing E&S market as its expanding role in the wider P&C industry raises its profile with lawmakers.

Buyers are facing higher rates and restrictive terms in the professional lines excess and surplus lines (E&S) market, AmWINS has reported, with the exception being the extremely competitive cyber segment.

The latest monthly REDY indexes from US wholesale giant CRC Group reveal September rate increases averaging 48.7 percent in cyber, 16.2 percent in excess/umbrella, and 12.9 percent in private D&O, with all three accelerating from August.

The cyber, coastal property and commercial property insurance markets are likely to remain hard in the next six to 18 months, according to the latest P&C Market Overview by Burns & Wilcox.

Cyber carriers this year are using “vastly different” tactics around rates and security requirements, while lower sublimits and more exclusions are increasingly making their way into policy wordings, according to a new report from wholesaler Risk Placement Services (RPS).

One of the biggest topics of discussion in the E&S market this year has been the continued evolution of distribution, and in particular the relationship between retailers and wholesalers.

Here at E&S Insurer, we are in the process of putting together the program for our conference and awards event in New York City on 20 March 2024 (see the back page of this issue for more details and look out for updates and a new website in the coming weeks).

After strong messaging from reinsurers earlier this month on the need to further drive down cede commissions on casualty quota shares, Lloyd’s set out its stall, flagging US general liability as one of three key areas of focus for performance oversight.

After this publication reported in its September issue on potential moves from the big three brokers to get into the wholesale arena – one of the topics du jour at the WSIA Annual Marketplace in San Diego – the CIAB-hosted Insurance Leadership Forum earlier this month saw the rumour mill go into overdrive.

The second quarter earnings season is underway and, just for a change, commentary around the sustainability of current pricing momentum is a major focus among investors in carriers and brokers.

In our lead E&S Insurer article this month we take a mid-year state-of-the-market look at E&S property, where there are few signs of anything on the horizon that will meaningfully change dynamics with supply still severely constrained and demand up because of higher valuations.

US insurance brokerage M&A transactions had reached 633 by the end of November, up 2.5 percent on the same period of 2023 and dominated by private capital-backed buyers, with activity expected to end the year strongly, according to boutique investment banking firm MarshBerry.

Bridge Specialty Group, the wholesale broking division of Brown & Brown, has acquired the assets of Madison, Wisconsin-based specialty wholesale environmental insurance brokerage platform American Risk Management Resources Network.

Ryan Specialty has disclosed that it paid $44mn in cash consideration to Ascot to acquire the P&C MGUs owned by Ethos Specialty Insurance.

Ryan Specialty is in final discussions to buy London-based MGU incubator platform Innovisk Capital Partners from investors that include funds managed by private equity firms BHMS Investments and Abry Partners in the latest example of strong demand from strategic buyers for assets in the sector.

Unison Risk Advisors has acquired E&S MGU Avondale Insurance Associates, adding its first non-retail business and its fifth platform deal overall,

South Shore Insurance Underwriters (SSIU) has extended its reach into the western US after acquiring personal lines specialist Linneman Specialty Insurance (LSI).

Monarch E&S Insurance Services, a division of Specialty Program Group, has acquired Garland, Texas-based binding and brokerage firm Professional Insurance Executives (PIE).

Conifer Holdings has announced that the $6.5mn sale of its 50 percent stake in Sycamore Specialty Underwriters (SSU) was to an entity owned by Andrew Petcoff – the son of its former co-CEO James Petcoff – while recently resigned CEO Nicholas Petcoff will receive up to $1.3mn as a performance bonus.

Ryan Specialty has completed its previously announced acquisitions of US Assure and Greenhill Underwriting Insurance Services, deals which will significantly bolster the firm’s MGU operations.

Monarch E&S Insurance Services, a division of Hub-owned Specialty Program Group, has acquired the assets of Commercial Sector Insurance Brokers (CSIB), which specialises in contract binding, the mining industry, and coastal property placements.

Novatae Risk Group, the wholesale operations of World Insurance Associates, has acquired the assets of Denali Specialty Group, a St Louis, Missouri-based full-service intermediary founded in 2019.

Global Indemnity CEO Jay Brown has confirmed that the repositioned specialty carrier has had conversations with rival James River, but said that any talks are currently “on pause”.

Pat Ryan has said that Ryan Specialty’s recently-closed acquisition of Castel Underwriting Agencies and the addition of its 135 colleagues will help fuel international expansion plans, adding that the wholesale giant’s M&A outlook remains “ambitious”.

Applied Underwriters is selling its Florida-based admitted carrier Centauri Insurance to Arbol’s newly formed Lilypad Insurance business, with capital freed up by the sale redeployed to support its entry into the E&S high-net-worth (HNW) homeowners space,

James River Group Holdings announced late Tuesday that Fleming Intermediate Holdings has completed its acquisition of the Bermudian specialty platform’s treaty business JRG Reinsurance Company on the previously agreed terms, following a legal spat between the parties related to reserving.

M&A remains Ryan Specialty’s “top priority” in relation to capital allocation with the company buoyed by “an uptick” in the number of people ready, or preparing, to sell their businesses, the firm’s chairman and CEO Pat Ryan has declared.

Amwins has agreed a deal to buy Connected Risk Solutions, the wholesale E&S brokerage operated by New York-listed insurance distribution firm BRP Group, in a deal that will generate net cash proceeds of around $59mn for the seller.

BRP Group’s divestment of Connected Risk Solutions to Amwins will bring the wholesale giant a business that generated $34mn of gross revenue and $5mn of adjusted Ebitda in 2023, the seller has revealed.

Wholesale and underwriting giant Amwins has agreed a deal to acquire expansive MGU platform Risksmith Insurance Services, which had been working with advisory firm Insurance Advisory Partners (IAP) to assess strategic options,

After ticking off one item on its wish list with a deal announced to acquire middle market-focused retailer NFP, Aon will continue to assess ways it can better directly access the E&S market, this publication understands.

The Hartford has said it remains on track to hit $300mn in E&S binding premium this year, with John Russo, small commercial CUO at its Navigators unit, telling this publication that the stickiness of the business and surging submissions mean there should be a “several year runway” for growth.

Allied World’s decision to maintain a dual distribution model rather than launching a dedicated wholesale unit has not been an impediment to growth, with the carrier’s E&S book expanding significantly in recent years to account for more than half of its US premium.

To remain relevant in a shifting distribution landscape and capitalise on the flow of business to the E&S space, wholesalers will need to deliver additional value by offering advice, expertise and proprietary product, according to Risk Placement Services (RPS) CEO Kevin Doyle.

Everest’s rebranded Evolution US wholesale business is building its talent base both in underwriting and in operations and technology, bringing in more digitisation and identifying and capitalising on E&S market opportunities, according to the unit’s leadership team.

Craig Smiddy has highlighted Old Republic’s 21 percent E&S premium growth in Q3, with the carrier also on track for its tenth consecutive year of favourable loss reserve development despite the quarter’s lower commercial auto and workers’ comp releases and a $25mn financial indemnity charge.

US casualty has arguably been the hottest topic in the sector over the last year amid growing concerns over deteriorating loss trends.

Novatae Risk Group, the wholesale operations of World Insurance Associates, has acquired the assets of Denali Specialty Group, a St Louis, Missouri-based full-service intermediary founded in 2019.

Brown & Riding’s “market-leading” growth rate has seen it more than double in size over the last four years with premium placed set to pass $2.6bn in 2024, as the firm capitalises on its position as an independent, internally owned wholesaler, according to CEO Jeff Rodriguez.

Aon is continuing to look at options that would allow it to directly access the E&S market, including the creation of an in-house placement operation, according to the firm’s president Eric Andersen.

Wholesaler XS Brokers has been riding the wave of the E&S market’s expansion, with the Quincy, Massachusetts-based intermediary continuing to add talent and moving into new lines as it looks to broaden its reach.

The increasingly complex and dynamic risk landscape means the shift of business to the E&S market is a structural rather than cyclical development, with the best access point to the sector through brokers with expert and sophisticated wholesale capabilities, according to Ironshore president Matt Dolan.

Wright Flood’s newest private flood program FocusFlood continues to gain traction with the Lloyd’s capacity-backed surplus lines product now being offered in 19 states, while the MGA has made a pair of senior appointments as it readies for the next stage of its development.

The founding leaders of Emerald Bay Risk Solutions have said the AM Best A- rated start-up will differentiate itself through alignment of interest – including taking a 20 percent share on most of its programs – and its collaborative approach to MGAs and reinsurers, as it eyes an opportunity it says is not being addressed by current fronting players in the sector.

In this second instalment of a two-part interview with OIP president and CEO Martina Seferovic, the executive talks about the unique needs of the E&S sector and how modernisation efforts need to be carefully shaped to meet them.

Successful insurers will be those that focus on specialisation and can help mitigate losses for insureds in an evolving risk environment that includes pervasive threats such as legal system abuse, according to Nationwide’s Russ Johnston.

The president of Distinguished Programs’ new executive lines business Ryan Becker has highlighted the importance of launching the offering with an exclusive wholesale-only distribution strategy as it prepares to begin accepting submissions in the new year, writing on the A++ paper of an RSUI subsidiary.

Most E&S carriers recognise they cannot keep pushing rate on property deals at a time when captive formations are potentially at their highest level ever, as buyers seek alternative solutions, according to Wes Robinson of Risk Placement Services (RPS).

Nationwide’s Scottsdale-based primary casualty unit has big growth ambitions for the year ahead, with the E&S unit on the recruiting trail as it looks to staff up and grow its portfolio by 70 percent to $35mn in premiums in 2024.

Aspen Insurance’s US head of primary casualty Rebecca Gitig has said the firm is seeing positive rate momentum in “every segment” of its portfolio, but warned that faster recovery times are leading to more elective surgeries and driving loss costs higher.

Carrier withdrawals, market downgrades and a notable capacity scandal have made for a challenging 2023 for the commercial auto segment, according to Amwins’ transportation head Jennifer Nuest.