Accelerant’s new US carrier platform will retain at least 20 percent of premium on all programs written with MGA partners – or members – as it addresses what it sees as a highly attractive opportunity in the segment, according to group CEO Jeff Radke.
- Accelerant confirmed new US platform earlier this week
- Brought forward US strategy to address growing opportunity
- Says US management team brings instant credibility
- Accelerant will retain at least 20 percent of premium across the programs it writes
- Also commits long-term capacity to MGAs and offers reinsurers transparency into performance
In an interview with The Insurer after the new platform was confirmed this week, the executive said that his newly assembled management team in the US has brought the start-up “instant credibility” along with relationships to help it navigate the opportunity, with a strong pipeline of potential deals lined up.
As previously reported, the US platform has launched with an A- AM Best rated E&S carrier and an admitted entity to follow in early 2021.
The management team includes Joe Zuk – also an operating partner at backer Altamont Capital – as president of the US carrier, former Allianz executive Hugh Burgess as CUO, ex-Guy Carpenter executive Rick Koehler as US chief business officer, and former Arch executive John Willemsen as head of US distribution.
“We sped up our expansion into the US because of market conditions by 18 months. We feel there’s an unusually large amount of disruption and because of that there’s an unusually large opportunity for us and others in the program space,” Radke commented.
Radke said the strategy employed in the US would be similar to the UK and Europe, where it has been building out its MGA membership and carrier platform since launching in late 2019.
It has a strong focus on creating a tech-enabled platform that provides transparency on the programs it writes, including to its reinsurer partners, and looks to enter into fewer, larger relationships with MGA members, providing them with a five-year capacity commitment in return.
It also selectively makes investments in member MGAs to support expansion, hiring new teams or M&A strategies.
“We’re an insurance company that supports only program managers or MGAs, and that’s the only source of business we have or want to have.
“We designed the team to be really effective at supporting the members, to be ready to address the pain points they feel compared to the traditional market. As a result we expect to have a relatively limited number of very meaningful relationships,” said the former PXRE CEO and Argo executive.
Radke said that the Accelerant model differentiates it from both traditional program carriers and the wave of hybrid fronting carriers that have emerged in recent years.
“We tend not to have distribution conflicts and other complications carriers have that try and do program business as well as wholesale and retail business,” he commented.
And compared with the fronting model, he pointed to what he claimed is a more selective approach with fewer, larger relationships, and taking a higher retention across its portfolio.
He also highlighted the long-term capacity commitments it makes to MGAs and program administrators as a differentiator, citing MGA frustrations with changing appetites at traditional carriers.
Radke said that Accelerant’s ability to build a tech-enabled platform as a start-up with no legacy issues was of benefit to its MGA members and reinsurer partners.
“We have complete transparency into what each of our members is writing,” he explained.
The level of transparency is good for relationships with MGAs and reinsurers and allows Accelerant to take a portfolio view, he suggested.
“The member’s job is risk-by-risk underwriting, and our job is to take a portfolio view about the direction of travel the portfolio is taking. Is it getting riskier or less risky, is it getting rated better or less well-rated?
“We steer behaviour by being very close to those members and having up-to-date and granular information about their portfolios. We can pass on that transparency to our reinsurance panel so they feel they understand exactly what they’re partnering with us on,” Radke said.
Accelerant does not look to buy program specific reinsurance, but instead has a panel of reinsurers that supports its portfolio both on a proportional and excess of loss basis.
That allows it to say to its member MGAs that its reinsurance relationship is based on the performance of the portfolio which they are part of, while the diversification of the portfolio leads to a more stable relationship with reinsurers, suggested the executive.
Radke added that the traditional fronting model can see higher reinsurer turnover when reinsurance is bought on a program specific or MGA specific basis.
In the US, the executive said that although the focus will be on fewer, more significant relationships, Accelerant’s portfolio would not be limited to multi-program MGAs, with the potential to also work with smaller, niche players.
“Most of our members are multi-class and we support them across the board. Then some members have a broader portfolio of business where we only currently write one particular class,” said the Accelerant group CEO.
He added that in those cases it would look to broaden relationships over time.
The new US platform adds to Accelerant’s existing Malta-based carrier as well as a new Belgium-based carrier that has just received a provisional credit assessment from AM Best.
Accelerant was established in late 2018 to provide a tech-enabled capacity solution to MGAs initially in the UK and European markets, focusing on low volatility, small commercial business.
The company says it leverages sophisticated data analysis of its underlying MGAs’ books of business, as well as a long-term capacity commitment, and uses technology to improve loss ratio performance of its partners to allow them to grow profitably.