The new E&S subsidiary from Fortegra Financial Corporation was launched in response to demand from agents for a broader programs capability as well as fast hardening rates, according to the US specialty insurer’s CEO Rick Kahlbaugh.

Rick Kahlbaugh – Fortegra

  • E&S platform augments existing programs capabilities
  • Fortegra seeing strong demand from agents
  • Will continue to retain on average 20 percent of deals
  • Seeing significant rate increases on portfolio
  • Can upsize capital in platform if opportunities continue to grow
  • Targeting new underwriters and teams 

In an interview with The Insurer, the executive said the insurer will continue to be selective in the programs it writes, with a targeted profile of smaller deals in the $10mn to $20mn premium range.

It will also continue its strategy of looking to retain an average of around 20 percent of the risk on programs it writes, ceding the rest to its Lloyd’s partners or panels of other reinsurers depending on the deal.

And it will remain laser-focused on underwriting profitability, entertaining programs in segments its underwriting teams have significant experience in.

“We have had a large volume of enquiries since we started in program business asking when we’d have an E&S company to support a broader undertaking for each agent,” said Kahlbaugh.

“It was largely driven by demand from agents and we were also looking at the market and seeing the rates harden so quickly we felt having that vehicle was appropriate at this time,” he explained.

“The landscape is littered with people who thought the environment was right for hyper growth and then found out it was under priced and it was too late. We’ve been very cautious and it has paid dividends for the business”

Fortegra’s Rick Kahlbaugh says the carrier will be conservative as it builds its programs book

He highlighted a concurrence of factors that are driving pricing up and that he believes mean that the current market conditions have more durability than a shift caused by a cat event that takes capacity from the market.

“Here you have cat events, Covid-19, Lloyd’s contracting, other underwriters being circumspect and reinsurers also being circumspect about how they utilize their capital. Our thesis is that it’s going to last longer than most hardening,” Kahlbaugh continued.

Although it will continue to be conservative in its approach, the executive said the company would have the ability to put more capital into the new platform depending on market conditions and how robust opportunities are.

Fortegra will continue to avoid classes like vacant buildings, cat-exposed commercial property and excess workers compensation.

But it will entertain a range of lines of business and is seeing opportunities in areas including EPLI, business owner’s policy (BOP), policy professional liability, cargo, church and institutional properties, and general liability. Some of those areas the carrier currently participates in on a reinsurance basis.

Targeting talent

Kahlbaugh said that the programs Fortegra will write are those where its underwriters in the US and through its recently launched London platform have underwriting experience.

And he added that the carrier is “constantly looking” for qualified and experienced underwriters in the US and London.

“Experience really matters in this business and we are working hard to build an underwriting culture here first and foremost,” said the executive.

He added that even though the portfolio of opportunities Fortegra is seeing today is greater than at the start of the year, its business plan is largely unchanged.

“The landscape is littered with people who thought the environment was right for hyper growth and then found out it was under priced and it was too late. We’ve been very cautious and it has paid dividends for the business,” Kahlbaugh concluded.

As previously reported, Fortegra has been looking to build out its specialty division that focuses on casualty-exposed lines with low-limit profiles, working with MGAs to create and deliver programs.

In January this year the Jacksonville, Florida-based company said it was set to build a $200mn casualty program book and grow its overall top line to $2bn over the next five years.

AM Best A- rated Fortegra, which is owned by publicly traded Tiptree, hired Mark Rattner as executive vice president, chief underwriter and head of product management four years ago from Houston International Insurance Group to grow the platform in the US.

Around a year ago it added former Chaucer head of specialist lines David Barber to tap his experience in the Lloyd’s market as it looked to add programs from MGAs seeking access to capacity through London.