Munich Re Specialty Insurance (MRSI) is actively adding new programs in the US as it looks to replace business lost from long-term partner Glatfelter following its sale to AIG and capitalize on opportunities created as other carriers retrench from the space, The Insurer can reveal.

Mike Kerner

Mike Kerner, CEO of the German giant’s US specialty insurance business, said that the Munich Re Group is firmly committed to the program sector and is looking to grow.

And he said that MRSI – which is the rebranded and reorganized US primary specialty operation of the Munich Re Group – has a pipeline of program business that is the strongest it has seen in a decade.

“We’ve already concluded several new transactions just this year and had a few at the end of last year, with a number that are now close to closing and getting to the finish line,” he told this publication.

MRSI uses program administrators and MGA coverholders to write business in the small account commercial segment when it doesn’t have inhouse underwriting capabilities.

Single risk business tends to be more middle market focused where it is willing to spend the time underwriting individual deals itself.

“We clearly see opportunities and the market is shifting. It’s not uniform across the board and there are still areas that are quite competitive. But the areas we see significant rate increases and reductions in capacity by our competitors are where we’ll continue to grow in terms of scope and scale”

MRSI’s Mike Kerner on targeted program expansion

“On the small scale business we’re clearly of the mind to look to grow and have been entertaining new programs from program administrators we haven’t done business with before and additional programs with existing clients,” said Kerner.

He added that MRSI is also looking at new lines of business that it hasn’t previously written on a program basis and is looking to grow in lines of business where it has traditionally been a bigger player.

“We clearly see opportunities and the market is shifting. It’s not uniform across the board and there are still areas that are quite competitive. But the areas we see significant rate increases and reductions in capacity by our competitors are where we’ll continue to grow in terms of scope and scale,” he said.

“So we clearly see an opportunity for us to continue to grow the business and deploy our capacity with some of these program administrators in a way that’s a win-win for them and for us in terms of getting profitable business on the books,” the former Zurich and Everest executive continued.

Glatfelter impact

As previously revealed by this publication, MRSI’s top line in program business was significantly depleted at the start of this year as the transition of the portfolio written by Glatfelter to the paper of its new owner AIG completed on 1 January 2020.

The book was estimated last summer to amount to around $450mn of premium across Glatfelter’s programs, with the business written by MRSI’s operating admitted insurer American Alternative Insurance Corporation for all P&C risks across its five core program offerings.

Although he wouldn’t comment on the specifics of the Glatfelter deal, or on the size of MRSI’s overall program book, Kerner told The Insurer that the carrier is out in the market trying to replace the business.

“It won’t be exactly the same classes or approach but we have the capacity to do that and we will redeploy it with other partners,” he confirmed.

MRSI was set up last year as a platform for growth. It brings together the company’s existing North American commercial insurance business that already generated around $1.3bn of GWP, including business written by its programs, binders and public entities business.

The new platform is also being used to offer significantly broader capabilities to the broker market, with the buildout of underwriting teams and products and a strong focus on the wholesale distribution channel.