Acrisure Re secures additional mid-year limit for strategically aligned SE clients
Acrisure Re was able to place additional cat limit to support the growth of a quartet of Florida and Southeast clients at renewals from April to June, navigating a shift in reinsurer appetite that required a range of structures and solutions, according to executives from the firm.
As previously reported, the rapidly expanding reinsurance intermediary and capital advisory firm has been executing what it sees as a differentiated strategy targeting the property critical catastrophe space.
Spearheaded by Craig Darling – executive vice president and head of Acrisure Re’s critical cat centre of excellence – the approach has seen the firm strategically align itself with carriers and MGAs in the space.
This year it has won the Allied Trust account formerly placed by Aon and SafePoint from Gallagher Re. It also counts among its clients recently converted full-stack carrier Orion180, and start-up Cajun Underwriters Reciprocal Exchange.
Speaking to this publication, Acrisure Re CEO Simon Hedley noted the concerted effort the firm has made over the last two years to build a “meaningful presence” in the critical cat market, including building out capabilities with the creation of its corporate advisory and solutions arm.
“I think we had the right proposition in place when we ran into this market. We’ve got various areas of strength within our business. We’re not trying to be everything to everyone, but critical cat was something that we wanted to grow significantly, and we’re doing it,” he said.
Darling laid out some of the dynamics the reinsurance broker had seen across April, May and June renewals.
Although he wouldn’t comment on the specific details of client placements, he noted that Acrisure Re advised one of the carriers it was working with to go to market with two towers, one for its Florida exposures and the other ex-Florida, including Gulf of Mexico exposures.
As previously reported, there was strong appetite from a number of reinsurers such as Berkshire Hathaway, Arch, Everest, Managing Agency Partners, Ariel Re and DE Shaw for Florida homeowners risk, with the renewal going much more smoothly than expected, albeit with meaningful rate increases.
In contrast, capacity was harder to find for Gulf exposures, especially Louisiana, which has had a tough run of losses in recent years. Louisiana Citizens was competing with the private market not on price and form but for Gulf capacity, making capacity more challenging to unlock.
“We thought it was going to be the other way around after Florida hurricanes last year, yet we had more challenges on the ex-Florida placement and other Gulf placements. The legislative changes in Florida made a big difference, with some reinsurers wanting to lean in as confidence returned,” he observed.
The number of early private placements in the Sunshine State also contributed to a surfeit of capacity late in the renewal.
Separating towers for carriers with Florida and ex-Florida portfolios allowed for closer alignment with reinsurer appetites, especially where some markets were only looking to write Sunshine State risks.
Other structural options under consideration included the bifurcation of commercial and personal lines placements, while Acrisure Re also placed quota shares as part of programs.
As well as structural strategies to navigate shifting reinsurer appetites, Acrisure Re utilised a broad suite of products and solutions to piece together coverage for clients.
These included the use of solutions such as county- or state-weighted industry loss products, industry loss warranties, and collateralised reinsurance where there was opportunistic appetite for lower layers.
Capital and debt market solutions such as surplus notes have also been in the mix as part of its holistic approach to optimising capital stacks for crucial cat clients.
“All of these clients bought more limit, so we were able to secure more capacity for them in what was a very capacity restricted market,” said Darling. “This will allow all four of them to grow significantly next year as they target opportunities from the continued dislocation in their markets.”