Reinsurance broking start-up Augment goes for the differentiation approach
Recently launched broker Augment is positioning itself as a differentiated alternative to the traditional broker market, offering multi-year, multi-geographic reinsurance and capital solutions focused on assisting clients in achieving their strategic objectives through an Ebitda-driven approach, The Insurer can reveal.
The firm's primary focus is to assist clients with strategic solutions, bringing added benefits with proprietary solutions for fronting, legacy, ILS and MGA-related services.
According to sources, the firm – which was officially launched earlier this year – has a healthy pipeline of senior hires as it builds out its multidisciplinary global team. They added that with no geographic or product “barriers” it can focus purely on the client and deliver a holistic view of risk transfer and capital, rather than the more siloed “catch-all” approach that it believes is so often seen in the traditional broker space.
It is also understood to have a pipeline of new clients, and is thought to already be placing in excess of $1bn of premium into the market as it helps clients optimise their capital structures, affording better efficiencies and positioning for growth opportunities.
Augment has access to significant funding from its private equity sponsor Altamont, with more than $100mn thought to be available to support the build-out over the coming years.
The intermediary is intentionally targeting clients that are seeking deeper, long-term strategic advisor relationships, avoiding the competitive landscape of transactional broking.
A key mission statement of the business is to “focus on the entire client, not the class of business”.
Augment aims to add value to clients by taking a company-wide view, with multi-class placements and structures rather than breaking their portfolios into individual classes to be placed – an approach it says reduces negotiating relevance and increases opportunities to maximise value for both the cedant and the counterparty (re)insurer.
Its client focus includes forward-thinking management teams, clients that have multi-class balance sheets, specialty MGAs and program managers, hybrid companies, fronting carriers and insurtechs in what is a rapidly growing segment of the industry.
Typically it is clients in the $50mn to $5bn of premium range whose management teams are looking to develop greater operational capital efficiency and growth to increase equity value.
Augment will be led by Andrew Matson as CEO once he completes his contractual obligations to his former employer McGill and Partners later this year, and the business has already been building out its management team of senior reinsurance leaders.
Despite early reports suggesting the firm is London-centric, it is expected that the majority of clients will be sourced from the US. The firm is building a global footprint that includes a major presence in the US, Bermuda, London, Continental Europe and the Cayman Islands.
Bringing capital closer to clients
According to marketing material seen by this publication, the start-up is looking to build a “best-in-class capital solutions business”, that is designed to “bring capital closer to clients, challenge the incumbent broking model [and] think like a carrier”.
The approach combines a globally distributed, multidisciplinary team with worldwide capital access to provide tailored solutions across multiple instruments and geographies. Capital will be sourced from traditional insurers and reinsurers, as well as captives, hedge funds, ILS funds and other types of alternative capital.
Another central tenet of Augment’s business plan is to create larger, more meaningful and often multi-year transactions – building partnerships where reinsurers want the client to win and support them at the portfolio level, rather than by class of business.
Augment is understood to be very conscious that reinsurers face a difficult environment where their returns on equity have contracted substantially over recent years, coupled with ceded margin declines and volatility cession increases.
Building capital-based solutions for clients will provide reinsurers the opportunity to ‘partner’ with clients rather than solely participating on annual price-driven transactions. Augment is positioning itself as a new distribution stream to reinsurers, providing access to profitable clients structured to one another’s mutual benefit.
As previously reported, stablemates that are also backed by Altamont Capital Partners include Mission Underwriters, the MGA incubator platform that provides equity to underwriting teams through its so-called “series” ownership structure, as well as systems, operational support and capacity. Altamont also backs Fleming Re, which provides prospective and retrospective reinsurance and capital management solutions including novations, adverse development covers and loss portfolio transfers.
Fronting solutions are also being developed, and Augment is expected to offer in-house parametric solutions as part of its integrated approach providing clients with a highly tailored product, bringing alternative property cat reinsurance and retro capacity to a marketplace where buying is price-constrained and demand is increasingly at a higher level than supply.
The various solutions are likely to be harnessed by Augment for its clients to release trapped capital to improve return on equity, as well as limiting earnings volatility from legacy development. It is understood that Augment is working on and in the market with several client legacy portfolios.
In partnering with their clients and understanding their business needs, Augment will tailor and adapt solutions to contribute towards driving consistent profits throughout the lifecycle of their business.
Augment says it is responding to a market opportunity where significant consolidation in the reinsurance broking landscape means there are a limited number of options for talented and creative industry professionals to work.
The start-up describes itself as a “colleague-led business” that “embraces a meritocratic environment”. Providing solutions around clients, not classes of business with success metrics of value is a profoundly different way of thinking. The culture of challenging the traditional and making innovative thinking the route of least resistance are key to that meritocratic thinking.
Augment also has a flexible working policy using a ‘work from anywhere’ approach to encourage collaboration across the globe.
Early hires include former Abacai, Miller and Aon Benfield executive Charlie Love as CFO, Henry Mikrut as head of rating agency advisory – a role he also held at JLT Re, former Inver Re head of global parametric Kurt Cripps, and ex-Aon Benfield UK chairman David Ledger, initially as senior advisor.