While a “class of” wave of E&S carrier start-ups has not emerged despite sustained best-ever market conditions, there are signs that in property – a segment that rehardened in the first half of last year – capacity constraints are easing and a stabilisation is beginning to take place.
That shift is being encouraged by a greater appetite to deploy capacity from incumbents across the market, including carriers such as Arch, Westchester and Axis.
But there are also signs of new players entering the E&S property market, albeit with relatively modest start-up capacity.
Among them are Trium Property, which is understood to be writing on behalf of Lloyd’s Syndicate 1322 as a US coverholder, with underwriting led by CUO Brandon Beauregard.
Boston-based Beauregard was previously a senior vice president and E&S property underwriting manager at Munich Re Specialty Insurance, after stints at Validus Specialty and Arch on the underwriting side, and RT Specialty as a broker.
Sources said that Trium Property is already open for business with quotes in the market. Although capacity could not immediately be confirmed, it is expected that the start-up will have a modest line size, perhaps in the $2.5mn to $5mn range.
Trium Syndicate 1322 launched in 2022 with backing from Pelican Ventures and an initial focus on cyber, led by former Aspen head of cyber Josh Ladeau.
The move into property will diversify the book as the syndicate looks to grow, with stamp capacity approved at £100mn for 2024, up from £33.7mn last year.
Hot on its heels is Arris Property Underwriters, the new MGA on the Doxa Insurance Holdings platform led by former Lexington executives Liz Coakley as president and Caitlin Murphy as underwriting director.
The start-up will distribute its E&S products exclusively through wholesale brokers and will have an initial capacity of up to $2.5mn in an excess, quota share placement, according to its website.
Its focus will be on real estate, hospitality, healthcare, education, municipalities and light manufacturing.
Sources said Arris has capacity lined up – potentially from a consortium of carriers – and is gearing up for a 1 March start.
Meanwhile, it is thought that former Everest executive Chris Curtin is progressing towards beginning underwriting at Lancashire, where he was hired to spearhead property on the carrier’s new US-based E&S platform.
Curtin is responsible for US direct and facultative property business. He had left Everest Insurance after seven years, most recently as head of US property.
Easing E&S property market conditions
The addition of incremental start-up capacity in early 2024 comes amid signs of easing conditions in E&S property after a rehardening in the first half of last year driven by the generational hardening of the cat reinsurance market at 1 January 2023.
In September last year, this publication reported that the E&S property market was showing signs of stabilisation after a chaotic start to 2023, albeit that it still remained in hard territory, with cat rates up 25 to 35 percent on coastal risks and significantly more on loss-hit accounts.
At the time, we reported that those chaotic dynamics of early 2023 had given way to relative calm and the prospect of 2024 rate moderation, despite concerns over severe convective storms and elevated reinsurance costs.
As we report later in this month’s issue, CRC’s latest REDY index for property provided evidence of rate moderation in the fourth quarter.
E&S property renewal pricing slowed from increases of 20.8 percent in September to 19.1 percent in October and November, and 16.3 percent in December.
CRC said the slowdown in the pace of rate increases marked a shift from a year of significant hardening that saw increases peak in June at 28.2 percent.
“This deceleration is attributed partly to a milder hurricane season and indications of an orderly treaty renewal season. As a result, the macro outlook for Q1 2024 is shaping up to be more stable, with expectations of more predictable pricing and rate trends,” CRC said in commentary on the E&S property pricing trajectory.
However, the broker suggested the market is expected to remain “diverse and segmented”.
“There is no one-size-fits-all approach to renewal outcomes, as pricing is predicted to vary considerably depending on a range of factors,” CRC continued.
Competitive forces returning?
There is an expectation that incremental capacity from start-ups as well as increased appetite from incumbents in the market will contribute to a further easing in 2024.
One senior broking source said: “We’ve got new capacity coming into the market and it’s all welcome. None of it is really substantial, but it’ll impact certain accounts and certain risks. I don’t think it will have a major impact, but it is a sign that people see opportunity.”
The executive said what was probably of greater importance was increased appetite from incumbents.
“The folks I’m talking to all have pretty aggressive growth goals with some capacity they want to deploy. When folks want more it means the price goes down,” he commented.
This is not expected to be seen in Q1 in any meaningful way, but could manifest itself in the second quarter – including the cat-focused May and June renewals – as management at carriers realise budgets aren’t being hit and they “turn on the spigot”.
“I don’t think anyone is expecting pricing to drop like a rock, but we’re certainly expecting things to be a little easier than they have been,” the senior broking source predicted.
Sources said there are no signs yet that carriers are significantly increasing line sizes, which means that the need for large limit capacity is not being met.
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