Melding Asian security and US risk
AM RE has facilitated the introduction of Asian capacity providers to US risk a match that benefits both parties and which is going from strength to strength as a result, Shevawn Barder, the company’s chief executive, tells Intelligent Insurer.
AM RE has seen tremendous growth since its inception in 2014. Traditionally, through the utilisation of Lloyd’s markets, AM RE predominantly covered marine and inland marine business. In recent years, following the curtailing of marine and energy classes at Lloyd’s, AM RE has commenced a diversification process in terms of the security it works with and in the lines of business it writes.
This vacuum has provided an incentive for non-European insurers, specifically Asian ones, to seek market share in the US. AM RE has started to expand its portfolio, striving to find new opportunities within the specialty reinsurance space. Shevawn Barder, the company’s chief executive, says that historically the reinsurance market has been dominated by large global reinsurers with a strict underwriting model and very high costs. After years representing Lloyd’s securities, AM RE has seen a retrenching of the Lloyd’s markets, especially in marine and energy classes, with very little opportunity for growth and high barriers to entry.
AM RE aims to bring traditional non-US re/insurers to niche, underserviced markets in America. With this in mind, Barder says, AM RE has agreed to act as an agent in the US market on behalf of some of the largest, most credible Asian securities. This approach has been mutually beneficial, providing AM RE with a broader remit and larger capacity while allowing these securities to participate in very stable and core American markets.
“Our securities see Lloyd’s withdrawal from traditional US markets as an opportunity to establish a foothold in the US,” Barder says. “We feel that quota share contracts guarantee a long-term partnership with cedants which goes hand-in-hand with our securities’ strategy. An important aspect of market penetration is to compete at a high level. New players must demonstrate stability and put cedants at a comfort level to do business.”
Championing Asian security Starting in 2018, AM RE was presented with the opportunity of acting as an agent for GIC (India) and PICC Re (China). The relationship has proved fruitful, with GIC naming AM RE in 2019 as its exclusive agent in the US market, and a broader remit and increased capacity from PICC Re. The successful penetration of this security in the US market has drawn attention from other securities globally. The panel for 2019 has been expanded to include GIC, PICC, CPIC, Asia Capital Re, Patria Re and Sompo International.
The background for these reinsurers tends to be similar. They operate as leaders in their home markets which, they feel, are saturated. They would like to become global players by accessing traditional markets in the US, and AM RE’s technical expertise and experience stands out as the choice to guide them through this process, says Barder.
In order to introduce these securities to the market, AM RE has spent time in their headquarters walking them through the procedures and expectations of the American market. AM RE stays in constant communication with its panel and reports any business developments regularly. “Education has been a key part of the relationship-building between securities, AM RE, and cedants. We are in constant communication with our panel so they can avoid the common pitfalls in the quota share space,” Barder explains.
So far in 2019, the securities have experienced good acceptance in the US market and, compared to 2018, AM RE has surpassed the amount of business bound during the first quarter. Part of the success is due to the work AM RE puts into structuring quota share opportunities that facilitate the handling of its accounts. “My experience, combined with that of my husband Simon, in the US market has accelerated the acceptance of Asian securities in what would otherwise be a protracted, difficult, and costly process,” she concludes.
Opening opportunity for all AM RE is a boutique reinsurance managing general agent (MGA) that focuses on quota share reinsurance. Through its brokers, AM RE receives a variety of opportunities in the reinsurance markets. It works with its cedants to set up quota share business that is beneficial to all stakeholders and leaves little room for ambiguity. AM RE uses the opportunity to perform in-depth analysis of the product while setting up an in-house structure to handle the particularities of different cedants. “Having securities commit to long-term support creates stability for AM RE when it comes to planning pathways to growth, and it puts the cedants at ease knowing they have a non-volatile partner they can count on for multiple renewals,” says Barder. “Partnering with an MGA like us in the long term ensures not only income at low cost but also access to strategic markets for the security.”