AM RE - At the Heart of US Program Business
AM RE Syndicate was set up by wife-and-husband team Shevawn and Simon Barder in 2014, after selling the first managing general agent (MGA) they had set up, to Ironshore Insurance. The new business was based in Manhattan, but last year embarked on a move to Dallas, Texas.
Now they are planning to launch their own carrier. Shevawn Barder, the company’s chief executive (husband Simon is chief underwriting officer), discussed the move—and the firm’s plans—in October with the 1.1 Club, Intelligent Insurer’s online, on-demand platform for one-on-one interviews, discussion and debate with leading figures in the industry.
Barder admits that the move to Dallas wasn’t easy, especially amid the COVID-19 pandemic.
“That was an incredible challenge,” she said. “It’s taken us probably four months to transition.”
The move has, however, brought both short-term and long-term benefits. Short-term, Texas has been among the less restrictive in its response to the pandemic, with the economy largely kept open.
“That has indirectly benefited our business,” Barder said.
Longer-term, the move places the business in the heart of the US program business—a program writing “hub”, as Barder puts it. “It was a strategic move closer to the heart of our business,” she said.
A Wider View
Texas isn’t AM RE’s only love. Part of the business is centred on US insurers but the other part is very much focused on its Asian reinsurers.
“They’re very strong and reliable partners,” said Barder. For its part, AM RE manages the entire reinsurance portfolio, from underwriting to claims oversight.
“They don’t have a presence in the US on the ground, so we’re bringing high-quality grassroots business in the US market to them.”
It’s an attractive offer. “The US is the biggest economy in the world, a $20 trillion market that is highly homogeneous and easy to sell goods and services in,” explained Barder.
“That has a high attraction to Asian business because it creates fantastic diversification to their domestic market. They also like the currency, so it’s a powerful combination.”
It’s not just the geography. The business excludes cat risks and settles on a 45-day time limit. “It’s compact, low limit, well geographically spread and settles on a finite time window,” said Barder.
“It really appeals to their appetite.”
Plans for Growth
The strength of that appeal has already helped make AM RE one of the largest quota share reinsurers in the US.
It hopes to build on this in future. The business is particularly attractive at the moment, Barder notes, in part because the excess and surplus (E&S) market sits outside the core risks for many insurers.
“A lot of business that would automatically flow into the admitted market has now started to flow into the non-admitted E&S market because of demand and the ability of the E&S market to react quickly to conditions. It has been a real positive with regard to hardening,” Barder said.
Rising rates as a result of the nat cat losses have also added to its appeal. “The market is hard, so we’re writing very high-quality business,” she said. The firm expects this to continue into the new year, she added.
However, to ensure profitable underwriting requires expertise, and Barder is convinced its approach gives it an edge: AM RE trains primary underwriters to write the business on a reinsured basis.
“It means they have the technical expertise to fully understand the business,” she said. “The thing about the programme segment is that it does require a special skillset. It can’t be written at a distance, contrary to what many people think.
AM RE is now looking to harness that expertise on its account by launching its own carrier. Pending authorization out of Arizona, it will continue to support AM RE’s existing E&S market and reflect the increasing diversification of the business.
“We want to write diversified lines because there is a lot of opportunity in the E&S space in lines that we’re not currently in. We’re looking at cyber, habitational property, and artisan general liability, among others,” she said.
Barder is convinced there are rewards to be had for those with the technical expertise.
“Capacity is extremely tight in the market. Everyone is focused on fee-generating companies, but really it’s about the risk-taking.
“Right now there are opportunities to write this class of business, and provided that you make the right decisions, it will work,” she concluded.
To view the full 1.1 Club interview click here