Insurance Program Results

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Industry At Large: Carriers Target MGUs To Grow Niche Business

Managing general underwriters will be in carriers’ acquisition sights during the coming months as they look to solidify and expand their foothold in specialty classes. Niche program portfolios are growing faster than the property and casualty industry as a whole as well as helping carriers secure higher operating performance ratings from agencies like A.M. Best and Standard & Poor’s. Crittenden estimates that program business alone will generate about $33.5 billion in commercial premium revenue earned this year, up from $32.3 billion in 2014. Five years ago program business accounted for only $17.5 billion in revenue. The 7.4 percent increase in program-generated commercial premium from 2013 to 2014 dramatically outpaced the 1.7 percent growth rate of commercial lines as a whole.

Crittenden expects most carriers will target MGUs with niche programs since it is more cost effective and efficient to acquire talent along with a specialty book of business than trying to grow that expertise from scratch. Insurers are also heightening their focus on underwriting each account in line with the risk since excess capital combined with low interest rates is increasing competition and softening pricing industrywide. Look for the MGUs merging with carriers to typically be firms that already have a long-standing relationship with the acquiring carrier. Carriers will also set their sights on program administrators with established relationships in specific industries as well as smaller carriers with niche books of business.

AmTrust, AIG, XL Catlin, Crum & Forster, Church Mutual and Auto Owners are among the carriers that have recently grown their specialty product offerings through acquisitions. Most of these carriers’ takeover targets were firms with which they had previously partnered with to write certain classes or books of business. AmTrust has been one of the most aggressive carriers in acquiring niche underwriters during the past few years. It gained specialization in the financial institution, hospitality, nonprofit, construction and auto dealer markets with its acquisitions of BancInsure, Sequoia Insurance, First Nonprofit Cos., Builders and Tradesmen’s Insurance Services, Oryx Insurance Brokerage, DMI Insurance Services and CorePointe Insurance. AmTrust is currently in the process of acquiring Republic Group, a regional carrier in the Southwest that writes package policies. The deal is expected to close during the first half of 2016.

Copyright © Crittenden Research Inc., November 9, 2015

CapSpecialty Privacy Response

Administered By: CapSpecialty

Distribution: MGU

Industries:

Financial Institutions, Healthcare Systems, Insurance Agents, Insurance Companies, Small Businesses

Carriers: Capitol Specialty Insurance Corp.

Coverage: Business Interruption, Cyber Liability, Media Liability, Privacy Liability/Notification Expense, Regulatory Liability

Limits: up to $10 million

Insurance Companies E&O

Administered By: CapSpecialty

Distribution: MGU

Industries:

Insurance Companies

Carriers: Capitol Specialty Insurance Corp.

Coverage: Errors & Omissions (E&O)

Limits: up to $10 million

Argo Flex-XS℠

Administered By: Argo Pro

Distribution: Direct/Broker

Industries:

Accountants & Accounting Services, Directors & Officers (D&O), Financial Consultants/Planners, Insurance Companies, Lawyers

Carriers: Argonaut Insurance Co.

Coverage: Crime, Cyber Liability, Directors & Officers (D&O), Excess, Fidelity, Fiduciary Liability, Miscellaneous Professional Liability, Professional Liability, Umbrella/Excess

Limits: up to $15 Million

Employment Practices Liability

Administered By: Kinsale Insurance

Distribution: Carrier Direct

Industries:

Accountants & Accounting Services, Architects & Engineers (A&E), Art Galleries/Fine Art/Museums/Antique Dealers, Auto Service and Repair, Auto/Car Dealerships, Aviation Risks & Airports, Banks, Brokers/Dealers, Camps (Youth, Sports & Enrichment), Chemical Manufacturers/Distributors, Commercial Auto (Public Transportation), Construction Equipment/Machinery/Materials, Educational Risks (School Administrators), Energy Companies, Film Risks, Gas Stations, Hospitality (Hotels/Motels), Insurance Agents, Insurance Companies, Investment Advisers, Lawyers, Logging/Lumber/Forestry Risks, Manufacturers (Hardware), Manufacturers/Manufacturing Risks, Mine/Mining Risks, Miscellaneous Risks, Museums, Nonprofit Organizations, Real Estate Agent/Broker, Research/Research Organizations (Clinical, Etc.), Restaurants, Retail, Social Services, Utility Companies

Carriers: Kinsale Insurance Co.

Coverage: Bodily/Personal Injury, Employment Practices Liability (EPL)

Limits: up to $5 million/$5 million (Primary Limits)

Financial Institutions/Services

Administered By: Arch Insurance Group

Distribution: Direct/Broker

Industries:

Asset Management Firms, Banks, Financial Institutions, Insurance Companies, Investment Advisers

Carriers: Arch Insurance Co., Arch Specialty Insurance Co.

Coverage: Bond, Directors & Officers (D&O), Errors & Omissions (E&O), Fidelity, Fiduciary Liability, Network Security Liability, Professional Liability, Side A D&O

Limits: up to $25 million (Per Risk)

Insurance Companies Professional Liability

Administered By: XL Catlin (Formerly Catlin)

Distribution: Direct/Broker

Industries:

Directors & Officers (D&O), Insurance Companies

Carriers: Catlin Syndicate 2003, Lloyd's of London

Coverage: Directors & Officers (D&O), Employment Practices Liability (EPL), Excess, Fidelity, Fiduciary Liability, Professional Liability, Umbrella/Excess

Limits: up to $10 Million (Professional Liability )

NAMIC Professional Liability & D&O

Administered By: NAMIC

Distribution: MGA

Industries:

Directors & Officers (D&O), Insurance Companies

Carriers: NAMIC Insurance Co., National Specialty Insurance Co., State National Insurance Co., United Specialty Insurance Co.

Coverage: Directors & Officers (D&O), Employment Practices Liability (EPL), Fiduciary Liability, Professional Liability

Limits: up to - $15 million

Privacy // 403 SRVS

Administered By: Allied World

Distribution: Direct/Broker

Industries:

Distribution Risks, Financial Institutions, Healthcare Systems, Insurance Agents, Insurance Companies, Lawyers, Manufacturers/Manufacturing Risks

Carriers: Allied World Assurance Co.

Coverage: Cyber Liability, Data Security, Privacy Liability/Notification Expense

Limits: up to $25 million (Primary & Excess)

Professional Risk-Transfer Organizations

Administered By: Allied World

Distribution: Direct/Broker

Industries:

Insurance Companies

Carriers: Allied World Assurance Co.

Coverage: Cyber Liability, Data Security, Directors & Officers (D&O), Employment Practices Liability (EPL), Errors & Omissions (E&O), Privacy Liability/Notification Expense

Limits: up to $15 million (Third-Party EPL Sub-Limit), up to $1 million (First-Party Network Security), up to $250,000 (Derivative Demand Sub-Limit), up to $15 million (Primary & Excess), up to $25,000 (Governmental Claims Sub-Limit)

ACE Advantage® Insurance Company Professional Liability

Administered By: Chubb Ltd. (Formerly ACE Group)

Distribution: Carrier Direct

Industries:

Insurance Companies

Carriers: ACE Group

Coverage: Excess, Fiduciary Liability, Umbrella/Excess

Limits: up to $25 million (Limits vary by risk)

Financial Institutions

Administered By: Everest Specialty Underwriters

Distribution: Direct/Broker

Industries:

Asset Management Firms, Banks, Brokers/Dealers, Financial Institutions, Financial Institutions (Private Equity), Insurance Agents, Insurance Companies

Carriers: Everest National Insurance Co.

Coverage: Bond, Directors & Officers (D&O), Employment Practices Liability (EPL), Errors & Omissions (E&O), Fiduciary Liability, Professional Liability, Side A D&O

Limits:

Financial Institutions

Administered By: Endurance

Distribution: Carrier Direct

Industries:

Asset Management Firms, Banks, Financial Institutions, Financial Institutions (Private Equity), Insurance Companies, Investment Advisers, Private Companies, Public Companies , Real Estate Investment Trusts (REITs)

Carriers: Endurance Specialty Holdings Ltd.

Coverage: Crime, Directors & Officers (D&O), Employment Practices Liability (EPL), Excess, Fidelity, Fiduciary Liability, Professional Liability, Side A D&O, Umbrella/Excess

Limits: up to $25 million (Primary or Excess )

Financial Institutions

Administered By: Zurich

Distribution: Carrier Direct

Industries:

Asset Management Firms, Banks, Financial Institutions, Insurance Agents, Insurance Companies, Investment Advisers, Real Estate Investment Trusts (REITs)

Carriers: Zurich

Coverage: Bond, Commercial Auto, Commercial Property, Crime, Directors & Officers (D&O), Employment Practices Liability (EPL), Excess, Fidelity, Fiduciary Liability, General Liability, Management Liability, Network Security Liability, Professional Liability, Umbrella/Excess, Workers' Compensation

Limits:

Financial Services

Administered By: OneBeacon Insurance Group

Distribution: Carrier Direct

Industries:

Asset Management Firms, Banks, Brokers/Dealers, Financial Institutions, Insurance Companies, Investment Advisers

Carriers: Atlantic Specialty Insurance Co., Homeland Insurance Co. of Delaware, Homeland Insurance Co. of New York, OBI National Insurance Co., OneBeacon Insurance Co.

Coverage: Commercial Property, Cyber Liability, Directors & Officers (D&O), Employment Practices Liability (EPL), Errors & Omissions (E&O), Excess, General Liability, Management Liability, Professional Liability, Umbrella/Excess, Workers' Compensation

Limits:

Multiple-Insured Captive Reinsurance Alternative

Administered By: Chubb Ltd. (Formerly ACE Group)

Distribution: Carrier Direct

Industries:

Captive Agents, Insurance Companies

Carriers: ACE Group

Coverage: Excess, Risk Management, Umbrella/Excess

Limits: up to $5 million (General and automobile liability)

 

Financial Institutions Management Liability

Administered By: QBE North America

Distribution: Direct/Broker

Industries:

Asset Management Firms, Banks, Financial Institutions, Financial Institutions (Private Equity), Insurance Companies, Real Estate Investment Trusts (REITs)

Carriers: QBE Insurance Corp.

Coverage: Employment Practices Liability (EPL), Fiduciary Liability, Management Liability, Professional Liability, Side A D&O

Limits: up to $25 million (Per Risk - Financial Institution Bonds), up to $25 million (Per Risk - side-A D&O), up to $10 million (Per Risk All Lines)

Miscellaneous E&O Coverage

Administered By: JLT Facilities, Inc

Distribution: Program Administrator

Industries:

Accountants & Accounting Services, Architects & Engineers (A&E), Artisan & Trade Contractors, Banks, Brokers/Dealers, Data Processing & Management, Insurance Companies, Real Estate Agent/Broker, Real Estate Appraiser, Title/Escrow Agents

Carriers: Beazley Insurance Co. Inc.

Coverage: Crime, General Liability, Management Liability, Professional Liability

Limits: up to $5 Million

Professional and Management Liability Coverage

Administered By: Cove Programs Insurance Services

Distribution: Program Administrator

Industries:

Insurance Agents, Insurance Companies, Manufacturers/Manufacturing Risks, Private Companies, Public Companies , Public Entities, Small Businesses, Technology Risks

Carriers: Lloyd's of London

Coverage: Broker's Legal Liability, Cyber Liability, D&O: Miscellaneous , Directors & Officers (D&O), E&O, Errors & Omissions (E&O), Professional Liability

Limits: up to $5 Million