In growth mode

In growth mode | Insurance Business America

In growth mode

The excess & surplus lines market in the US is constantly shifting and evolving to meet emerging needs. That adaptability is one reason why the E&S market has done so well in recent years, riding a solid growth curve and collecting record levels of premium. Seeing opportunities to build strong momentum in the E&S market, Munich Re launched Munich Re Specialty Insurance (MRSI) in January 2019 with a directive to deliver specialty property & casualty insurance products and services in North America.

When MRSI came into fruition, Jill Beggs was 17 years into a successful career with Munich Reinsurance America, where she had worked her way up the ranks from senior vice president and production under-writer to property underwriting manager, head of specialty lines underwriting (where she led ocean marine, surety, political risk and trade credit reinsurance for the US), and finally head of new strategic markets, where she built a practice responsible for driving innovation and oversaw corporate communications, the data hunting team and cross-platform development.

In April 2019, Beggs took the opportunity to join MRSI as president of E&S lines. Since then, the E&S unit has launched 10 products, built a team of 35 people and, as of August 2021, has more than $200 million of gross written premium in the marketplace.

“Our E&S business is going really well,” Beggs says. “The market has been very receptive to us, which I’m really thankful for. January of 2019 was a good time for us to enter the market. The Munich Re name is familiar, we’re an A+-rated carrier, and we’ve got a good reputation in the market. I think the brokers were very pleased to see that we were looking at the primary market holistically and bringing all the capabilities that we have to bear together. We’re working with them strategically at the top level and bringing not just MRSI capabilities to the table, but all of Munich Re’s capabilities – whatever is needed in a particular instance for a certain broker. That’s played well for us so far.”

Adapting to the market

The first E&S product that MRSI launched out of the gate was general liability, but it wasn’t long before the team learned that the GL market “wasn’t as hard as expected,” Beggs says. In light of that, MRSI decided to expedite the rollout of an E&S property line of business, which was originally planned for a few years down the road.

“We pivoted very quickly to enter the property market,” Beggs says. “We made that decision in 2019, hired a team, and they were able to launch the product in about two and a half months at the beginning of 2020. The E&S market is constantly shifting and constantly changing, so those types of pivots are expected. Property now makes up about half of our book of business.”

In July 2020, MRSI made a move that perhaps raised some eyebrows in the marketplace, given the context of the COVID-19 pandemic. The group launched an E&S healthcare liability product that caters to senior living facilities at a time when many markets were pulling out of that space due to the pandemic. MRSI launched the product with a communicable disease exclusion and has managed to grow the portfolio quickly because of the market disruption in the senior living space.

“We’re seeing that in a lot of different segments,” Beggs says. “There’s a bit of market dislocation, whether it’s a lack of capacity or companies cutting back or pulling out due to social inflation impacts or the pandemic. There’s also increased frequency and severity of nat cat losses, which are pushing claim costs higher, and the costs of labor and materials on the property side are also higher. So there are profitability issues out in the marketplace, which carriers are reacting to in various ways.

“At MRSI, we have the benefit of being fairly new, so we don’t have the legacy issues that our competitors are struggling with, and we can come in and fill some of those gaps with a full view of what’s happening in  the marketplace.”

What’s next?

One of the latest E&S products launched by MRSI is a management liability solution for private companies and nonprofit organizations. It debuted in August 2021 as MRSI’s third E&S financial lines product, alongside lawyers’ professional liability and miscellaneous professional liability.

Like all of MRSI’s E&S products, the management liability solution was designed to fill a gap and meet a capacity demand for creative solutions in D&O for the private and nonprofit sectors. In recent years, Beggs says, insurers have been reducing their participation in the management liability space due to historically inadequate pricing and deteriorating loss ratios caused by social inflation, M&A, technology and cyber risk, among other things. 

“We now have 10 products out in the marketplace, covering property, GL, excess casualty, professional liability lines and healthcare,” Beggs says, adding that MRSI’s next target is the surety space.

“We have hired a leader who is building out our capabilities in surety, and we will launch a product within the next several quarters,” she says. “Surety is a historically profitable line of business. There have been recent losses in the surety space, and we believe there’s going to be an increased infrastructure spend, so we think the market is advantageous for another carrier at this point.

“Our idea is to continue to launch products where we see a market demand that fits our appetite and where we think we can achieve risk-adequate pricing. We’re definitely in growth mode, but we are very much focused on the bottom line.”