With a crop of strong Managing General Agents having weathered a program market further dislocated by COVID-19, AM RE Syndicate’s Ernie Zayicek sees an opportunity to help both high performing MGAs and reinsurance partners in facilitating their ambitions for growth in the US.
Zayicek, who serves as Chief Operating Officer and head of corporate development at the specialty program reinsurance provider, says an ability to connect high-quality programs with AM RE’s reinsurance capacity is a much more valuable service in the current marketplace.
Furthermore, Zayicek believes that now is an opportune time for AM RE to launch its own E&S carrier and bring additional capacity to existing business partners, further supporting them during a challenging market. While there have been significant rate increases across many of the specialty programs we write, we have also seen a reduction in capacity due to large loss event and the ongoing pandemic.
“The key areas where high performing MGA’s bring value is their understanding of their clients needs, their focused geographic distribution and the dynamics present within their core business lines,” said Zayicek.
“In a hardening market, it is easier for all MGAs to find and deliver high-performing business because a rising tide lifts all boats. However, in comparing high-quality MGAs and the rest, the high-quality MGAs are going to continue to outperform the broader market due to their ongoing risk selection expertise and well-developed infrastructure.”
While AM RE believes the hard market still has legs to persist, when the market cycle begins to soften, Zayicek believes AM RE results will persist as the company has been able to establish high quality programs with strong, highly-developed MGAs and will continue to see superior returns through the whole underwriting cycle.
“The creation of our E&S platform is the next step in that process. All MGA’s have a specialization; our specialization in the reinsurance space is based on our high-quality technical underwriting expertise and focus on risk selection.
“We excel at identifying quality MGA’s, and partnering with them to create a profitable outcome. The resulting underwriting performance will attract capital. Our carrier is going to be the next step in that process.”
Zayicek says AM RE’s E&S platform will allow it to utilize its risk selection expertise and write additional diversified business classes that provides greater leverage to its model.
“The key is the fluidity of capital – in the P&C markets this has increased greatly over the last 20 years since I started in the sector.
“For companies with multiple sources of capacity like AM RE, there’s an opportunity to match each capital sources’ desired risk profile and return expectations to programs tailored to best meet these criteria.
“Whether it is attaching these programs to our own balance sheet, supporting them with our third-party capacity, or matching them with alternative capital sources such as ILS or sidecar structures.
“What we are doing is leveraging our core risk selection, strengthening our program market position, and bringing attractive returns to capital providers that want to partner with us as the gold standard of the specialty US program market.”