EMC has announced that it is to exit the assumed reinsurance business conducted through EMC Re.
A statement from Scott Jean, president and CEO of EMC, said that the firm plans to focus on its core insurance products distributed through independent agents, including commercial property/casualty lines and bonds, and life insurance written through affiliate EMC National Life Company.
Jean also said that EMC Re represents about 10%, or $180m, of EMC’s total annual premiums. It is currently exploring options for the management and/or runoff of existing reinsurance business.
Jean said: “This transition impacts approximately 65 team members, located across the US, who will receive severance packages and comprehensive career/placement services. All impacted team members have been notified. This will be a gradual workforce reduction over time, beginning Jan. 3 and continuing through 2023. Impacted team members also will have the opportunity to interview for other EMC positions. In total, EMC has approximately 2,200 team members countrywide, with more than 1,100 located in Iowa.
He added: “While an extremely difficult decision, EMC felt this move was necessary to position the company for the future and the achievement of its strategic plans and goals.”
Last month, it was reported here that EMC Re was one of six reinsurers that saw a net loss in Q2 of this year. Of the reinsurers included in the survey, the highest Q2 combined ratio was once again posted by EMC Re at 125.8%.
It only just over a year ago when EMC Re said that ‘humility and agility’ would be key for the company to manage attrition and volatility as it looks to grow further and expand into new markets. That statement takes on a different colour considering today’s news.
Speaking in an interview with Reinsurance News, Mondale Smith, president and COO of EMC Re, said that the firm had a plan for growth that involved further diversification of its business, as well as a focus on writing more reinsurance business from abroad.
Mondale said: “Diversification has several uses. It can be used as a growth lever to bring in new clients, markets, and distribution channels. It can also be used as a stabiliser to smooth operating performance volatility, and as a driver of innovation when exploring emerging perils, exposures, and covers.”
