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Intermediaries can create win-win value chain opportunities: RFIB & RTG CEO

7th June 2018 - Author: Luke Gallin

The Chief Executive Officer (CEO) of insurance and reinsurance broker RFIB and its parent the Risk Transfer Group (RTG), Steven Beard, is confident in the firm’s ability to create opportunities throughout the value chain as it looks to expand its presence and capabilities as an intermediary.

steven-beard-ceo-rfib-risk-transfer-groupAs part of its strategy to double its revenues in three years to £100 million, the holding company of RFIB recently announced plans to rebrand from CCP TopCo to the Risk Transfer Group (RTG). Under the rebrand, the RFIB brand will continue to exist, and Beard told Reinsurance News that he expects 50% of its growth to come from its leading wholesale re/insurance broking subsidiary.

“We expect half the growth to be delivered through the broking business at RFIB, the other through the captives and MGA,” said Beard.

He continued to explain that RFIB will remain core to its business strategy as “part of the engine driving dynamic growth,” while the broader group will look to innovate and utilise technology to establish itself as a leading independent broker.

“We will be focused on distribution and pricing, technology and serving all participants in the value chain. Helping to fix some of the inefficiencies that have existed in the market for a long time.

“The level of innovation, using of new products and technology, hasn’t delivered the change that all markets have desired. We want to make sure that as we look to double the size of our business, that we make great products for our clients and provide great service for our partners,” said Beard.

Prior to 2017 catastrophe events, the reinsurance market had endured a prolonged softened state underlined by shrinking margins as a result of benign loss activity, intense competition and dwindling reserves on the underwriting side of the equation, while the low-interest environment dampened investment returns.

In response, some companies looked to get closer to the original source of risk, essentially jumping parts of the risk transfer value chain in order to lower costs, a trend that tested the ability of the broking community to remain relevant and show its value throughout the chain.

But despite the soft market conditions, “we’ve experienced double-digit growth,” explained Beard. It’s a point worth highlighting, as throughout the soft market environment the position and role of the intermediary through the value chain was brought into question, with all market participants eager to lower costs and improve efficiency in order to mitigate falling profitability.

The soft market landscape of recent years has also contributed to increased consolidation across the insurance and reinsurance sector, and Beard told Reinsurance News that acquisitions are “in-fill rather than transformational.”

“Recent M&A deals involving private brokers are an endorsement of the opportunity to become a leading private retailer.

“We’ll look to acquire or invest where it can accelerate access to capability or markets, where it would take too long to do it ourselves. Or equally investing in new teams, where they believe in what we believe in and can bring knowledge or expertise and recognise they can be more successful within Risk Transfer Group than their current employer,” said Beard.

Also expected to support its growth plans over the coming years is its Limehouse Agencies holding company, which will be used to both acquire and establish MGAs and captives, while looking to collaborate with InsurTech start-ups in order to better connect distribution with underwriting and capital.

Commenting on Limehouse Agencies, Beard said: “The acquisitions and investment that Limehouse Agencies is going to undertake this year, if there’s a consumer brand it could have its own name.”

The company is already making some headway regarding certain growth initiatives, with Beard telling Reinsurance News that it will set-up a UK mutual for a specific client opportunity, as well as a PCC structure in Guernsey, “which remains subject to regulatory approval.”

Discussing the captive management business, Beard said: “The initial application is customer sensitive, but we think it’s another thing in the kit bag for solving client solutions where it makes sense. Niche verticals will be a strategy within the captives, but with substantial premium.”

Ultimately, explained Beard, the captive management business will focus on identifying areas that the firm believes aren’t well served, either by the way a solutions is priced or operated, or by the way a client views the reinsurance market.

“It’s more to get into the captive market to be able to provide solutions where they are compelling,” added Beard.

While the firm is clearly eager to expand its presence, Beard explained that the firm already has a good international footprint in Asia, Africa and the Far East, as well as a clear presence in Bermuda in terms of both innovations and relationships that come out of that market.

Overall, said Beard, “we want to provide innovative advisory solutions, where we can save clients premium we will.

“We believe you can create opportunities in the value chain where all participants can win and as an intermediary if you can’t create solutions that benefit all sides you’re not doing the right thing.”

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