Dan Dijak, Head of Underwriting at AM RE Syndicate says that, amid challenging market conditions, the key to the company’s success is nurturing long-term, predictable relationships with clients.
“We believe that the relationship aspect of our business is timeless,” Dijak told Reinsurance News during a recent interview that focused on finding and writing intelligent business as a reinsurance MGU.
“At a time when capacity is shrinking and we see Lloyd’s pull back from the US marketplace, we bring primary MGA’s the continuity to manage their business,” he noted. “Additionally, the hardening market allows us to carefully select our partners.”
AM RE Syndicate is a specialty program reinsurance provider that deals almost exclusively in quota share reinsurance for the US market.
As one of very few delegated underwriting authorities in the US that operates in the reinsurance space, the company is somewhat uniquely positioned in its approach to business.
Predictability is therefore a key consideration when it comes to working with clients, who will usually require a proven track record and a proactive attitude to underwriting and claims management, Dijak explained.
“AM RE has a long-standing presence in the marketplace dating back to the early 2000’s. We have strong relationships with large and small brokerages in London and US,” he told Reinsurance News. “In recent years we have fostered relationships with domestic primary MGA’s and Fronting carriers.”
For this same reason, AM RE has built a reinsurance portfolio of many insureds with low (< $1 million) limits, which adds an element of predictability to modelling its portfolio performance.
Likewise, all of the programs where AM RE provides capacity undergo a rigorous underwriting and claims audit during the diligence phase, utilizing various forecasting models such as Bornhuetter-Ferguson to develop ultimate loss ratios.
“We appreciate that various underwriting strategies can be used to generate a profitable result. Not only do we look for clean risk selection, we also believe in working with a primary MGA to bring a portfolio into profitability,” Dijak noted.
“Similarly, as part of the claims review, we must clearly understand the reserving practices. For example, if we determine there is a high percentage of leakage from claims expense, we require further information or may decline the portfolio altogether.”
“Given rapidly changing market conditions, it is important to implement continual rate monitoring,” he said, asserting that the relationship between claims and underwriting must remain “symbiotic.”
“Even well-underwritten portfolios can suffer consequences from poor claims practices,” Dijak concluded. “It is important to identify leakage quickly and take a balanced approach to reserving.”