Canopius will capitalize on the dislocation in excess casualty and be “ready to go” to enter the class on January 1, US and Bermuda CEO Lisa Davis told Insurance Insider US at WSIA.
Amid a challenging loss cost environment, a mass exodus of admitted carriers in the line has made casualty top of mind for the industry, presenting an opportunity for E&S carriers to pick up business.
“We are looking at it as an opportunity,” Davis said. “If you'd asked me that question two years ago, I probably would have said differently. I probably would have said to stay away from it.”
“There's been enough movement,” she added. “We're getting to the point where the rates are getting to where they need to be, and [carriers have] the ability to offer lower limits.”
The US division’s initial offering will be wholesale-only, Davis said. She added that the company plans to build the product “from scratch”, as opposed to acquiring a business or portfolio.
That said, the CEO mentioned that Canopius “will always be on the lookout for something opportunistic” and could partner with a program further down the road if there is alignment in values.
“Right now, it's about building the team and starting it and not taking on something that's already out there,” Davis said.
“It’s not something you can dip your toes in, it’s not a ‘dabble’ type of business. You really have to get into it and get the right people that understand the risk and how to mitigate it, and how to price it.”
In August, the company tapped Ledgebrook’s Steve Mills to serve as its head of casualty, US.
Casualty trends of the past five years are coming to a head as pandemic-era claims come to fruition after a long lull period, Davis said, and showing up in an influx of nuclear verdicts.
“The exposure was always there, but things got so slow for that time period that a lot of things didn't go to court, or they didn't go through,” the executive said. “Now they're all coming in around the same time.”
Wholesale M&A trends
On-site at WSIA, Davis also shared her perspective on the recent trend of wholesale brokers being hyperactive in M&A and their consequent growth.
“It does seem like there is a small shift to buy more of the MGA/MGU,” the CEO said. “I think gives brokers a little bit more control over how they're able to place their business.”
On the growth the MGA market has seen recently, she said, “I personally don’t think it can continue at the same rate it currently is.”
That said, she added that since MGAs “tend to be a bit more nimble than insurance companies in adopting technology”, they will likely continue to offer an opportunity.
Alternate distribution channels are another source of growth for MGAs, Davis said, pointing out embedded insurance as an example to facilitate an improved customer experience.