MGAs bringing distribution and tech access – AmTrust professional lines

The specialty arm of AmTrust International provides “strategic business to managing general agents (MGAs)”, Moore explained, with six strategic lines, with Moore leading its professional lines business.

“There’s a purposeful mixed portfolio,” We write some very small and very large business,” Moore told Global Reinsurance.

He was at the MGAA event to drive awareness of his part of the business, which has been a relatively little-known part of AmTrust, the large US privately owned insurer.

“About 70-80% of our business, depending on what region, is MGA binders capacity. An event like this is really good for MGAs to find out what we do,” he said.

AmTrust International has a $1.2bn book of business, a significant chunk of business to the otherwise US-focused group.

Within specialty, Moore’s book consists of a mix of professional indemnity (PI), directors’ and officers’ liability (D&O), employment practices liability (EPL), mergers and acquisitions (M&A) and, relatively recently, cyber business.

“We are expanding out in Europe in PI, so that’s our growth target area. The office from which we do European business is in Dublin, but one of the major MGAs we back is based in Barcelona,” he said.

Some of this MGA business is wholly owned, with some capacity also coming from other providers. In other examples, the MGA is external, with AmTrust International one of its capacity providers among others – something he suggested can be “reassuring” to work with other backers who provide second opinions on pricing adequacy.

Asked what the firm likes about the MGA market he provided a clear answer.

“What we like is access to distribution and it’s access to technology,” he said. “What we look for when we back an MGA is something different. We’re not backing MGAs that all do the same thing. We’re looking at distribution, key brokers, and how that business comes to the market.”

Some business is “more underwriter heavy than tech-heavy”, he explained, such as much of his European business, which focuses on large and complex risks, whereas in the UK there is more focus on small and medium sized enterprise (SME) business.

Much of this SME business has the advantage of being “sticky” due to the small amounts involved, and this is mixed with much larger business, on an open market basis.

“We write a broad brush, and the reason we do that is because then we’ve not got over-reliance on one sector,” he said. “If a sector gets particularly aggressive, or a new entrant says they’re going to target there, then that small book could suddenly start to shrink. There would be pricing pressure, and we’d have nothing else sitting above it. That’s why we go for the broad church.”

Moore sees a market of softening rates across professional lines, coming off the back of a period in which rates were hard.

“All professional lines are softening after a hard market that started in the fourth quarter of 2019,” he said. “That hardening went on to early 2023, and we’ve been in a softening market since then, producing some pricing pressure.”

The hardening process began with a performance review at the Lloyd’s market, leading to capacity for some professional lines business, seen as under-performing, being reduced within Lloyd’s.

In the UK, there were also issues of confidence in the construction market due to the impact of the Grenfell Tower tragedy in 2017, and resultant uncertainty about the quality of risks.

Technology and testing is allowing greater confidence in construction materials in the present market, he suggested, such as new types of concrete with an eye to environmental, social and governance (ESG) considerations.

The plan in 2024 and into 2025 is to continue diversifying, Moore emphasised.

“It’s back to the idea of diversification,” he says. “If we had a huge PI book in the UK but nothing in Europe, that doesn’t feel comfortable. I’d rather have a multiple-territory approach, and multiple price points, from very small to very large.”