$6bn SabRE launch highlights in vogue global MGA/program reinsurance market

David Howden, the co-founder and boss of expansive UK broker Howden Group, attends the Rendez-Vous today for the first time in his 40+ year industry career following the $1.6bn acquisition of TigerRisk.

Once regulatory approval is granted in H1 2023, the intermediary’s combined reinsurance arm Howden Tiger will cement its position as the fourth largest reinsurance broker with $350mn+ in revenues.

The deal also brings together two high-profile industry entrepreneurs: Howden, who co-founded Howden Group in 1994 initially as a D&O MGA/coverholder, and Rod Fox, who co-founded TigerRisk in 2008 and has overseen his firm’s march into the US MGA/program market in recent years.

And last week saw the two firms unveil a new unit, SabRE, which will formally go live once the combination completes. It was the first new strategic action announced by the firms since the deal was unveiled and also underscores the growing importance of reinsurance capital to the global MGA/program sector.

SabRE will combine the specialist coverholder teams of Howden RE, TigerRisk and Howden’s delegated binding authority business Bowood, and says it will be the industry’s largest dedicated global MGA/program reinsurance intermediary, advising on the placement and structuring of $6bn of gross written premium (GWP).

Since the last Rendez-Vous in 2019, the global MGA/program market has enjoyed a renaissance with reinsurance capital and fronting structures underpinning much of its growth and with entrepreneurial underwriters swapping carriers for MGAs.

Indeed, Conning recently estimated the US MGA market alone had expanded to $70bn+ in size based on 2021 data and predicted it will soon exceed $100bn. The boom is supported by an explosion of interest in fronting carriers that sit between MGAs and reinsurers and ILS funds. Transverse, which only launched three years ago, is being acquired by MS&AD for an initial $400mn in a move that looks to have set a new marker on valuations in a fronting carrier segment where there are now more than 20 players operating. Market growth is seen in both affiliated and independent carriers.

This alone guarantees the MGA/hybrid capital model will be a popular theme over the next few days. But interest will be further heightened by Richard Brindle’s trail-finding move to divide his London/Bermuda specialty (re)insurer Fidelis into separate underwriting and balance sheet components, a move he says recognises the distinct valuation appeal of the two propositions.

Bowood managing director Stephen Greener will become SabRE chair with a US-London leadership team that includes TigerRisk’s program head Neill Cotton and Howden RE’s new arrivals Michael Jameson and Matt Beard.

The latter duo recently led a 13-strong team that moved from Guy Carpenter’s dedicated MGA reinsurance unit GC Access to Howden RE earlier this year, provoking an as-yet-unresolved legal battle between the two firms.

The new unit will report to Howden RE chairman Elliot Richardson – who Guy Carpenter claims in its legal filings was the mastermind behind the audacious swoop – with the executive describing SabRE as an “industry first”.

“SabRE will have a combined offer of unrivalled depth, scale and expertise and be a core part of what we are building with TigerRisk – a leading position in our chosen markets and a superior offering for the modern client”, Richardson explained.

Bowood is a Lloyd’s broker acquired by RK Harrison in 2008 which operates separately from Howden Group’s own MGA colossus Dual, placing ~$1.5bn GWP through a variety of London-led programs.

TigerRisk CEO Rob Bredahl added that SabRE will also benefit from the combined group’s capital advisory and banking resources as well as other services, including data and technology.

“The aligned capabilities of SabRE will produce the only ‘full stack’ reinsurance broker in the MGA and program marketplace. SabRE will be the leading capacity finder, investment banker and strategic adviser to this rapidly growing and important sector,” Bredahl explained.

Bredahl will become CEO of Howden Tiger when the two businesses formally combine following regulatory approval. Fox will become chairman and Richardson vice chair. All three previously worked together at UK reinsurance broker Benfield. Completing the senior leadership group is president Tim Ronda, another Benfield alumnus who left Aon for TigerRisk last year, and CEO of international Bradley Maltese.

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