Dresner and Blackburn to join up with Ambac for Everspan program carrier

Steve Dresner is joining up with former State National executive Wyatt Blackburn at Ambac Financial Group’s (AFG) repurposed Everspan Insurance Company subsidiary to build a new program platform, The Insurer can reveal.

AFG is the New York-listed parent of run-off monoline financial guaranty Ambac Assurance Corporation (AAC) that has been looking at opportunities to enter live business in adjacent sectors including specialty P&C (re)insurance.

This publication reported yesterday that former Endurance executive Dresner had left his position as senior vice president for affiliates, partnerships and programs at Fairfax Financial’s Crum & Forster.

And according to sources he is set to re-emerge at Ambac’s Everspan subsidiary alongside veteran Blackburn, who was at program fronting specialist State National from 1981 until 2013, rising to the position of executive vice president and COO.

Blackburn was most recently at small business lender The Interface Financial Group, which he joined from Redpoint Insurance Group where he was president until 2016.

Details of their roles and the business plan at their new employer are not known.

But sources said that after a recent internal restructure Ambac is looking to use its Everspan platform as a vehicle to launch new businesses including a program carrier.

Recent regulatory filings with the Wisconsin department of insurance reveal that AFG has formed Everspan Holdings Company to acquire direct ownership of Everspan Insurance Company (EIC) from AAC. The move effectively insulates the insurer from the ongoing run-off at AAC.

The newly formed entity will also be the intermediate holding company for all other new AFG insurance businesses.

According to the Form A filing by AFG relating to the change of ownership, a business plan submitted in late 2018 with the regulator said that Everspan would look to make an initial foray into the surety market in Q1 2020.

However, the filing also revealed that following discussions between Ambac and AM Best any live business-writing entity affiliated with AAC would be better domiciled in a state different to the financial guaranty insurer.

Follow-up correspondence with the Wisconsin department of insurance confirmed that EIC is set to redomicile to Arizona. The vehicle is expected to seek an AM Best rating.

The insurance company subsidiary – which has effectively been dormant for years with no new premium written – had $247mn of statutory surplus as at 31 March 2020.  

Sources said that with Blackburn and Dresner coming on board, EIC’s business plan is likely to have evolved to have a focus on program business, including fronting, given the backgrounds of the executives.

They added that before going down the route of building its own platform, AFG had been looking at the possibility of acquiring an existing platform in the burgeoning program fronting space.

It is thought that the program carrier is part of a strategy at AFG that could also include looking to acquire and build MGA and program administrator businesses.

Ambac looks for live opportunities

Ambac is the one-time monoline financial guaranty insurer that has spent the years since the subprime mortgage financial crisis that began in 2007 running off its book and seeking to optimize assets and reduce liabilities including through a raft of long-running legal actions.

It went into Chapter 11 bankruptcy back in 2010 as its bond insurance unit was no longer able to pay dividends to the holding company, exiting Chapter 11 in 2013.

Then under current CEO Claude LeBlanc it was able to exit rehabilitation via a restructuring transaction.

In recent investor presentations released with quarterly earnings, AFG said that with the group’s fundamentals improving it is now looking at deploying capital in a tax efficient way to diversify its platform and enhance long-term shareholder value.

That includes a new business focus in specialty P&C insurance and reinsurance, credit and asset origination businesses, asset management and fee-based businesses, and insurtech and fintech related businesses.

AFG said it would consider potential transactions as part of the strategy, including acquisitions, strategic investments and joint ventures.

It highlighted existing resources, including its public company platform, expertise in areas including insurance and its insurance licenses across the US and UK.

AFG did not immediately respond to a request for comment on this article.

The Insurer comment:

News that fronting veteran Blackburn and programs executive Dresner are teaming up at Ambac raises the prospect of another (quasi) start-up entering the swollen ranks of program fronting carriers.

That will inevitably raise questions over the number of mouths to feed – although there is an expectation that program opportunities will continue to grow for fronting carriers amid retrenchment in the broader P&C marketplace.

Details of the business plan are not known, but if sources are correct and Ambac is also looking to add MGAs to its Everspan platform it could represent the latest example of another emerging trend in the program sector.

There have been a number of moves by MGAs or program administrators and fronting carriers to more closely align, either through direct or joint ownership.

The rationale is that reinsurers supporting programs increasingly want to see an alignment of interest with their counterparties – whether that’s a fronting carrier retaining a larger share of the business or an MGA engaging in some form of risk sharing structure.

Putting MGAs and program fronting carriers under the same ownership also helps guarantee access to paper.