Scale of E&S growth highlighted by AmWINS submissions surge
The sheer scale of the surge of business into the excess and surplus (E&S) market has been brought starkly into focus, with wholesale giant AmWINS seeing more than one million submissions in 2019, representing 30 percent year-on-year growth.
As previously reported, AmWINS grew organically by 16 percent last year as overall revenues climbed 27 percent to around $1.4bn.
But speaking at The Insurer’s New York Insurance Forum 2020 this morning, AmWINS president James Drinkwater revealed that the firm had seen organic growth in its P&C transactional business of around 25 percent last year.
Although rate increases had a significant impact – at an average of 16.5 percent across the book in 2019, compared with 6.5 percent in the prior year – Drinkwater emphasised the volume of business flooding into the sector over the last 12 months.
“It was a challenging year,” he said, noting that the growth really started on St Patrick’s Day, 2019.
“We saw dramatic growth from that point… Obviously we saw rate increase, but we also saw dramatic volume increase,” explained Drinkwater.
While the 2019 numbers are striking, Dave Obenauer, CEO for wholesale at CRC Group, noted that the E&S market has been in a period of expansion for some time.
“Our industry has grown significantly for many years. Certainly 2019 was a fast growth year, but it’s not an anomaly,” said Obenauer.
The CRC executive noted that the E&S market grew by 60 percent between 2011 and 2018 to what is now roughly a $50bn market.
“It’s a very healthy market, even before we started with 2019,” said Obenauer who also warned the sector should not take that growth for granted, insisting the industry needs to retain a sense of humility.
“Part of our goal is creating sustainable, long-term value for our clients. It’s not just about the hard market now, but how do we continue that success. That’s some caution we all should bear in mind when we think about the good times… Certainly we need to provide value throughout the cycle,” said Obenauer.
Drinkwater believes the E&S market will continue to grow, partly because there has been a gradual, structural shift with an increased focus on the specialty sector.
“There was always the retail/wholesale piece, and now there’s an enormous focus on the specialty piece,” said Drinkwater, adding: “We’re seeing growth in this market, but we’ve got to be very careful about it. We’ve got to be thoughtful, and I do think the wholesale and E&S industry really needs to focus on making sure we have got specialty capabilities for our clients.”
Berkshire E&S exposure growth
Berkshire Hathaway Specialty Insurance executive vice president Dave Bresnahan also provided detail of growth seen at the carrier, albeit with the caveat that it plays in the E&S sector as more of a “standard underwriting participant” than a “classic E&S participant”.
In parent Berkshire Hathaway’s earnings last weekend it was revealed that BHSI grew its top line by 30 percent in 2019.
And on the panel the executive said that there was a similar rate of growth in its US business.
“At a high level I could say a third or if not a little more [of the growth] came from rate… and a little more than a third came from new business and new clients. One thing you might not have expected to hear from me is that a significant driver of our growth was also new exposure.
“That’s not just exposure growth on our customers getting bigger, it’s us lending more capacity… [for exposure] in the E&S space,” he explained.