MSI launches nationwide E&S HNW program with A rated Transverse paper

Millennial Specialty Insurance (MSI) is targeting the cat-exposed high net worth (HNW) market with a new program, supported by the AM Best A rated paper of Transverse and a panel of reinsurers, to meet a significant need created by the widespread retrenchment of admitted carriers, Program Manager can reveal.

The new program officially launched this week as a nationwide product available in all 50 states distributed by retail and wholesale brokers, largely with which MSI has existing relationships.

The offering is initially aimed at cat-exposed property risks with up to $10mn of insured value, targeting a segment of the HNW market that is estimated to be a $10bn+ premium opportunity for the sector overall.

It is currently in a “test and learn” phase as a program before it is expected to ratchet up to more rapid growth in 2024.

It is being written on the A financial strength rated paper of Transverse Specialty Insurance Company, now part of global top 10 insurance giant MS&AD. Reinsurers on the panel behind Transverse include several carriers MSI has had longstanding trading relationships with.

The program adds to existing non-admitted and admitted homeowners offerings from the BRP Group-owned MGA platform that target the so-called “affluent” segment below the HNW space, with total insurable values on properties typically ranging from $700,000 to $3mn.

MSI is also expected to expand the HNW E&S offering into other lines of business in time.

Speaking to this publication, Naimish Patel, who joined BRP as president of its Homeowners Insurance Group in 2021, said the move is in response to demand from agents.

“We’ve heard loud and clear from all of our distribution partners that there is a big gap in the market with a need that’s not being fulfilled.

“Our mindset is always to try and find a solution that’s a win-win with our agency partners and we’re trying to fill in the gaps where the market is inefficient and doesn’t have the solution for the customer,” he explained.

Patel pointed to the differentiation MSI believes it brings to its distribution partners and capacity providers in a cat-exposed homeowners market that has proved challenging for some players, leading them to pull back meaningfully in some states.

“We’re uniquely positioned to bring this to market because the team has decades of experience managing carrier operations,” said the former AIG Private Client, Farmers and Liberty Mutual executive.

“But I think another big enabler for us is our tech forward strategy. Our IT platform – in which we’ve invested millions over the years – is second to none,” he added.

“It’s a competitive advantage for us because we’re bringing the traditional underwriting expertise and talent to the table but we’re also bringing leading edge tech and predictive modelling that supplements that talent. The intersection of that with the underwriting talent enables us to grow profitably.”

MSI claims to be one of only a few markets able to quote and issue a HNW policy in less than 24 hours, while smaller accounts can be quoted and issued in less than three minutes.

On the underwriting side, the firm employs a multi-model approach as well as what Patel described as “pure underwriting discipline”, which he believes will allow MSI to build a profitable portfolio.

“In today’s marketplace, we could probably write as much Florida business as we wanted to, but we consciously don’t do that. We limit it to a fraction of our total portfolio to maintain that countrywide balance.

“We’re looking at a spread of risk that is very well diversified across the country and across perils so we are never exposed to any one event in a disproportionate way,” Patel explained.

The HNW opportunity

The executive highlighted the significant opportunity MSI has identified in the HNW space, particularly for E&S products as admitted carriers pull back.

As well as challenges at the big brand HNW specialists and reduced appetite from Lloyd’s, he pointed to the volume of business in the segment that is still insured with the large direct writers such as State Farm and Allstate.

“You have companies like State Farm ceasing writing in California altogether, where they were actually insuring some high net worth properties that are now coming into the independent agency channel that weren’t there before.

“So you have the dynamic of the admitted market getting tighter, then you have the dynamic of less capacity from the traditional Lloyd’s markets too. From my perspective, there could be no better tailwind for us to launch this program,” he said.

The current retrenchment from the admitted market – in part due to the lack of available cat capacity in a hard reinsurance market – is playing to the strengths of the E&S market and MGA model.

The multi-carrier approach deployed by MGAs allows them to diversify risk across multiple balance sheets, while the E&S market provides a quick entry path for reinsurance capacity targeting hard market opportunities, in part because of the flexibility of rate and form.

Patel said the new HNW program had received strong support, largely because of MSI’s strong track record of delivering profits to its capacity providers.

MSI is BRP’s so-called “MGA of the Future” platform and its more recent expansion in the homeowners insurance space adds to its more established presence in the renters segment.

Since the MGA was bought by BRP in 2019, its portfolio has surged, from zero only two years ago, to north of $300mn in managed premium in 2023.