Alliant Re targeting $30mn-$50mn in revenue over three years: P&C head Arkley
Alliant Re is targeting $30mn-$50mn in revenue during the first three years of operations, as the private broker seeks to capitalize on its internal structure and current reinsurance market conditions, Alliant P&C retail president Peter Arkley told this publication.
In an interview, Arkley said: “[Reinsurance is] a new venture for us, it's a big investment for us, and we want to grow the right way.”
“Reinsurance has always had pretty healthy margins historically, so I assume that we could probably have very good margins.”
Newport, California-based retailer Alliant launched the reinsurance division late last month with a facultative-focused operation as the next step in its overall growth plans.
Alliant added fac-focused senior executives Nicholas Ambriano, Chris Medlicott and Mike O’Brien from Aon Re to lead the unit.
Yet, Arkley told this publication that the new division is expected to continue hiring talent and to venture into the treaty market in the near future.
“We feel like [the reinsurance] market is set right now that we can do very well on the facultative side, and we'll kind of work up to treaty probably sometime in the next year or so.”
The New York-based unit provides services in facultative reinsurance, automatic and semiautomatic reinsurance structures, deductible buy-downs, captives, MGU and individual risk placements.
“I see a lot of property business opportunities for Alliant Re, as well as casualty,” he said. “And then I think that we'll also be in the professional financial services side of the business.”
The Californian intermediary currently has a P&C retail division, which includes a middle market unit; a specialty segment that operates in 14 lines of business; an MGA arm underwriting several classes, including construction and M&A insurance among others; and an employee benefits division.
The company has over 9,700 employees across its four operating divisions and ranks among the top 10 largest intermediaries.
“It was time for us to look at how we expand from there, and reinsurance was a natural thing for us,” Arkley said.
He continued: “We saw an opportunity not only to do new business in reinsurance with the volume of business that we're doing with the insurance carriers, but also there's a lot of business inside of Alliant currently that we could work with our reinsurance group.”
“We want to capitalize on the volume of business that we have,” he added. “We will focus on our internal business, as well as external opportunities that come along for us.”
“But we believe there's a lot of opportunity inside Alliant right now, certainly with our underwriting operations, as well as our specialty operations.”
Ambriano, who joined Alliant Re as EVP, managing director, will lead the business, reporting to Arkley in the near term. However, the reinsurance division is expected to eventually become Alliant’s fifth independent vertical in addition to P&C, specialty, MGAs and benefits.
Ambriano is overseeing the unit of ~20 employees, including Medlicott and O’Brien, both SVPs. The company is looking to hire 10 additional fac re team members in the coming weeks, including account representatives and managers.
Ambriano joined Alliant earlier this year after over two decades at Aon, where until recently he served as executive managing director.
Meanwhile, Medlicott spent nine years at Aon, where he was senior MD, after over seven years at JLT as SVP and almost 14 years at Gallagher Re, where he was EVP.
O’Brien also spent over 20 years at Aon Re, where until recently he served as director.
“[We have] I'd say mostly casualty-focused people that we hired, and we have some property [executives] as well,” Arkley said.
“I think we'll have to hire a number of folks on the property side because the property market is a tough market, and there's opportunity there.”
“Right now, we're just happy with what we started with our business in reinsurance and we're going to just continue to invest and build up,” he added.
More recently, the reinsurance operation recruited Thomas Uzzo from Aon Re as VP and reinsurance lead.
Opportunity in a hard market
Alliant is launching a reinsurance division in a moment of hardening – particularly in the property market following Hurricane Ian – as rates increase, retentions rise and capacity contracts across the board.
As Inside P&C’s Research team recently discussed, reinsurance pricing rose “significantly” in Q1 with rate-on-line growth of over 30%.
While the rate expansion doesn’t translate directly into an equal commission/fee earnings growth for brokers, the dramatic hardening and subsequent price increases boosted their reinsurance results last quarter.
“[Property is currently] a very tight, tight market,” Arkley noted. “When a market gets hard like that, it creates opportunity.”
The reinsurance sector has attracted retail brokers who ventured into the market in a bid to expand their operations, although the space has remained highly concentrated, particularly compared with the retail sector.
In the segment, companies such as Lockton Re, BMS Re and Acrisure Re are competing with the largest players in the class such, as Aon Re and Guy Carpenter.
Yet, over the last two years the third and fourth largest reinsurance brokers were formed via M&A and not through talent hiring, with the $3.25bn+ acquisition of Willis Re by AJ Gallagher in 2021 and the $1.6bn+ takeover of TigerRisk by UK intermediary Howden last year.
“It makes sense for us now to be a player in that market and at least control our own destiny with respect to our own business,” Arkley said.
“So, I think that was really the impetus for us getting into reinsurance.”