New wholesale unit responding to double-digit growth in E&S: Everest
Everest’s new wholesale division has not set top line growth objectives but will capitalize on the double-digit increases seen in the excess and surplus (E&S) channel that are expected to continue for the foreseeable future, North America president of insurance president Mike Mulray said.
In an interview, the executive said the initiative is “directly in response to what our wholesalers have been asking us to do. It creates a bit more clarity and consistency in appetite and appointments. And that's really the focus.”
The executive was speaking with Inside P&C during the WSIA 2023 conference right after Everest announced a new wholesale division to serve the US E&S and programs markets.
While Everest’s complete wholesale portfolio, including professional lines and the internal MGA, is a $2bn+ business with around 200 underwriters, the new wholesale P&C unit is a ~$1.1bn operation with ~100 underwriters.
“By having a dedicated wholesale focus, we can innovate with new products more quickly and make sure we focus on the needs of the wholesalers,” he said. “That's the benefit of what we're trying to accomplish.”
The executive added that Everest is expecting to appoint a leader to head up the new operations over the next 30 to 45 days.
“And then we'll see all kinds of milestones over the next three months throughout the year into next year as far as different steps will be taken to more formalized structure, including how we realign operations,” he added.
Everest’s new venture comes amid a favorable market environment in the US E&S channel, characterized by surging growth driven by standard lines business passing into E&S. (See: The Golden Age of US specialty evolves (insidepandc.com)
A structural change as retailers seek wholesale expertise
Mulray noted that the E&S expansion has been driven by increased cat activity and reinsurance costs that led primary carriers to look for more rate flexibility, as well as “some re-domestication of risk out of LLoyd’s, coming back into the US”.
In addition, the executive said that the non-admitted channel has benefitted from “potentially a structural change, where some retail brokers are relying on the expertise of wholesalers and their human capital.”
“Each one of those impacts the cost and therefore the growth,” Mulray added. “I don't know if we've fully seen the impact of the increased reinsurance cost.”
While property and some casualty lines such as general liability are expanding and seeing higher rates, others are trending in the opposite direction.
Besides D&O, Mulray noted that Everest is following the commercial auto space closely as higher frequently and severity fueled by social inflation are impacting the market.
“It's really out of control,” he said. “The pricing needs to adjust accordingly as well.”