Amwins’ Armijo: Stabilisation in property means less need to leverage other classes

Amwins’ Ryan Armijo has said that stabilising property market conditions mean the need to leverage other classes to get property capacity has “very much changed”, adding that the firm is eyeing a “more portfolio” approach to relationships.

The head of Amwins’ underwriting division was speaking in an interview with The Insurer TV on the sidelines of this week’s Target Markets Mid-Year Meeting in Tampa, Florida.

Armijo commented on the surge in attendance at the event and said that Amwins Underwriting had around 15 colleagues in attendance to collaborate with partners, gauge market sentiment and build relationships.

While last year saw a move to leverage non-property capacity to get backing for property deals, Armijo said that dynamic has “very much changed” and that it would be “interesting” to see how carriers now view diversification.

“Last year, one of the key themes was property capacity and the challenges there, and how do we leverage relationships and non-property programs to get property capacity?

“And I think that is very much changed,” he explained.

“While there's still a need for property capacity, casualty is starting to see some pockets of hardening or maybe it's more broad than just pockets. But it'll be interesting to see how carriers are viewing that,” he commented.

“Whether it's a large balance sheet carrier, or some of the fronting markets, just how they're thinking about the diversification within their property-casualty books, and again, how we can utilise our programs to get them what they want,” Armijo added.

Property market stabilising

The Amwins executive said the Target Markets mid-year event provides an opportunity to get a feel for the range of views across the market.

“Property is stabilising. There's more capacity available. So, I think it's going to be more about how you deploy that capacity and still hit rates of return that are required by our carrier partners where we can name price and terms,” he explained.

“[From] as little as six months ago, the world has changed. So, now we have to deploy [property capacity] appropriately, but we want to deploy it.”

In casualty, Armijo said his firm sees “a lot of headwinds approaching” with an imperative to navigate dynamics in that segment by getting rate increases that stay ahead of loss trends, adding that transportation conditions are as “tough as ever”, at least in the last five years.

“And so, we've got some capacity needs on transportation to round out some of our programs. Generally, though, I think it's kind of a stable market – some rate softening, some rate increases still in pockets, but nothing is huge ahead of us that we're concerned about,” he said.

“Our strategic priorities are really centred around making sure we've got the best capacity strategy, so that we can minimise volatility and create stability,” he said.

“So, to us that looks like more portfolio plays with strategic partners that can support all lines of business [with] admitted, non-admitted, different distribution strategies, and just do bigger blocks of deals,” he explained, adding that leveraging advanced technology like AI is a priority.

Balancing de novos with acquisitions

Amwins’ underwriting division writes about $3.5bn in premium - out of $5bn underwritten across the entire firm - across 115 programs within 19 operating companies, largely driven by organic growth from start-up programs.

The unit has built an infrastructure around technology, operations, actuarial teams and regulatory compliance that Armijo described as “a controlled environment” that enables entrepreneurs and teams that join the firm to leverage its infrastructure.

The group has launched de novo MGAs in addition to acquiring businesses, with Armijo noting that Amwins “see[s] every deal in the market”, although it prioritises “cultural fit” for both launches and acquisitions.

Within its underwriting division, Amwins has an incubation group that has delved into the data associated with the $20bn of premium the brokerage team puts into the market to design and develop exclusive products catered to the brokerage side of the business and to benefit retail clients.

The underwriting division has launched multiple transportation products and has several casualty and construction products in the pipeline.

“We're just going to work through that [brokerage] book and continue to build more and more product, until we've kind of exhausted what we can do for our brokers and for our retail clients via that channel,” Armijo said.

“De novo MGA start-ups, partnership[s], M&A, and then just product development [and] incubation internally – those are kind of our three prongs of growth,” he explained.

Armijo said he and his team have seen a pick-up in deal activity for MGAs in the first quarter, which could potentially reflect pent-up demand, as he described those scenarios as “competitive processes” with Amwins currently engaged with a number of prospects.

“We think there's going to be more that come up in the next three to six months that we've got our eye on. We may do one, we may do two, we may do none, right? It just comes down to the diligence process,” he explained.

Along with cultural fit, Armijo said that for potential deals, Amwins focuses on how it could potentially “enable” the firms it is considering acquiring.

“I think it's an attractive place for a team to come,” he said of Amwins.

“Whether it's succession, or looking for just an enabler for growth – they can trust that their team is going to get taken care of at Amwins,” he explained, adding that his firm can leverage its in-house distribution resources and infrastructure to help them scale.

“They're going to join a firm that cares about underwriting and wants to protect balance sheets and views our carrier partners as our clients and everything we do from an investment standpoint, internally, is focused on ‘How do we become a better underwriter?’ So, I think that's attractive as a differentiator and then, obviously, the price has to make sense,” he commented.

“But we do think there'll be a lot of activity this year. Whether or not we're participating in all those, we'll see. We're excited to see what's out there,” Armijo added.

Looking to “go deeper” in casualty amid potential dislocation

Commenting on areas where Amwins’ underwriting division is looking to expand, Armijo said it plans to “go deeper” in casualty as that segment becomes dislocated by reserve development carriers are facing from older accident years.

“I think it's a spot where we want to be participating in a big way, especially as property stabilises,” Armijo said, noting that about a quarter of the underwriting portfolio is property and a quarter is workers’ comp, where conditions remain soft.

He added that his group is underweight in casualty and professional lines, where it is looking to grow, while Amwins is looking for the right partner for transactional liability and in surety.

“We think we're building first-in-class underwriting across all of our segments, and if there are partners that can help enable that or give us a broader scale or geographic footprint, then that's attractive to us,” he commented.

Watch the full interview with Amwins’ Ryan Armijo to hear more about:

  • Amwins’ plans to take a “more portfolio” approach to its capacity relationships
  • The balance between launching de novo programs and acquisitions
  • The relationship between Amwins’ underwriting and brokerage divisions
  • The value of going through AM Best’s MGA underwriting rating process