Howden’s Jameson: Greater alignment of interests needed to get programs off the ground

Howden’s president of US programs has said that start-up programs have become harder to place in recent years, arguing that for insurtechs in particular there is a need for greater alignment of interests between businesses and their capacity backers.

Speaking with The Insurer TV at last week’s Target Markets Mid-Year Meeting in Tampa, Florida, Michael Jameson also outlined the evolution of Howden Re’s programs team, discussed the Vesttoo scandal and commented on market conditions.

Jameson said Howden trades well with the big MGA platforms that have emerged, while adding that one area that's been increasingly difficult over the last couple of years has been start-up businesses.

“Unless there's a really good hook, in terms of technology … or a very niche product, or distribution play, whereby they have unique distribution that doesn't cross over to any other carriers' distribution – apart from that, the start-up is still difficult,” he explained.

“We take them on, obviously, when we think there's a really valid component to it and, I think, again, technology, distribution, a very unique product that we think is going to sell into the market,” Jameson commented.

He added that underwriting talent with a strong following also makes getting capacity for start-ups easier, while acknowledging that for insurtechs, about 20 percent are likely to survive while about 80 percent are likely to fail.

“On a go-forward basis, just because there has been some volatility in the insurtech market, [a focus] is around the insurtechs finding a way to align interest from the beginning,” he explained.

“Not just writing on somebody else's paper [and] having 100 percent reinsurance, it's how do I align myself strategically with capacity? Is there an investment/ownership there? Do I create a captive that is risk-taking from the beginning?” he outlined.

“The ones that are going to continue to struggle – and I think this is relevant to any MGA, not just insurtechs – is when you get too far behind on rate early in the process, and have to continuously catch up,” Jameson explained.

Rise of hybrid fronts

One outcome of the hard reinsurance market has been that many firms that had been setup as “pure” fronts have had to retain more risk, effectively pushing them to a hybrid model.

“We're seeing that business model thrive, as long as the reinsurance market is able to support it, but then they're kind of functioning and supporting each other, because the reinsurer now needs the hybrid or fronting carrier, or whatever it is, to take a pretty significant amount of risk,” Jameson explained.

“There was a fundamental shift, in terms of the fronting carriers' or hybrid carriers' ability to take risk, or necessity, in terms of taking risks,” he commented.

“When we think collectively around alignment of interests, now it's not necessarily just carriers and reinsurers taking significant amounts of risk, we're seeing the evolution of MGAs that are either purchasing their own carriers or aligning themselves with a carrier or having common ownership interests,” he said.

While Jameson said that property business has come back into “vogue”, the trend of greater risk retention across the risk chain is a significant development.

“We've seen a significant rise in activity in the captive space, so just furthering that alignment between carrier, reinsurer and MGA. So, I think more of a … or maybe less of a shift, in terms of line of business appetite, maybe a structural appetite, or a risk-taking appetite around all the different component pieces of the game.”

Market responded in “efficient and effective way” to Vesttoo scandal

Commenting on the Vesttoo collateral scandal, Jameson said the market “responded in a really efficient and effective way” with (re)insurers on existing panels stepping up and new markets coming in to support deals “on good terms”.

“It's something that, I think, the likes of this industry has rarely seen or almost never seen, so there was no precedent for what happened, but generally I think the traditional market in particular stepped up in a pretty big way,” he commented.

He said after the initial panic over the episode subsided, the conversations with incumbent markets about increasing their shares “became very fluid” and deals to line up replacement capacity came together very quickly.

“I think our market responded in a way that generally, we were collectively very proud of. A terrible situation, but I think collectively our market was very resilient and fought through,” he noted.

Jameson and his team joined Howden in 2022 before the group's takeover of TigerRisk was announced that June.

“It's been quite the evolution. We started as a small group in the Dallas office and shortly after we joined, the Howden-Tiger merger happened, which obviously added a bunch of people to the team,” he explained.

“We always had this very strong presence in London with the Bowood outfit, so I think, the biggest part of the development has really been combining all of that capability and resource between Howden US programs, the legacy Tiger programs and obviously the legacy Bowood, and now forming one cohesive team,” he added.

Among the additions Howden Re has made in the past year are Greg Alberti and Matt Prominski from BMS Re and John Conway and Ben Sullivan from Acrisure Re.

Jameson said his team is still “very opportunistic” in its hiring plans, while he also detailed the success the Howden programs unit has had in the market, saying that it is “not afraid to do things that are difficult”.

“If it seems like ‘Mission Impossible’, we seem to be the first call, in terms of getting those things done. I think over the years, we've developed a reputation for really concentrating on this business,” he said of the group’s leading market position.

“We've really dug in and really put 100 percent of our time and effort and interest into the MGA space. And I think that's really paid dividends, and in terms of our client base, and the loyalty with which we've benefited from that,” he added.

Watch the full interview with Howden Re’s Michael Jameson to hear more about:

  • How creating a great alignment of interests is becoming critical to getting start-up deals off the ground
  • Why more “pure” fronts are evolving into “hybrid” fronts with more risk retention
  • How the market “responded in a really efficient and effective way” to Vesttoo scandal after the initial panic around the episode subsided
  • How Howden’s programs team has evolved over time and has become a “first call” for stressed business
  • An overview of Howden’s MGA portfolio and an update on market conditions