MS Transverse’s Matson: Reinsurers must behave “rationally” at renewals

MS Transverse CEO Erik Matson has cautioned reinsurers not to be “irrational” at renewals and to ensure pricing is "appropriate", as he noted that some have been coming off deals they have been supporting for 10+ years.

Speaking to The Insurer TV in New York last week during the Program Manager 2023 Conference, Matson discussed the impact the harder reinsurance market is having on new program launches and the renewal of existing programs.

“Everybody says that it's harder to do and that it elongates the process, which happens. But what is not talked about so much is that I think there's much more of a deeper focus on who's doing what, where capacity is going and how it's supporting particular programs,” he said.

“There's an element where I'd like to see the reinsurance community, especially some of the big, big players that have the breadth and scale and scope, to help the rationality that needs to be there,” he added.

The current hard market was preceded by several years of losses, so while Matson sympathises with the actions taken by reinsurers regarding rate, T&Cs and restructuring to ensure future profitability and sustainability, he believes some have maybe gone too far.

“You've seen some players have pulled out and some of those have been supporting markets they've been with for more than 10 years, and that to me is a bit irrational,” Matson said.

Geographical expansion

Turning the conversation to life following Mitsui Sumitomo’s $400mn+ acquisition of Transverse, Matson discussed the opportunities that lie ahead.

“[The acquisition] has given us the strategic element first and foremost. I also think for the people of our company, they can be well assured that this is not a flip. This is long-term and that gives us the confidence now to go into the market,” said Matson.

He explained his strategy moving forward is to work with less partners, “but forge much deeper relationships”.

Matson added: “Now we can bring this massive balance sheet and other kinds of capabilities, if there are things that begin to extend globally, we can do that as well because [MSI] has licences around the world, so it brings a real breadth of that.”

Indeed, MS Transverse has wasted no time in exploring opportunities elsewhere.

The Insurer recently revealed the hybrid fronting carrier’s long-planned London-based platform is targeting a summer launch, as it makes its way through the final regulatory approvals.

“For us, we see the US and London as the main two markets globally,” said Matson. “And we always had the thought process, we need to be [in London] one way or the other.

“So if it's within Mitsui, and their fronting companies there, or us working with a partner – and this is going back prior to being acquired by Mitsui – we already thought London would be important.”

While discussing the differences between the US fronting market and the UK/EU markets, Matson said they are between two to three years behind the US market.

“We’re seeing more and more MGAs being structured and set up the way that you would see here [in the US]. So I think you'll see that merge, and it'll become an extension of what’s happening in the US and the opportunity to grow across both of those markets [UK and EU] is very, very significant.

“Depending upon who's counting, it could be over $160bn between Europe, UK and US,” he concluded.

Watch the 12-minute video with MS Transverse CEO Erik Matson to hear his thoughts on:

  • The growth trends in the program management space
  • The advantages to being exposed to the underwriting risk
  • Life after the Mitsui Sumitomo acquisition
  • Impact of the hardening reinsurance market