Gallagher Re wins Travelers middle market umbrella account after RFP

Gallagher Re will place the 1 January incepting reinsurance cover for Travelers middle market supported umbrella business that was previously reinsured by Swiss Re on a direct basis after the intermediary won a recent RFP process conducted by the US insurance heavyweight, The Insurer can reveal.

According to sources, the sizeable book of business relates to underlying premium running into several billions of dollars.

It has been described as a portfolio with consistent performance and strong data supporting its track record.

Sources said Gallagher Re went up against Guy Carpenter, Aon and Howden Re in the RFP.

It is thought that the change to the long-standing direct relationship with Swiss Re on the cover came as Travelers is looking to diversify its reinsurance counterparties.

However, it is expected that the cover will be written by a relatively small number of reinsurers that Travelers views as long-term partners.

That means the cedant is more likely to favour highly rated major markets such as Munich Re, Swiss Re on a brokered basis, Hannover Re, PartnerRe and RenaissanceRe.

The structure of the placement is not known at this stage but sources said Travelers would be more likely to seek an excess of loss cover for the book and is seeking to form a reinsurance partnership with those on its panel for the long-tail book of business.

Travelers is separately thought to place an unsupported excess treaty through Guy Carpenter.

The giant insurer is widely viewed as a strategy buyer of reinsurance.

Nuanced casualty re market

The US casualty market is again likely to be a major talking point at the upcoming Monte Carlo RendezVous and other fall industry conferences in the lead-up to the key 1 January renewal.

Sources have described a nuanced casualty reinsurance market where buying experience will be heavily dictated by the view of reinsurers on a cedants grasp of their portfolios in relation to reserving, loss cost trends and achieving rate increases ahead of trend.

Commenting on mid-year renewal dynamics, Gallagher Re in a report last month said US general liability excess of loss treaties with no loss emergence are seeing rate increases of 5 to 10 percent, while those with loss emergence priced up 5 to 15 percent.

On the subject of the broader US general third-party liability segment, the reinsurance broker said loss trends remain elevated and volatility in performance is expected for the foreseeable future.

“That said, the original market remains disciplined, and carriers continue to take corrective actions to their portfolios, particularly from a pricing stand-point. As a result, reinsurers overall maintained a healthy appetite and stable capacity for US casualty lines,” it continued.

“Given the expectation of volatility going forward, reinsurers are taking [a] nuanced approach by cedant and continued to put pressure on pricing there they view it warranted. Equally, a number of reinsurers continued to selectively grow in segments such as E&S casualty and middle markets.”

The firm said that outcomes on individual placements were driven by cedants’ historical performance as well as their transparency on strategy and disclosure of data around key battlegrounds such as their view of rate adequacy, loss and claims trends.

“Those that provided greater transparency and insight were able to achieve stable pricing and placement outcomes,” said the report.

Rate hardening continues in middle market

According to Travelers most recent 10K, its middle market division provides mid-sized businesses with P&C products including workers’ comp, general liability, commercial multi-peril, commercial auto and commercial property.

It provides products through commercial accounts, but also to targeted industries through verticals including construction, tech and life sciences, public sector services, and oil and gas.

Mono-line umbrella and excess coverage insurance is written through its excess casualty line.

On its most recent earnings call, Travelers management said that in its overall middle market division renewal premium change was strong at almost up 10 percent and was consistent with recent levels, while renewal rate change accelerated from Q2 2023 by a point to around 7 percent.

Retention in the book remained strong and the carrier delivered its highest ever second quarter result for new business at $383mn.

Travelers and Gallagher Re did not immediately respond to a request for comment on this article.

Reinsurance Month

Monday is the start of The Insurer’s Reinsurance Month, which will feature a daily focus on the market as the autumn conference season kicks off in Monte Carlo in the lead-up to the 1.1 renewals. Look out for regular exclusive content like the article above, together with commentary, interviews and analysis dissecting all the major issues and themes…