Irick: TMK poised for specialty and P&C growth following treaty reinsurance exit

Lloyd’s carrier Tokio Marine Kiln (TMK) is eyeing opportunities across its specialty and P&C portfolio after withdrawing from the treaty market earlier this year, CEO Brad Irick has told this publication, describing the move to stop underwriting reinsurance as “a very difficult decision for the company”.

Speaking to The Insurer TV, Irick discussed the rationale behind the move to cease writing treaty reinsurance business – written through its London and Singapore units – from 1 September and place its portfolio into run-off.

Irick outlined that TMK undertook a review of its portfolio over a multi-year period with the carrier reaching the conclusion it did not possess the scale to make the class work.

“It was a very difficult decision for the company – one that we didn’t take lightly,” he said.

Irick explained that dynamics in the retro market – which has been shaped by constrained capacity – compounded TMK’s decision to exit the class of business.

“That made it even more difficult to make the maths work,” he added.

Kiln – which Tokio Marine acquired in 2008 – was historically a leader in reinsurance, but has gradually been reducing its exposure to the class, with reinsurance gross written premium (GWP) at Syndicate 510 falling to £95.2mn in 2021. The year before its flagship syndicate booked £109.8mn in reinsurance GWP.

“Ultimately, we decided that you needed more scale to be able to really drive a business result,” he said.

Irick said that while there had been rate increases across the reinsurance market, the hardening had not been pronounced enough and had not been in regions where TMK had exposures.

“So the long and short of it is at the end of the day, it didn’t meet the underwriting standards that we set for the company and we decided that it was important to stick to our values,” Irick said.

“And if business wasn’t meeting our underwriting standards, even if it was one that had been around for 60 years then we needed to step away,” he continued.

Expansion opportunities

But while the carrier has retrenched from treaty reinsurance, Irick identified a number of areas across the specialty and P&C market where TMK would look to grow.

Irick said TMK is mulling building out its position in the marine cargo market after previously contracting as part of a process to streamline its portfolio.

“Marine cargo is an area that we pulled completely out of and now we see some opportunities to get back into that marketplace,” Irick said.

TMK retrenched from cargo and hull at Lloyd’s ahead of the corrective action overseen by the Corporation through the Decile 10 initiative, but it continued writing a portfolio of marine classes out of its Singapore hub.

It is unclear at this stage whether TMK’s move to re-enter the class will see the insurer underwrite cargo risks through its Lloyd’s platform or through backing an MGA, however it is understood the company is reviewing a range of appropriate means to grow its presence in marine cargo as a diversifying class.

Aviation at “inflection point”

Irick also identified aviation as a class that the carrier had earmarked for growth.

While aviation has been a significant part of its portfolio for many years, Irick said TMK would continue to grow its footprint in the class in light of hardening rates and wider market opportunities.

“We see lots of opportunities to grow within those lines of business – it’s probably one of the best markets we’re seen across the board in several years,” Irick said.

“Aviation is one of the areas where TMK has been focused on growing for many years, and it has plans to grow further in this line of business,” he continued.

As The Insurer has tracked, TMK has made a swathe of high-profile appointments as it has built out its aviation division and diversified its portfolio under the stewardship of Chubb’s former aviation product head David Slevin.

Slevin moved to TMK to lead the carrier’s aviation unit, with recent hires including Lisa Leahy, who joined from Faraday Underwriting as a senior member of the team focusing primarily on airlines. Matthew Farrar also recently joined as general aviation (GA) underwriter from Lockton.

As part of the build-out, Graham Oddie has transferred from TMK’s office in Singapore and now heads up the carrier’s GA team.

“We happen to be the largest writer of aviation business in the Lloyd’s market – so it’s a natural one for us to focus on.

“We think that we’re at a bit of an inflection point within the aviation business right now… there’s lots of opportunities that we want to be in a place to take advantage of,” Irick continued.

He added that TMK wants to take part in further opportunities in the aviation sector related to sustainability.

“I think there is going to be a number of new, innovative products that come up as the aviation industry takes on some of the sustainability concerns that exist for them,” he explained.

In addition to pursuing opportunities in the cargo and aviation market, Irick said that TMK would also focus on growing its existing property book, adding that there is also growth potential across casualty lines, highlighting Canadian liability.

He said TMK will also be targeting growth in cyber, which he labelled a “hot topic on a lot of fronts”, given the healthy pricing environment in class.

“The long and short of it is that the market should perform reasonably well. Pricing has been holding up in most lines of business. Disciplined insurance companies should do reasonably well in a market like this,” he concluded.

During this video, Irick discusses the following topics: