Everspan targets $250mn+ GWP in ’23 with GL and comp programs in sights

Everspan aims to pass the $250mn premiums mark in 2023 and again double in size to $500mn+ over the next couple of years as it looks to add general liability and workers’ compensation programs to a platform that typically retains more than its peers and offers broad E&S and admitted capabilities.

The participatory front is owned by publicly traded Ambac, which in October reached a milestone $1.84bn settlement with Bank of America on its legacy financial guarantee business.

That drew a line under the biggest exposure from the credit crisis left on the company’s books, clearing the way for it to fully focus on its reboot as a P&C specialty insurance platform.

And in a joint interview with Program Manager, Ambac president and CEO Claude LeBlanc and newly promoted Everspan president Steve Dresner highlighted the progress at the carrier since it was launched in early 2021, as well as the group’s MGA platform Cirrata and its investment arm Redgrove.

Commenting on the settlement of the legacy exposure, LeBlanc said: “It gives us a lot more financial flexibility going forward and it will provide us additional capital to deploy into our new specialty P&C business. We are very excited about the outcome – it really is a game changer.”

Since securing an AM Best A- VIII rating in February 2021, Everspan has added 13 programs to an underwriting platform that now boasts non-admitted licensing in all 50 states and five admitted carrier subsidiaries.

“That is going to really position us well over the next three to five years for growth without channel conflict,” said Dresner.

In Ambac’s third quarter earnings presentation to investors, the company said that it had added $30mn of gross written premium (GWP) in the three-month period, taking the total in the year-to-30 September to $95mn – compared to just $6mn last year – as onboarded programs gained traction.

The target for 2023 is to grow GWP to more than $250mn and to double that to $500mn+ by 2024/2025, subject to market conditions in the fast-growing US programs sector.

The underwriting platform is aiming for a mid-teens ROE at scale and over the insurance cycle. And LeBlanc and Dresner highlighted what they believe are differentiating characteristics at Everspan that will allow it to build long-term relationships with MGA partners and reinsurers.

LeBlanc pointed to the group’s approach in hiring claims, actuarial and underwriting personnel with proven track records in specialty markets, as well as its ownership by New York-listed Ambac. “We really do set up and operate like a specialty program platform relative to many of our peers. And because we’re owned by a public company, that’s permanent capital, so Everspan is a permanent vehicle that’s not for sale.

“We think a lot of the companies in the space are going to sell, and we think some of them may fail, unfortunately. But we believe the strength and capital support of our holding company, and that Everspan is a core business, differentiates us,” he commented.

Dresner suggested the amount of risk on programs the platform is prepared to take is also a key differentiator.

Everspan averages around a 20 percent retention and will retain significantly more on some programs.

That contrasts with most hybrid fronting carriers in the sector, who might in exceptional circumstances retain as much as 20 percent, but typically are in the 5-10 percent range.

“What we’ve been saying is that other people take risk because they have to; we take risk because we want to,” said the former Endurance and Crum & Forster executive.

Everspan does not target cat-exposed property risk, but the willingness and ability to typically retain more than its peers on other lines of business in a tightening reinsurance market is an example of the alignment of interest that reinsurers are increasingly seeking from fronting carriers. Dresner said the platform also offers a consistent approach to reinsurers across programs it writes.

“We’re in it for the long term and we want our reinsurance partners to be there along the way. We talk to them about our process, and that’s due diligence around claims, underwriting and actuarial, and we have a consistent process from program to program,” he explained.

Ultimately the success of the approach will be measured by underwriting profitability, and that will also be the driver of long-term strategic relationships for Everspan.

“It comes down to loss ratio and making sure that the book is profitable. If we’re making an underwriting profit then our partners are making an underwriting profit. Everyone is competing on the same playing field, but it’s about execution and picking the right programs and the right partners,” said Dresner.

Portfolio diversification

Of the 13 programs onboarded so far – including two in Q3 2022 – almost all are casualty-focused.

They include hospitality business with liquor liability; excess liability; D&O insurance; commercial multi-peril; commercial auto and trucking; surety; and personal lines, where there is some property exposure through homeowners and auto programs.

Dresner said that Everspan is currently working on opportunities in the general liability space and is targeting the workers’ compensation segment for 2023.

“We have the five admitted companies that really give us a great platform to avoid channel conflict. Workers’ comp is a state-by-state analysis and we can be pretty selective in picking our partners as we decide what states to enter,” he suggested.

Everspan’s admitted footprint includes two carrier subsidiaries that can write nationwide, two that are more focused on states covering around half of the US, with the fifth insurance company licensed in just a few states.

“The platform helps avoid channel conflict and also allows us to offer some of our client base a strategic partnership where they can grow with us,” said the executive.

To date, the initial growth has largely come from the E&S carrier capabilities, accounting for 76 percent of GWP in Q3 2022 and 86 percent in the first half of the year.

But LeBlanc said that balance is expected to shift over time. “The E&S market continues to grow and for now that’s going to be the focus of our growth.

I think the admitted side at some point will begin to take on its own development and we’ll be ready for that as well,” he said.

Dresner said another differentiator for Everspan is its ability to bring more product to MGAs, which increases its value proposition – including niche opportunities coming from underwriting talent moving from traditional carriers to MGAs.

And LeBlanc said the significant investments being made in technology and risk controls also mark out the platform for its ability to provide transparency to its reinsurance and MGA partners.

“We’re currently as advanced as anybody and our goal is to strive to continue to improve that over time. It’s about transparency and being able to collect data and information that we can share in a manner that’s helpful to our reinsurers.

Reinsurers are demanding increased data and information and we are customizing our development to support that,” he said.