E&S property rates soften as admitted capacity increases: MSIʼs Carlisle

MSIʼs president of MGA solutions Amy Carlisle said the MGA is seeing more pressure on rates in the E&S property market, driven by an increase in admitted capacity, though the impact can vary by jurisdiction.

In an interview with this publication, she caveated: “When I say kind of softening, that’s softening relative to a very hard market over the past two years, so we’re still having a lot of success in the surplus lines.”

This publication has reported that rates in E&S property are expected to moderate if not fall slightly, even as the market digested the impact of hurricanes Helene and Milton and other natural catastrophes.

On that note, Carlisle pointed out that Florida is a state where the company is seeing more capacity in the market, especially admitted availability, “as insurers feel more confident in that market and in the regulatory support within it as well”.

She added that while the hurricanes did not have a major impact on MSI, she foresees that Helene and Milton will be top of mind for reinsurers during renewals.

The executive continued that certain parts of the property market still feel risky overall, including parts of the country that face severe convective storm SCS) risk and areas of California with wildfire risk.

Echoing those sentiments, in an interview with this publication, RT Specialty co-president Brenda Austenfeld said that given the surge of less-modeled perils and the threat of a major windstorm in the peak of hurricane season, there will always be a portion of property business that needs to be in E&S. 

Carlisle added that on the casualty side, there are certain jurisdictions that have been more challenging from a legal and regulatory perspective, such as Georgia.

This publication reported that as litigation has increased drastically in Georgia and claim frequency and severity has skyrocketed, there has been steadily increasing pressure for legal reforms in the Peach State, and lawmakers and lobbyists expect 2025 to be ripe for changes that could make it easier for P&C insurers to do business there.

MSI facts and figures
> $1bn of in-force premium as of Q2 2024, compared to $870mn in 2023, $660mn in 2022, $318mn in 2021, $117mn in 2020 and $77mn in 2019
> Goal of launching three to five new products every year
> Recently hired cyber team that will launch its first program going into 2025

MGA M&A
On the MGA M&A environment, Carlisle noted that there is more private equity capital coming into the overall MGA ecosystem.

“I don’t know necessarily where that’s ultimately going to go, more into the reinsurance space or more into the MGA space or hybrid fronting space, but I do think there will be an influx of capital.”

The executive continued that she has seen a higher number of potential MGA M&A opportunities arise, especially for smaller MGAs. Whether or not those opportunities will translate into actual transactions is still to be determined.

When asked if MSI plans to be active in M&A, she said that the firm has “no specific plan”, adding that “it’s a high threshold for us to convince ourselves that acquisition is the path forward to grow in any particular product line”.

Source: Insurance Insider US