Shevawn Barder of AM RE Syndicate can see opportunities in the current market

Shevawn Barder of AM RE Syndicate can see opportunities in the current market, as she told SIRC Today.

The quota share model reinsurer (see box) has consistent production of business, and part of that is because the company is trading “very much in the E&S space”, according to Shevawn Barder, chief executive officer of AM RE Syndicate.

“There is disruption in the US primary market due to several factors. One is Lloyd’s retrenchment from the market, which has added to opportunities for a business like Am RE, and has loosened the primary market in the US,” Barder said.

In addition to this, on the back of the losses from hurricanes Harvey, Irma and Maria in 2017, the primary market is firming.

“There’s a modest improvement in rates across the board for all classes, and in particular classes we’re seeing a strong rate movement. This is overdue and a welcome development,” she said.

“Rate needs to be partnered with underwriting discipline. When these elements combine, that creates opportunities that we will consider.

“As Lloyd’s continues to step back from the E&S space in the US market, we are able to move into that space and look for strong quality companies to partner with.

“With a disciplined underwriting approach, we are seeing a solid underwriting environment for our model,” she explained.

In 2018, AM RE was encouraged to approach Lloyd’s to create a syndicate.

“That gave us an early heads-up as to what was going on with Lloyd’s. As a result of the Lloyd’s under-performance review, we stepped back from the Syndicate opportunity.
“The ability to see the direction that Lloyd’s was heading early on gave us the ability to steer our business in another direction,” Barder explained.

“We were able to anticipate what was going to happen in the market. That gave us the ability to look at securities outside London. We were able to create our Rest of the World panel of securities and to focus on the primary market in the US and decide what direction we wanted to go in.

“We have focused on the programme segment, which is a natural quota share opportunity, as this type of reinsurance is integral to the business model. With our high level of technical expertise, we are able to partner with best-in-class, primary companies, to assist them with their security needs.

“We are relationship-focused and prefer to partner with companies that have a long-term approach to their reinsurance buying.

“We build our book sideways, while keeping the nat cat and limit to income in a very controlled structure.”

Simon Barder, AM RE’s chief underwriting officer, added that the managing general agent tries to avoid nat cat, while selecting cedants that have strong underwriting discipline and excellent US nationwide geographic spread.

Advantages of a quota share model
From 2000, when Shevawn and Simon Barder set up their first company, they focused on creating a quota share model for securities. It is a pro-rata reinsurance contract in which the insurer and reinsurer share premiums and losses determined by a fixed percentage. The reinsurance model allows an insurer to retain some risk and premium while sharing the rest with an insurer up to a predetermined maximum coverage.

Shevawn Barder explained: “This model supports the integrity of the primary market and doesn’t compete with it. We never sought to move into that space, it was more of an evolution.

“We have always sought to work with good primary players in the US market. As our model has evolved we’ve increasingly moved into the programme space.

“We’re partnering with quality businesses that write insurance on a programme basis, and we see fantastic opportunity and spread within that model.”

Shevawn Barder is chief executive officer of Am Re Syndicate. She can be contacted at:  shevawn@amresynd.com