Fastest Growing E&S Carriers in Top 30 Revealed: Fitch Report

In a year-end report on the U.S. excess and surplus lines market, data compiled by Fitch Ratings revealed that the top growing E&S writers in recent years were not necessarily the biggest.

The report, published in Dec. 23, 2013, based on data for the 30 largest U.S. E&S insurers in 2012, shows that Swiss Reinsurance America Corp. and Liberty Mutual Insurance Co. were fastest-growing E&S writers based on average annual direct premium growth for 2011 and 2012 – with Swiss Re posting an average growth rate of 37 percent and Liberty Mutual posting 33 percent.

Swiss Re jumped to 27th place in 2012 with $259 million in direct E&S premiums. Its 2010 premiums would have given it a last place ranking for that year, when measured against premiums for other U.S. E&S writers in the 30-company group analyzed by Fitch using data from SNL Financial.

Liberty moved up six spots in the two-year period, leaping from a 28th place among the 30 carriers in 2010 to 22nd place in 2012, with $356 million in direct U.S. E&S premiums.

Only XL America had a bigger sprint – moving from 22nd place based on 2010 premiums to a 15th place ranking for 2012.

XL’s average annual growth rate of 17 percent for 2011 and 2012 was among the 10 fastest two-year growth rates calculated by Fitch. Besides Swiss Reinsurance America and Liberty Mutual Insurance Co., three other groups – QBE North America (ranked sixth based on 2012 premium dollars), American Financial Group (ranked 24th), and Aspen Specialty (ranked 28th) grew faster.

QBE, with the third fastest two-year growth rate and a sixth-place ranking based on 2012 dollars of premium, was one of only three top-10 carriers (based on premium dollars) to show double-digit growth in the two-year period. W.R. Berkley and Ironshore were the other two.

Meanwhile, the two-year average growth rate for the biggest writer of U.S. E&S business – Lloyd’s of London – was only 4 percent, while second-place American International Group, had a 5 percent drop in premiums in 2012 after a flat year in 2011.

Fitch noted that standard carriers are refocusing on core risks and cutting back on risks typically covered in the E&S market, pointing out that U.S. E&S premiums for Travelers shrunk by 26 percent in 2011 and reported flat premium growth in 2012, compared with meaningful rate and exposure-related growth for the industry.

Travelers was ranked 26th among the 30 largest E&S carriers analyzed by Fitch, with $282 million in direct U.S. E&S premiums. Travelers’ $380 million in U.S. E&S direct premiums for 2010 would have put it six spots higher – in 20th place – if the same 30-group were ranked based on their 2010 premiums.

Other companies to report lower premiums over the two-year period included Munich Reinsurance America and Argo Group US, according to the Fitch 38 report.

Fitch also noted that Endurance grew tremendously during the soft market and shrunk in the more favorable pricing environment in 2012. Other companies to report significant growth during the soft pricing cycle include Catlin Insurance Co., Alterra Capital Group (sold contract binding authority division to Selective in August 2011, which makes up a portion of its E&S business, and acquired by Markel in 2013), and Allied World Assurance Holdings Group, Fitch said.

Topics Carriers USA Excess Surplus Swiss Re