The lure of the hardening market
The hardening market may be cause for consternation among brokers and insureds, but for underwriters it is a glorious time to be alive—so much so that some are coming out of retirement to capitalise on the new opportunities that are emerging, as Bermuda:Re+ILS reports.
“There is a real opportunity for experienced price-making teams to build well-priced, well-balanced books and in the process, generate alpha returns.” John Boylan, Arcadian
“John will be able to attract like-minded underwriters who want to build a team of experienced experts.” Dan Malloy. Third Point Re
For many, retirement is a time to spend more time with the grandchildren, tending the garden or finally doing up that classic car that has been sitting in the garage for 10 years. It is a time to put work aside and focus on the things you love doing.
For others, leaving work behind can be a challenge. For those lucky enough to love what they do for a living, turning your back on it can be a wrench.
When John Boylan, the founder and chief executive officer at Arcadian Risk Capital, retired, he was ready for the change of pace that retirement promised. He had enjoyed a successful career that stretched back to the 1980s when he was a casualty underwriter at AIG, and also took him to XL and Markel, and finally called it a day in 2018. After years of falling prices and increasingly generous terms and conditions, the fun had gone. He was ready for something new.
It was only after he had retired that the market started to harden, and this, he admits, changed his mind. Market conditions, Boylan says, enticed him out of retirement.
On October 1 he reversed that decision, launching Arcadian Risk Capital with support from Third Point Re, an investor and paper provider that is managed by his old friend Dan Malloy.
“This is just the third hard market in 35 years, so there is a real opportunity for experienced price-making teams to build well-priced, well-balanced books and in the process, generate alpha returns,” he says.
Malloy, chief executive of Third Point Re, says he was delighted to have been able to lure his old friend out of retirement with the prospect of building a profitable book of business.
“Now is the time the market needs experienced participants willing to bring meaningful capacity to a correcting market,” Malloy says.
Boylan started Arcadian as a new managing general agent (MGA) in Bermuda, a clean slate on which to build new business. Arcadian already has 15 underwriters across offices in Bermuda, where Boylan is based, as well as Dublin and London. He says he may look at a New York presence in due course.
Starting a new business was a key part of the appeal for Boylan.
“Having no legacy issues is a huge advantage,” he says. “Book remediation takes time and when your underwriters are investing time in remediating legacy books that is a distraction from writing new business.”
Boylan is enthusiastic about the current opportunities in the market. The last—very elongated—soft market cycle resulted from a capital supply and demand mismatch, he says, which led to compound rate degradation, a loosening of contract terms and conditions and eventually sub-par returns.
“This dynamic has now shifted in favour of the risk-taker and capacity provider,” he says. “Rates are on the up, universally, with attendant terms and conditions also improving. We now have an opportunity to build selective and technically-priced and sustainable accounts that will serve to generate return at all points in a cycle.”
Malloy highlights Boylan’s reputation for underwriting discipline, his strong track record, and historic support from top-notch reinsurers, which were all positive factors in building a partnership between Arcadian and Third Point Re.
Boylan emphasises the qualities in the team he has built at Arcadian.
“It’s all about team collaboration, especially in the underwriting process,” he says. “Our teams have worked together for many years, in some instances for all of their careers. They have built strong broker and client relationships which will benefit Arcadian as we set about our book build.”
“With strong capital support and no legacy challenges, John will be able to attract like-minded underwriters who want to build a team of experienced experts focused purely on underwriting profitability,” adds Malloy.
“He’s luring great underwriters from big firms to come and work for a startup MGA—that should tell you how exciting this opportunity is to the people who know the market best.”