Few in legacy circles would dispute that over the past three years the market has witnessed some of the most rapid change seen in decades.
New deals from new sellers are steadily flowing into the market. New capital has arrived in the form of private equity and hedge fund money. And with both of these developments come new opportunities.
The only thing missing is an abundance of new players.
But for those on the sidelines waiting to make their move, what do you need to compete in the legacy market? What does the ultimate legacy carrier look like?
Of course, outstanding claims management is a must but, as our 2019 legacy roundtable attendees discussed, it is no longer enough.
Harnessing the influx of fresh capital to your advantage is key. Bigger deals require bigger balance sheets.
Deal execution will always be key, and the ability to understand and cater to clients’ new and evolving needs paramount.
But what else? A Lloyd’s platform for the coming wave of in-market RITC deals? A Bermudian sidecar, or a subsidiary in Rhode Island? (On that last note, perhaps you think Oklahoma might be a better bet?)
Perhaps a combination of life and P&C liabilities is the new nirvana, and in the coming years the market will be watching AIG’s Fortitude closely to see if that holds true.
But rapid change can make a market unwieldly.
The sudden arrival of competitors with bulging pockets can initiate a race to the bottom on price, as the live market well knows.
When a carrier has a new private equity investor with chunky return expectations to satisfy, it can be tempting to cut corners.
As a result, margins will thin and the pressure on legacy players intensify.
And, to add to that, there’s nothing like the sound of rapid market expansion to prick up the ears of regulators.
So the legacy market has a thin line to walk as it presses ahead into this new era. Discipline will be key and value propositions must be rock solid.
Participants at our annual legacy roundtable had a thoughtful and engaging discussion around what a legacy carrier needs not just to survive, but to thrive in the new market norm.
Read ahead to get the views of some of the leading voices in the market.
To view the Legacy Roundtable 2019, please click here.
Catrin Shi, Acting Managing Editor, The Insurance Insider
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