Despite softening, US casualty is still a good market for reinsurers

The US casualty market might be softening, but it’s still attractive to reinsurers. That is the view of Maria Amelio, head of national carriers and MGAs, MS Reinsurance. 

Key POINTS:
Focus on growing with existing clients
US MGAs expanding to Europe face ‘growing pains’
Keep limits tight amid nuclear verdicts

The US casualty market might be softening, but it’s still attractive to reinsurers. That is the view of Maria Amelio, head of national carriers and MGAs, MS Reinsurance. 

Speaking to APCIA Today, Amelio added that the frequency and severity of casualty claims, many of which are characterised by large, so-called “nuclear” jury awards continue to be of concern to the market. 

On top of this, persistent social inflation is here to stay and managing general agents (MGAs) are coming under pressure from investors to deliver high top-line growth, which could lead to short-term thinking about the underlying profitability of these businesses. 

But while there is no doubt rates are under pressure, the market remains an area of potential growth, said Amelio. She added that as we approach 1/1, 2026 renewals, MS Reinsurance continues to look for growth opportunities in US casualty. 

She said: “Although the US casualty market is softening somewhat, it is still a good market for reinsurers. If we spot attractive opportunities to grow our footprint there, we are certainly open to growth.”

However she cautions that while casualty cedants are seeking greater capacity, reinsurers need to exercise discipline when it comes to requests to expand limits.

“We take a long-term approach, which means we commit to our clients that we will show up at renewals and support them.”

She added: “Clients might say: ‘we are not going to use that capacity, but it is nice to have,’ but that is a concern for reinsurers, especially at a time when we are seeing more ‘nuclear’ verdicts where jurors are awarding plaintiffs higher verdicts than ever.”

While MS Re is actively considering working with new cedents, Amelio stressed the main focus going into renewals is to increase the levels of business with existing clients.

“We take a long-term approach, which means we commit to our clients that we will show up at renewals and support them,” she added. “We will look to take a bigger share of business with some clients, and will examine what they need, and if there are additional lines of business where they require capacity beyond our current relationship, we will see if we can support them and help them grow.”

Turning to MGAs, Amelio, who has 25-plus years’ experience in the MGA space, opined on the recent uptick in European MGA start-ups. “The market in the US is more mature than in Europe. Established players in the US MGA market might experience ‘growing pains’ such as access to existing data and technology infrastructure, if they try to expand into the European market,” she said.

“We take great care to understand MGAs to ensure our interests are aligned, so we can share in the profits but also in the pain.”

“The MGA market, especially in the US, has been a cornerstone of our move to diversify our portfolio since 2021, and it is an important part of our strategy,” said Amelio. “We have underwriters who have many years of experience, and as the overall market grows, we have an appetite to expand with it.”

She said one of the main things MS Re looks at when considering working with an MGA is whether they have a proven track record. It is also important that they have a strong commitment to invest in technology. Finally, she feels reassured if the MGAs themselves are risk takers who had “skin in the game”.

MS Re was initially attracted to MGAs because these companies can bring a level of expertise that is more niche than that offered by some of the more broad-based reinsurance carriers.

“We take great care to understand MGAs to ensure our interests are aligned, so that we can share in the profits but also in the pain,” she said.

Amelio added that the MGA casualty market is seeing more M&A activity and outside investment from third-party capital buying up or investing heavily in these businesses. Pressure is put on the MGAs to achieve top-line growth by both the private equity backers, who are looking for a quick return, and principals of the MGAs who are looking for higher payouts. 

“We often don’t know the terms of MGA sales, so we need to keep watching the companies to see how they continue to perform under their new owners,” she said. “We need to continuously monitor how they are doing using real-time data. All of this underscores the need to cultivate strong relationships with our MGA partners.”

This perspective was reinforced when MS Re recently re-organised its underwriting teams, aligning expertise with client needs, to prioritise ease of doing business and partnership. Amelio and her team support key client segments – national carriers and MGAs – out of their New York office for both property and casualty risks. 

Maria Amelio is head of national carriers and MGAs at MS Reinsurance. 

For more news from the American Property Casualty Insurance Association (APCIA) click here.

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