Palomar enters new sector to boost income with compelling returns
Specialty insurer Palomar Holdings has entered the fronting sector of the US insurance market, targeting multiple lines of business where traditional insurance is difficult to source. The company hopes the move will help generate new income streams and compelling risk-adjusted returns for its shareholders.
Palomar’s fronting business, known as PLMR-FRONT, will partner with reinsurers, insurance carriers and managing general agents to enable the design and operation of customised insurance programmes.
The new business will provide fronting paper on both an admitted and non-admitted basis through Palomar Specialty Insurance Company and Palomar Excess and Surplus Insurance Company, respectively. The product lines may include but are not limited to cyber, non-standard auto, trucking, warranty and workers compensation.
In addition, Palomar’s entry into the fronting space will allow the specialty insurer to act either as a non-risk bearing insurance entity with a pure fronting model or participate in risk through a hybrid model.
“PLMR-FRONT is a logical extension of Palomar’s franchise in the specialty insurance market," said Mac Armstrong (pictured), chairman and chief executive officer of the company. "It represents an entrance into a sector that will generate new income streams and compelling risk-adjusted returns for our shareholders."
Armstrong added: "Our admitted and E&S platforms offer the requisite infrastructure to execute PLMR-FRONT and also allow us to participate alongside our partners where appropriate.
"Ultimately, the fronting sector represents another opportunity to capitalise on changing market dynamics and dislocations while adhering to our focus on sound underwriting and profitable growth.”
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