Munich Re Specialty targeting further growth of $1bn programs book under new hire Carnevale

Munich Re Specialty is firmly on the front foot as it looks to expand its circa $1bn book of US programs business, with new recruit Claudia Carnevale tasked with growing the platform in the burgeoning market sector.

The company has supported the programs market for over 25 years, with Munich Re Specialty’s AM Best A+ rated capacity currently backing 27 programs across 11 MGAs in the US.

And Munich Re Specialty has set its sights on further expanding that portfolio under the oversight of its new head of US programs Carnevale, who joined the company in May.

A 25-year veteran of the insurance market, Carnevale has extensive experience working within the programs space.

Prior to Munich Re Specialty, Carnevale’s most recent role was at Homesite Underwriting Managers. She had joined American Family-owned Homesite in 2019 as senior vice president and chief risk officer with responsibility for underwriting, product/compliance and operational related services.

Her career also includes programs-focused roles at companies including Allied World, Starr Insurance Companies, PartnerRe and QBE.

Carnevale’s departure from Homesite came after the firm took the decision to divest of its program business, a process that ultimately saw the portfolio sold to Fortegra.

After leaving Homesite, Carnevale took some time to consider her next move.

Programs core to Munich Re Specialty – North America

Talking to Program Manager, Carnevale said when it came to choosing her next role, there were several options on the table, but the offer from Munich Re was immediately attractive.

“Programs is a core pillar within Munich Re Specialty, and that was very important to me. I wanted to find a company that wanted to be in the space and understood the space,” Carnevale stated.

Another draw was the Munich Re brand overall, and particularly its reputation within the specialty space.

“Munich Re Specialty has a lot of insights it can draw upon from its 25 years in the programs space, and I thought that was very important.

“When you talk to MGAs and they're looking for a carrier partner, they always mention longevity, capacity and stability. Munich Re Specialty checked all those boxes for me.”

Munich Re Specialty, Carnevale said, “has built a culture that values long-term relationships”.

“There's also transparency and collaboration, and I feel those are two core values in building an MGA platform, and there’s a lot of innovation too with good data analytic tools at our disposal.”

Diversified programs portfolio

Having those tools at hand has enabled Munich Re Specialty to build a programs portfolio that Carnevale said is “very diversified” by geography, class, segment and business line.

Having that diversification means Munich Re Specialty can manage its programs business through various market cycles as it “smooths out the volatility”, Carnevale said.

Currently, Munich Re Specialty’s programs portfolio includes offerings targeted at the public sector, auto dealerships, difference in conditions, social services, contractors and builders’ risk, schools and educators’ legal liability, and condominiums and apartments, among others.

“We have a broad and competitive product offering that I think the MGAs like, and we can support them on an admitted and non-admitted basis,” Carnevale said.

Carnevale has considerable experience building out programs portfolios at her previous firms. Having joined Munich Re Specialty, she has again been given a remit to grow the carrier’s programs platform.

As Carnevale explained, part of that will be through the MGA partnerships Munich Re Specialty already has in place, with new programs potentially added once they have undergone due diligence and been vetted.

New programs

But Munich Re Specialty is also on the lookout for new MGAs to support, although as Carnevale noted, new relationships will only be agreed if the partners have invested in capabilities that enable all parties to succeed.

“They must have class expertise in their segment and a proven track record of success,” said Carnevale.

“The right relationship weighs heavily, and so we leverage MGA relationships based on quality versus quantity.

“We’re looking for managing general agents that have invested in capabilities that will help us all succeed – they tend to have actuaries on staff and they have built strong data platforms,” she said.

One example of that is K2 Insurance Services, through which Munich Re Specialty supports public sector-focused programs specialist Allied Public Risk.

As Munich Re Specialty looks to grow its programs portfolio, the company is agnostic as to whether an MGA is big or small, so long as they are best in class.

However, given the relationships that Munich Re Specialty already has with some of the larger MGA players in the space, inevitably the likelihood of supporting new programs through those tie-ups is greater because they have already been vetted.

“We already know them and we already have data ingestion with them, so if there's new opportunities that we both like, we're happy to work with them again,” said Carnevale.

But the executive reiterated that Munich Re Specialty would not shy away from supporting a smaller, experienced MGA operating in a niche segment of interest to the carrier, although de novo start-ups are less appealing.

“New programs with existing partners, I find, are a little bit easier. It’s always hard to predict how a new start-up MGA is going to perform.”

An exception to that could be if a known individual is leaving a carrier or another MGA to set up their own venture.

“We're more likely to support something like that because we have the historical knowledge with the individual, or possibly with that specific portfolio from our past,” Carnevale explained.

PL in focus

Currently, Munich Re Specialty’s programs team has 12 dedicated underwriters that support its MGA partners. And looking ahead, Carnevale said Munich Re Specialty is looking to add both new programs and talent to its roster.

“We have a broad risk appetite – we’re looking for homogeneous class, multiline programs. We will look at various classes as long as there's no internal conflicts.

“Currently, we want to grow in the professional lines space. We’d like to see some more monoline casualty lines of business, just because from a premium standpoint, we are a little shifted on to the property side of our portfolio mix,” the executive said.

And although Munich Re Specialty would consider writing programs in most business classes, Carnevale said the company currently has limited appetite to support anything within the wheels or workers’ compensation segments.

It is not just new MGA and program relationships that Carnevale is seeking to add though, with the executive also looking to add talent to the team she oversees, especially if it enters new market segments as planned.

“If we grow in the professional line space, we're going to need additional headcount,” she said.

Carnevale said Munich Re Specialty’s program team is currently adequately staffed to support the launch of another one or two new property and casualty offerings each year.

But if it gets to the point where it is targeting three or four new offerings per annum, then its ranks will need to be bolstered further.

Managing market softening

The MGA and programs market has been on a tear in recent years, and newly published data from Conning suggested premium volume in the sector last year increased 12 percent to $102.1bn.

There is an expectation though that the widespread hardening in the P&C marketplace of recent years is now giving way to a softening, with pricing in some segments decreasing.

Carnevale is not overly concerned by how that softening could impact the programs portfolio she oversees though.

“We're targeting specialty portfolios that require unique capabilities, and in writing niche segments, there's sometimes a barrier to entry.

“We’re looking at, and have relationships with, MGAs with strong distribution networks, and with that, they have the advocacy of their retail agents, and that also comes with strong retention ratios.

“We're able to still get adequate pricing for the risks that we're accepting,” she said.

Another factor is the diversification within its programs portfolio.

“It puts us in a good position, because not every segment is being hit with the same effect through these pricing cycles.

“We're in a position where if we see something is softening, we may pull back a little bit, but we'll continue to grow in areas or pockets where we can still get strong rate.

“It always comes down to prudent underwriting. We're an underwriting first company, and as long as we're getting the adequate rate for the exposure we're putting on, we'll continue in those segments.”

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Munich Re Specialty is a description for the insurance business operations of affiliated companies in the Munich Re Group that share a common directive to offer and deliver specialty property and casualty insurance products and services.

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