Lancashire’s Maloney hails US E&S growth as direct specialty lines beckon corrective action

London-listed Lancashire is committed to exploring E&S opportunities in the US, although group CEO Alex Maloney has clarified that this does not mean competing with business in London.

Speaking to The Insurer TV at the recent Rendez-Vous in Monte Carlo, Maloney described the onshore E&S market as “a really exciting opportunity” for the carrier.

“For us to be onshore in the US at a great time in the pricing cycle makes a lot of sense to us,” he said.

“Now, what I’ve said to everyone is that we’re not there to compete with ourselves in London. We’re not there to take business away from London brokers or business that naturally comes to London. The business that stays in the US – the real E&S business – is what we’re after.”

In order to take advantage of the timing of this market opportunity, Maloney added that Lancashire is aiming to add another two teams to its E&S platform in the next six months.

“We want to access the market, and we are going to do it the Lancashire way. Everything we do is matched to the opportunity,” he continued.

“We’re not in a hurry, we need to get the foundations right. We’re not known for putting flags around the world, but being in the world’s largest insurance market is exciting for Lancashire.”

Corrective action needed in specialty insurance lines

Discussing the upcoming renewal season more broadly, Maloney said that while he remains “relatively relaxed” about the insurance market – which makes up roughly 50 percent of Lancashire’s portfolio – there are some insurance lines in London that are a cause for concern.

This includes upstream energy, with Maloney previously speaking to this publication over the lack of discipline in the class after Lancashire’s book went negative in its half-year results.

“What’s going on in that market makes no real sense, you would’ve seen from Lloyd’s recently that energy actually lost money. That class of business is difficult, and we’re going to take corrective action there,” Maloney told The Insurer TV.

“Some of the energy lines and marine lines have seen some loss activity in the ring. Losses are why we’re here – that’s not a problem. But some of the insurance underwriting does worry me.”

For marine, all eyes will be on the extent to which the Baltimore bridge loss will continue to push price increases in marine liability. With some increases having already materialised in this line, Maloney said he expects this trend to continue, although he underlined the degree of uncertainty that remains:

“Obviously, the International Group is such a big part of that world, and we’ll wait to see what happens there. I don’t think anyone has any real clarity on that yet. To throw everything in the mix, you’ve then got most people’s reinsurance renewing at 1.1.”

“That’s going to be a challenging renewal all round. As a business, we can pivot, so if we write more marine liability on the insurance side, or more specialty reinsurance in our Bermuda platform, I don’t really mind. We’re just going to go to where we believe we’re getting paid for the risk.”

On this point, Maloney told this publication that Lancashire has not been able to expand its aviation insurance book as much as was hoped, owing to a continued disconnect between the softening direct market and the reinsurance market.

“The disconnect is still there – on the insurance lines we are very cautious on what parts of the aviation portfolio we write. We were hoping that there was going to be a broader opportunity for Lancashire, which hasn’t materialised, which is disappointing,” he said.

“There is still a disconnect if you’re buying reinsurance. The conversations we’ve had are more fluid a year on. You can see that most reinsurers are in a good place – most people want to expand.”

Watch the 11-minute interview with Lancashire’s Alex Maloney to hear more about: