Ironshore gaining momentum and eyeing opportunities after wholesale refocus

Ironshore’s newly introduced wholesale-only focus strongly positions it to take advantage of the E&S market’s expected continued expansion at a time when the risk environment is becoming increasingly complex, especially in the healthcare, environmental, property and cyber lines.

That is the message from Ben Johnson, senior vice president and executive, wholesale distribution for Ironshore, who detailed how the market is responding to Liberty Mutual’s announcement last September that Ironshore would focus exclusively on the wholesale distribution channel.

As Liberty Mutual Global Risk Solutions (GRS) North America specialty and Ironshore president Matt Dolan explained at the time, the split was implemented to create a clearer, more consistent experience for customers and partners while also demonstrating the group’s dual-channel commitment.

While Liberty Mutual writes E&S business in both retail and wholesale, the company has seen significant need for E&S solutions and expertise in the wholesale channel, Johnson said.

“Really, we feel like there is a lot of opportunity to increase our wholesale book, and that’s why we've constructed Ironshore to be the wholesale brand,” said Johnson.

“We’ve made great strides in innovation and product development in the last four years. Our wholesale book has more than doubled in that timeframe.”

To date, Johnson said wholesalers have responded very positively to Ironshore’s refocus.

“Key for us is to line up our specialty underwriting expertise with the wholesale marketplace’s specialty brokerage and consulting expertise,” Johnson said.

“We’ve really seen [the benefit of that] in some areas that are really experiencing fairly explosive growth from our perspective,” he added.

E&S growth to continue

In particular, Johnson highlighted miscellaneous medical facilities, senior care, environmental, certain pockets of financial lines such as cyber, and private D&O as among those where Ironshore has really reaped the benefits from its new wholesale-only focus and dedication.

The surplus lines market has grown at a rapid rate in recent years, with $82.7bn of premium recorded in 2021, and the sector expected to have recorded over $100bn in 2022.

Johnson forecast that the “phenomenal growth” will continue, with increased litigation, social inflation and shifts in weather patterns all driving business out of the admitted space and into the E&S market.

The executive also noted that the E&S marketplace is where solutions for new and evolving risks are found, and the current challenging risk environment will help to fuel the sector’s growth too.

“The E&S marketplace, fundamentally, is a place of innovation and where new products are typically launched and new industries are created,” Johnson said.

“When I got into the business, the focus was really on things like EPLI which was a relatively new trend then. Today, that trend is the cyber market [and it] is now a major pillar of the E&S marketplace.”

To that end, Johnson said Ironshore in 2023 is focused “on organising and pumping dedicated product into the wholesale marketplace”.

Healthcare and environmental targeted for growth

When it comes to specific products and business lines that Ironshore is looking to build out, Johnson described long-term care and miscellaneous medical as “1 and 1A for us in terms of areas of expertise and growth”.

The US healthcare industry, Johnson detailed, is changing at a rapid rate. Telemedicine and alternative care facilities are becoming increasingly prevalent as patient preferences shift.

Environmental is the second major area of interest for Ironshore.

Johnson said Ironshore has “a deep bench of product experts” in environmental, with the carrier selling three key products – a contractor’s pollution policy, a combined general liability pollution combo form for manufacturing customers, and a site pollution policy for clients with fixed assets.

“[Environmental is] a marketplace that historically was retail, but it has specifically benefited from being in the wholesale marketplace because the world has become an ever more complex place, and we have been able to provide solutions that align with the needs of the channel.

“We've brought on dedicated underwriting teams [and] we've developed and grown our own to be product experts.

“Then when you look at the wholesale marketplace, it’s really been an explosive growth area for them too. It really fits right into our strategy,” Johnson detailed.

Concerns over per- and polyfluoroalkyl substances and other so-called forever chemicals, and evolving technologies regarding carbon sequestration will drive further environmental insurance business to the E&S market, Johnson suggested.

“These and other environmental challenges are driving innovative insurance solutions that provide a great deal of value in the wholesale market,” Johnson said.

Aside from healthcare and environmental, Johnson highlighted wood frame builder’s risk, private market D&O and other financial lines as other areas of opportunity for Ironshore to build out its operation.

Standalone terrorism a growing interest

Standalone terrorism coverage is another business line attracting interest, Johnson noted.

“We view these products as an opportunity for growth,” the executive said.

“Standalone terrorism coverage is a space where we're seeing more and more decoupling from the property policy in the US given the environment we’re in.

“We’re really seeing it in two different spaces – one is with clients who have significant riot exposure, like inner city risk in New York, Chicago, LA, etc. And then the other area is clients with heavy cat exposure – banks typically require terrorism insurance as part of standard lender practices in these instances.”

Property and cyber lead the way

The E&S space is seeing a lot of activity and need in the property and cyber lines, likely because of the growing complexity of risk in these two areas. Clients are searching for solutions for these exposures at a time when capacity can be hard to come by.

As Johnson noted, an increase in both the frequency and severity of weather-related losses has resulted in property insurance returns reducing, and that has led to carriers constricting capacity.

“The catastrophe-exposed property market has been tremendously difficult to navigate,” said Johnson.

“When you take the combination of losses, plus how inflation has impacted property valuations, and the returns, or lack thereof, in the reinsurance and insurance-linked securities markets around cat property, it has become increasingly difficult to navigate.”

Despite those challenges, Johnson said the increased weather-related losses and the constricted capacity has created opportunities for Ironshore on shared and layered products, as well as bespoke policies.

Cyber is another major focus for Ironshore, and the wider Liberty Mutual business is positioning itself to play a more prominent role in the sector going forward.

“We actually think the cyber market, over time, will be every bit as large as, if not larger than, the property market in terms of premiums deployed,” said Johnson.

Given the opportunities in the space, Liberty Mutual GRS in February launched a global cyber office under the oversight of Liz Geary, with the company currently in the process of hiring a global cyber head.

“The idea there is really to change how the industry thinks about cyber and to offer a suite of pre-assessment and risk prevention products to our insureds,” said Johnson.

Ironshore, Johnson said, generally writes in the excess cyber market. But the launch of the cyber office means it is now seeing where else it can play in the space, including potentially in the primary segment.

“Building the suite out gives us much more possibility,” said Johnson. “One of the major design principles [Geary] has in her business unit is the idea that we're going to be a consultative advocate that you also buy insurance from.

“[It’s an opportunity] to continue to add value by helping customers identify risk, mitigate risk, and how to handle risk.”