Applied Underwriters targets major M&A and organic growth in 2022

Following a highly active 2021, expansive carrier and MGA platform Applied Underwriters has a pipeline of larger scale transactions and is also looking to drive strong organic growth this year, especially in the E&S market.

In a letter to stakeholders, Applied Underwriters chairman Steve Menzies and president Jamie Sahara described 2021 as a “pivotal year” for the company’s growth.

Menzies said that Applied Underwriters had been able to continue working “almost at full throttle” to add to its financial capacity, improve its stability and add new business units in the US and abroad, despite the challenges of uncertainty, inflation and societal ills for business organizations.

The executive, who led a management buyout of the company from Berkshire Hathaway in 2019, added: “We have added larger scale transactions into our pipeline, and we are hoping to close some bigger deals in 2022.”

Sahara, who has been a driving force in Applied Underwriters’ build-out since the 2019 transaction, highlighted continued E&S opportunities as a focus for the company, as he contrasted it with a domestic, traditional admitted market that is “way oversupplied”.

“Primary carriers [in the admitted market] are not attaining adequate rates nor reasonable terms and conditions. Conversely, we view the E&S market as quite attractive in some segments, and we expect the E&S market to harden further before leveling off,” he commented.

“Of course, E&S coverages are characteristically complex to underwrite. Continuing our successful efforts in 2021, Applied is well set to capitalize swiftly on changing market conditions and resulting opportunities,” Sahara continued.

As previously reported by this publication, Applied Underwriters has completed a series of acquisitions in the last 12 months as well as adding several underwriting teams to launch new MGAs on programs on its burgeoning platform.

In February it bought UK-based international MGA Concept Special Risks. The Lloyd’s coverholder has a strong market position in the US and Caribbean markets for motor yachts, trailer craft, sailboats and catamarans.

It also completed its acquisition of homeowners specialist Centauri Specialty and Oklahoma Property and Casualty Insurance Company in February, and repurposed its Texas Insurance Company for E&S lines countrywide.

Other acquisitions included Florida Casualty Insurance Company in March, a renewal rights deal from homeowners carrier Gulfstream and a deal to buy Alaska Timber Insurance Exchange in the fourth quarter, which is set to be converted into a stock insurance company.

On the MGA side of the business, major 2021 launches included Applied Financial Lines led in the US by former Validus Specialty CUO Stephen McGill and in Europe by Jeroen Claesen; Applied Specialty Underwriters with a team led by former Tokio Marine HCC executive Chris Day; Applied Underwriters Aerospace to join forces with the former PartnerRe D&F space team led by Jon Lewis; Applied Specialty Risk Construction; Applied Warranty & Insurance Services; and Applied Fine Art & Collections led by former AIG executives Ron Fiamma, Rand Silver and Christopher Walsh.

Applied Underwriters also entered into a partnership with Demotech in May to provide umbrella and excess coverages for up to 400 carriers with ratings from the firm.