Integral ILS launches insurance partnership with Amwins & Core Specialty

Insurance-linked securities (ILS) fund manager Integral ILS Ltd. has now formally launched its property insurance partnership with risk origination and distribution specialist Amwins, and has announced that Core Specialty is set to act as the policy issuer.

The partnership between Integral ILS and Amwins had always been inevitable, as the strategic partnership had been in place for some time in various guises, coming to fruition under the Integral brand.

As we explained recently, this means Integral ILS Ltd. will be accessing catastrophe risk insurance through Amwins managing general agent (MGA’s) platform.

At the time of Integral’s launch in July 2020 we wrote that the ILS investment manager was set to leverage its strategic relationships to gain preferred access to sources of insurance and reinsurance business, with part of the plan being to access risk on a fully-fronted basis to begin either via an AmWINS MGA participant carrier, or through its other strategic partner reinsurance firm TransRe.

We had learned some time ago that part of the seed investment from Canadian pension giant the Public Sector Pension Investment Board (PSP Investments) was always destined to be deployed to Amwins MGA business, as the ability to shorten the market chain to access catastrophe risk from closer to the source was seen as attractive by this investor.

Now, Integral has formalised this arrangement, announcing the launch of a US property insurance focused initiative, with risks underwritten by Amwins and the policies issued through subsidiaries of Core Specialty Insurance Holdings, Inc.

The initiative will see ILS manager Integral assuming US catastrophe risk that has been originated from Amwins’ MGA platform.

Specific MGA’s included are Amwins Access, Seacoast Brokers, Special Risk Underwriters (SRU), and Unicorn Underwriting.

All of the policies will be written by Core Specialty insurance subsidiaries, each carrying an AM Best rating of A- (Excellent), Financial Size Category XI.

Integral said that this will result in a “broad, diversified portfolio”, featuring small commercial, personal lines, middle market, and large shared and layered accounts.

Funds managed by Integral will assume the defined natural catastrophe risks embedded in this business that has been originated through Amwins MGA’s.

Meanwhile, subsidiaries of Core Specialty, the recently launched recapitalised an rebranded excess and surplus lines (E&S) specialist underwriter, will retain premium and risk outside of the risk transferred to the Integral ILS funds.

This is typical of a fronted program arrangement, such as those seen in ILS previously. With the ILS fund manager attracted to the pure catastrophe risk component, but not wanting to assume the attritional risks, or the tail exposures and so the fronting carrier will retain this, Core Specialty in this case.

Integral sees this as a key milestone to access the broader insurance market chain through its strategic alliances with leaders in insurance or reinsurance risk origination.

“Access to property catastrophe risk through multiple channels is beneficial to Integral and our clients,” Lixin Zeng, Co-Founder and Managing Partner of Integral commented. “Being closer to the original risk enables us to gain access to exposure with greater data resolution, accuracy, and timeliness, resulting in better portfolio quality. We are excited to partner with Amwins and Core Specialty in this endeavor.”

“Amwins is committed to securing exclusive capacity for our retail clients,” explained Scott Purviance, Chief Executive Officer of Amwins. “This unique partnership provides them with access to long-term, efficient capital in a challenging property market.”

“I am delighted that Core Specialty will be working with the Integral ILS management team, who are well-known to us,” added Jeff Consolino, President & Chief Executive Officer of Core Specialty. “This new initiative is complementary to the capabilities of the Property Division that Core Specialty launched in conjunction with our 2020 recapitalization.”

This isn’t new to Amwins, who previously had a large program in place with ILS manager Nephila Capital, which put its reinsurance capacity behind a significant amount of the catastrophe risk originated by Amwins MGA’s.

It enables Amwins to deliver efficient underwriting capacity through its MGA’s, while the ILS manager Integral gets the natural catastrophe risk exposure it desires and Core Specialty provides the infrastructure for policy issuance and also retains the attritional exposure and tail, a win for all sides.

Program access to primary property insurance catastrophe exposure can be a significant driver of growth for ILS funds, with access closer to the source of the risk also helping them to avoid the reinsurance renewal process, reduce frictional costs in the chain and source risk all year around.

As such these relationships continue to play an interesting role in the ILS market, with benefits cascading right down to the policyholders, as efficient ILS capital supports their coverage more directly.