The Fronting Market: At an Inflection Point - 2023 Focus Series
Taking stock of events and developments over the past 18 months in the fronting world, one sees an incredibly active period:
- Growth has continued at a torrent clip.
- One additional player has entered; are others on the way?
- One front was acquired; two are for sale.
- Two fronts have ratings under review with negative implications.
- Challenges facing re/insurers apply to the fronting insurers, some disproportionately so—namely loss cost inflation, a tight reinsurance market, and lower capital.
The fronting market is at an inflection point. If the past three years represented the “heyday” for growth and investor sentiment, what is in store next?
Table of Contents:
- Where Will the Fronting Market Go Next?
- Extraordinary Growth Again in 2022
- Still Highly Concentrated
- Speaking of Consolidation
- Others for Sale
- Aside from Growth, How Are the Results?
- The Capital and Risk Equation
This Focus Series report represents Conning’s first piece dedicated to the fronting market. We have included a chapter on fronting in our annual MGA (managing general agency) study since 2019, which focuses primarily on which MGAs were doing business with the various fronting insurers. As the fronting market grew in number of players, the flow of premium dollars, and increasing interest in the space, we determined that a report dedicated to the fronting insurers and related developments was the best approach to cover this dynamic market. Our annual MGA Strategic Study will continue to feature a chapter covering the fronting market, which will include a summary of this fronting piece.