Since launching, Acrisure Re’s facultative reinsurance business has doubled its revenue every year – a testament to the external trends shaping market conditions.
In a recent interview with ReInsurance Business, Jen D’Arcy (pictured), EVP of facultative reinsurance at Acrisure Re, explained how the market is evolving. During the prolonged hard market, rising costs made facultative reinsurance more expensive, leading insurers to carefully consider how much coverage to purchase. Now, as the market softens and prices begin to ease, insurers are rethinking their buying strategies, balancing the need for protection with the improving affordability of coverage.
“The rising rates make it harder for cedents to justify purchasing coverage for lower layers of risk, pushing them toward alternative strategies such as retaining more risk or only buying coverage for higher layers,” she said. “We’ve been in that situation of a hard market cycle which has been a bit more restrictive. However, we’re now facing a situation of overcapacity and what I would call a lack of ‘market-moving capital events’.
“Despite significant events like Hurricanes Helene and Milton, the Baltimore Bridge collapse and geopolitical conflicts in Europe and the Middle East, the market has not experienced enough truly catastrophic events to absorb the excess capital. This overcapacity in the market, with more capital chasing relatively few large claims, has softened FAC pricing. This situation presents an opportunity for cedants to re-evaluate their strategies and take advantage of lower prices to protect their portfolios with cost-effective FAC coverage.”
D'Arcy warned against the potential for loss creep from certain recent events as, if these losses turn out to be higher than initially estimated, they could still influence future pricing and capacity. However, for now, the overcapacity is allowing cedents to secure better terms for FAC coverage. That’s where her team sees the real opportunity, she said, because when the pricing starts to reduce, the first thing cedents do is go to the FAC market to see where they can protect their portfolios at a competitive price.
To truly stand out as a reinsurance broker in this space, at this juncture, requires a range of different skills and approaches – above all, the need to be energetic and informed. Reinsurance brokers need to bring energy and deep expertise to their specialty areas, she said, as it’s by being passionate and knowledgeable that they provide valuable insights and tailored solutions that truly address the unique needs of cedents.
She noted how she and her team have seen first-hand how being proactive and well-informed is the key to delivering cutting-edge reinsurance strategies that keep clients ahead of even the most newly emerging risks. Another core element is having a strategic approach to FAC. “FAC should never be treated as a peripheral product,” she said. “A successful broker approaches facultative reinsurance strategically, aligning closely with all business functions and understanding the broader risk environment.
“This allows us to offer integrated solutions that provide cedents with comprehensive protection and flexibility across their entire portfolio. In addition, it’s brokers who collaborate both internally and externally, leveraging the full resources of their firm, who stand out as true partners.”
As to what this looks like in practice, she highlighted how Acrisure Re is looking to challenge the market to deliver more innovative solutions. By integrating data-driven insights and advanced analytics, the brokerage has proved it is possible to deliver fresh approaches that break away from traditional methods and help cedents manage their risks more effectively.
D’Arcy also championed the need for brokers in the FAC space to be nimble and flexible. In today’s fast-paced and ever-evolving market, she said, nimble brokers who can quickly adapt to challenges are invaluable. “We focus on maintaining access to established capacity while also exploring new markets, ensuring that we have the flexibility to meet our clients’ needs as market dynamics shift,” she said.
“Finally, it all comes down to relationship building. Ultimately, strong relationships are at the core of success. Brokers who take the time to understand their clients’ portfolios and offer bespoke, tailored solutions become the go-to choice. At Acrisure Re, our dedication to long-term partnerships and consistent, reliable service has been critical to our growth and continued success.”
Addressing what’s top of her and her team’s agenda for the year ahead, she emphasised that they’ll be looking to leverage the benefits of a soft market – including more competitive pricing and enhanced terms. Acrisure Re’s goal is to ensure its clients capitalise on these advantages across their portfolios, she said, maximising protection and value in an evolving market environment.
“Education, education, education” is high on the agenda. “It might sound cliché,” she said, “but continuous education remains our priority, both internally and externally. We are committed to demonstrating how FAC can be a key tool for cedents to assist our clients, helping them negotiate higher limits, broader coverage, and potentially more competitive pricing, all while keeping their best interests at the forefront.”
Also front of mind is how to continue building strategic FAC partnerships globally. With Acrisure’s significant scale and expertise, the focus remains on collaborating with key clients to deliver bespoke solutions and ensure they are well-positioned to capitalise on market opportunities. “You’ll hear more about that going forward,” she said. “We plan to announce more strategic FAC partnerships as part of our broader global strategy.”
“Expanding our international footprint is a critical element of our growth strategy, enabling us to provide more diverse solutions for our global clients,” she said. “And finally, we’re getting out-and-about traveling so we can make the most of face-to-face interactions. We believe that being present with our clients is the best way to truly understand their needs. Our team is dynamic, ambitious, and dedicated to growth, so you can expect to see us at numerous conferences, events and international meetings throughout next year.”
