The move is described as part of the company’s efforts to diversify its portfolio. The new MGA is expected to offer a wide range of cyber reinsurance products, including quota share, excess of loss, and aggregate stop-loss coverage, catering to clients ranging from local to global carriers.
The company is reportedly close to finalising capacity arrangements and is targeting a launch date of January 1st. This development follows the rollout of Coalition’s open-source cyber risk modeling tool in February 2022, which allows simulation of how a single cyber risk event can trigger a chain reaction leading to significant economic losses, including illustrating the potential for a nearly $30 billion insured aggregated cyber loss event. Coalition collaborated with academia to develop this systemic risk modeling tool, emphasising its ambition to be a thought leader in the cyber insurance segment.
In an environment where the appetite for (re)insurance has tightened, Coalition’s move is likely to be welcomed by cedants as it provides a new source of capacity. With cyber threat activity reaching all-time highs, many market participants anticipate a rehardening of cyber market conditions, particularly as upcoming cyber treaty renewals take place.
Notably, Coalition recruited John Coletti, the former Global Head of Cyber at Swiss Re, in May, and he has played a significant role in launching the new cyber reinsurance MGA. This marks Coalition’s expansion beyond its retail-oriented roots into portfolio-based cyber reinsurance.
Coalition’s co-founder and CEO, Joshua Motta, had previously expressed his firm’s ambitions to play a role in reinsurance, drawing parallels with RenaissanceRe’s history in the catastrophe reinsurance market. The company is considering various avenues for growth, including managing third-party capital through sidecars.
Coalition’s reinsurance operations are expected to be independently staffed and operate with a ‘Chinese wall’ in place, similar to existing major (re)insurance industry players that write both insurance and reinsurance. The company has taken several strategic steps, such as launching Coalition Insurance Company, partnering with Allianz, establishing Bermuda-based reinsurer Ferian Re, launching a captive as an additional source of capacity, and securing capacity deals with various insurers.
While Coalition has not ruled out raising additional capital, it currently faces no pressure to do so. The company is closely monitoring market conditions, particularly regarding IPOs, but is focused on making decisions that are in the best interest of the company.
Coalition’s plans to launch a new cyber reinsurance MGA represent a significant step in its strategy to diversify its portfolio and expand its presence in the cyber insurance market. This move aligns with the increasing demand for cyber insurance coverage in the face of rising cyber threats.
Original source: The Insurer
