By Michael Loney

June 12 - (The Insurer) - Vantage’s insurance CEO is bullish about the growth opportunity in its healthcare, casualty and construction practices, as well as the U.S. large property business it launched last year.

Vantage was established in late 2020 and launched its insurance operations the following year.

In an interview at the recent RIMS Riskworld meeting in Chicago, Vantage insurance CEO Alex Blanco said that about 80% of the company’s insurance business is excess and surplus lines, and highlighted the high volume of business that has shifted into that market.

“We’re really leaning into those areas that we deem to be most suitable for our lines of business,” he said. “On the insurance side, we are largely an E&S writer. There's a structural change in the E&S market given all the complexities that are going on right now, geopolitical or what have you.”

Blanco highlighted Vantage’s launch of a U.S. large property offering last year. He said that the property market has changed “fairly quickly” recently.

“We're certainly seeing rate pressure. However, the underlying economics and the underlying metrics of what we're targeting are still at a very rate-adequate level, I would even argue a highly adequate level,” he said.

“So we see a lot of opportunity there. We just have to be mindful of where we want to trade, because there is a lot of market pressure.”

U.S. large property is one of Vantage's 10 insurance businesses, alongside casualty, construction, cyber and E&O, financial lines, healthcare, management liability, and political risk and credit in the U.S., and casualty and financial and professional lines in Bermuda.

When asked which areas offer the biggest opportunity, Blanco said: “We’re going to see the most growth year over year in our healthcare practice, we're going to see growth in our casualty practice, and we're going to see growth in our construction practice.

“Those are areas that we still deem to be highly adequate, good trading environments where terms and conditions are favourable, and that's where we're going to be pushing.”

Blanco reported that Vantage is securing double-digit rate increases in its healthcare practice. He said that there is “long overdue” pressure on large hospital systems, which Vantage now views as an opportunity.

“We can offer short limits where terms or conditions are far better than they were two, three, even five years ago,” he said.

In casualty, Blanco said that “loss trend is a real thing”, meaning upward pressure on rates needs to be maintained.

“But I'm also trying to get more than loss trend because there are thermonuclear awards, there are issues going on in the market that we have to address, and the only way that can be addressed is by having an industry that recognises the perils of casualty, which requires more rating,” he said.

“We’re going to continue to see these difficult rate increases, unless something dramatically changes in the market where we're not seeing these thermonuclear awards.”

Blanco added that the individual property practice will also see more growth year over year, but noted it is starting from a smaller base. The large property business focuses on highly engineered industrial manufacturer segments.

“We have a better view of that risk over the long haul versus some of the coastal exposures that I know many are going to have issues with in the long term,” Blanco said.

In contrast, Vantage is not looking for a lot of growth in financial lines because of the trading environment in the class. However, Blanco said better decision-making is starting to return around rates for financial lines.

“Two or three years ago you were seeing double-digit rate decreases, and now you're seeing low-single-digit rate decreases and in certain cases a flattening of rates,” he said.

Blanco also said rate decreases are slowing down in cyber but cautioned that there have been some large ransomware matters that have hit that market recently.

“We’re fairly confident that (cyber’s) taking a path to where we still see rate adequacy,” he said.

VANTAGE GROWS GWP TO $1.4 BILLION IN 2024

Blanco said that Vantage wrote $1.4 billion of gross premium in the 2024 fiscal year, and has about $1.5 billion of investor partnership capital available to deploy in 2025.

The executive said that Vantage increased its submission count 60% year over year on the insurance side last year, although it did not increase its quoting percentage. He noted that Vantage is still small and nimble and can adapt its insurance portfolio quickly because it leans into the E&S market.

“From the industry, I don't think you're going to see a vastly different underwriting result year over year, but for Vantage we're definitely going to be seeing improved results year over year," he said.

When affirming Vantage’s A-minus rating in February, AM Best said that the overall group over the previous two years had achieved operating profitability but was yet to achieve a full-year combined ratio below 100%.

AM Best expected Vantage’s full-year combined ratio for 2024 to continue to benefit from changes such as moving property catastrophe business off the balance sheet through its ILS vehicle.

“As the group continues to execute its business plans, the reinsurance portfolio has become relatively smaller than the primary portfolio; and thus, has less of an impact to its bottom line,” AM Best said.

Vantage was launched with capital from Carlyle Group and Hellman & Friedman, together with the (re)insurer’s management.

There has been a recent pick-up in IPO activity for insurance carriers, such as Aspen. Blanco said that an IPO “is one of many simulations that could occur” for Vantage in future “but there's no window”.

“There are multiple simulations for a privately held company,” he said. “There is no timeline for a monetary event, whether it is our PE investors looking to monetise through another PE or an IPO or an acquisition. All of those are simulations that can occur at Vantage but right now there is no window whatsoever.

“We want to make sure that what we are building is durable and the rest will take care of itself.”

Blanco said that Vantage is still a young company.

“We have very patient investors, and they are in lockstep with us in terms of (saying), 'Build what you think is going to create the most amount of value and we'll worry about the other stuff when the time comes.' So there's been no pressure whatsoever,” he said.