Following the acquisition of Hiscox MGA Marine (HMM) business by Nexus Group (Nexus) via an asset purchase into Millstream Underwriting Limited (Millstream), SuperyachtNews speaks with representatives from HMM and Nexus about the conditions leading to the acquisition and the current state of the superyacht insurance market.

“Nexus is a group that has grown by acquisition as well as organic growth, but we are not in the business of wholesale growth for the sake of it, it needs to fit into a clear strategy that, as an MGA, revolves around specialist lines of business,” starts Tim Brangwyn, Group COO of Nexus. “We are focussed on those areas where we can demonstrate clear value, whether that is through particular expertise or specific products that are designed to be flexible and fit the requirements of our clients. The acquisition of HMM has certainly ticked these boxes. Additionally, we believe that HMM complements a number of lines of business that already exist within the Group, as well as the team fitting within in the culture of our business in so far as they are looking for new opportunities, adapting and developing to meet the needs of a changing market.”

“While Hiscox has supported HMM’s development in our five years there, the focus of many of the very largest insurance businesses has shifted towards their core lines,” explains Paul Miller, director of marine underwriting at HMM. “As such, finding a new owner for HMM that would continue to invest in the business’ development was an incredibly motivating factor for us. We had conversations with a number of interested parties, but from the very beginning Nexus was a frontrunner.”

Unlike the very largest insurers in the world that typically focus on extensive core markets, the MGA model is seemingly more suited to the needs of the superyacht market in so far as it allows the underwriters more scope to get close to the clients – which in the superyacht market typically require a higher level of service than one might expect in the more transactional commercial marine markets – and develop customisable solutions in a market that is at its core, bespoke.

As the focus of the major insurance underwriters continued to shift away from niche markets and towards their core lines, certain superyacht underwriters have increasingly looked beyond the major providers for the fruition of their long-term growth plans, a process which has been hastened by the challenges posed by Brexit.

“In essence, insurers are now required to have structures in place to ensure that they can continue to provide products and services to policyholders with EEA risks. This is something that Hiscox did early, by preparing for “any eventuality” Brexit but approaches vary. Lloyd’s has set up Lloyd’s Brussels to be its head office and it has since transferred the original business’ assets and liabilities to the European business. This movement towards Europe has triggered some of the movement we are now seeing in the insurance community across insurers, underwriters and brokers. For the smaller more specialist enterprises, it has been more cost-effective to join larger businesses with proven European operations than it has been set up a new operation individually. With Nexus already having a strong footprint in Europe, as well as the excellent synergies between our business, the acquisition of HMM has covered all bases.”

While HMM’s operations will now fall under the Millstream brand, the products upon which HHM has built its reputation, including Yachtsure24, will retain their names as a clear indication to HMM to continue doing what it is doing.

“From my point of view, part of the reason that we have kept the product names is that we don’t want a huge amount to change because the team were doing extremely well beforehand,” continues Brangwyn. “The only real change will be a change of branding to Millstream and our continued investment in the team and the business, and we plan to announce some interesting developments in the second quarter of this year. These announcements will focus on risk management in order to help our clients protect their assets, with a particular emphasis on technology to make information more accessible and meaningful, as well as some expansionary information on our part, especially in continental Europe.”

Following the hurricane losses in 2017, which had a large impact on the whole yacht market globally and is largely accepted to be the straw that broke the camels back in terms of the unsustainable pricing of superyacht insurance premiums, the market shrunk rapidly as insurers exited the market and prices began to increase. In both 2019 and 2020 premiums increased by 20 per cent-plus and Miller expects this trend to continue in 2021, albeit at a slower pace. With the market shrinking, in conjunction with increasing premiums and a shift in focus on the part of the large insurers, it has provided superyacht underwriters with the necessary conditions to keep pushing on price, however, there has been an adverse impact on the market’s total capacity to underwrite larger lines of business and to take on risks on a 100 per cent basis.

While Brexit has clearly been a factor in the acquisition of HMM, both Brangwyn and Miller reiterate that it was not the defining factor. Rather, with the synergies between the two companies and the willingness on the part of Nexus to invest, it is hoped that the result will be a superior product that is perfectly suited to cater to the needs of an evolving superyacht industry. Indeed the acquisition of HMM is Nexus’ 18th acquisition since its inception and is another step towards growing from a $500m GWP MGA today to a $1billion GWP MGA in 2023.

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