Strategic update

Pioneer Underwriters (“Pioneer”) has completed a wide ranging exercise to examine optimal strategic and capital options for 2020 and beyond. Pioneer’s core operations, the underwriting services business (MGA), has been remediated to provide increased focus on business where Pioneer can provide differentiated value through expertise and distribution. This work has resulted in the withdrawal from certain lines of business over the past 12 months, which has been communicated to our stakeholders, and the results are already encouraging.

Underwriting performance at one of the group’s capital platforms, Pioneer Syndicate 1980, has improved significantly with a forecast 2019 underwriting year of account combined ratio of 96%, down from 130% in 2018. However, despite Lloyd’s approval of its 2020 Syndicate business plan with a small increase in underwriting capacity, Pioneer has determined that the cost of capital within the syndicate structure is no longer economically efficient when compared with its other capital arrangements. As a result, the board has decided not to proceed with the syndicate for 2020.

Pioneer will be working with Asta, the managing agency of Syndicate 1980, to ensure run off of the syndicate is achieved smoothly, and with brokers and clients to facilitate business transfer to replacement capital providers where appropriate.

As an underwriting services organisation, Pioneer underwrites on behalf of over 20 capital providers offering diversity of capital across its facilities. Renewal of these facilities is underway. The largest facility has been finalised, and commitment of support achieved in many other cases. Supported by both renewal and new capital, replacing a significant proportion of Syndicate 1980 capacity across a number of classes, Pioneer plans to write in excess of £200m gross written premium in 2020.

Pioneer continues to work with Canaccord Genuity as the business explores capital options for future growth, and is in advanced discussions with a number of potential investors who are attracted to the underwriting services organisation.

Andrew McMellin, group chief executive said

“As a result of this work, Pioneer is leaner and focused on providing the value to capital necessary to generate superior returns through the core underwriting services platform (MGA). In our view, customers, employees and shareholders are better served by Pioneer as a focused underwriting services organisation and we look forward to a successful 2020.”
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