The MGA said it will instead focus on business where Pioneer can provide differentiated value through expertise and distribution

MGA Pioneer Underwriting is placing its Lloyd’s syndicate into run-off, saying it was “no longer economically viable” compared with its other capital arrangements.

The move comes despite a dramatically improved year-on-year performance for its Syndicate 1980, which posted a 96% combined operating ratio for this year compared with 130% in 2018.

”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,” it said in a statement.

To achieve the improved results, Pioneer said it had withdrawn from certain underperforming lines and had completed a wide-ranging exercise to improve its ”strategic and capital options” for 2020. Its core underwriting had been fixed to ”focus on business where Pioneer can provide differentiated value through expertise and distribution”.

The MGA will be working with Asta, the managing agent for the syndicate, to ensure a smooth run-off and ensure brokers and clients would be transferred to other capital providers, it added. 

Pioneer underwrites for 20 capital providers, and renewal of these facilities was underway, it said.

”The largest facility has been finalised, and commitment of support achieved in many other cases.

£200m GWP target

”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 potential investors who are attracted to the underwriting services organisation,” it added.

Group chief executive Andrew McMellin 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.”

MGAs and insurers have suffered troubles amid tightening capacity, claims piling up in liability classes and a Lloyd’s crackdown on underperforming lines.

Last week, Vibe Syndicate went into run-off.

MS Amlin has pulled the plug on nine classes of UK business.

Brokers expressed their shock in May after Aspen Risk Management Ltd went into run-off.

The tightening capacity has meant MGAs securing backing has become much harder, but Aqueous Underwriting scored a victory last month after Qater-based QIC rallied behind it in a long-term deal