Underwriting agency Epsilon has brought the Wellington and Aster businesses into the fold, in a merger that will deliver efficiencies for an expanded group focused on clients with complex risk exposures.
Wellington came under the Epsilon brand from November 1, with Aster scheduled to follow soon after, creating a business with about $150 million in gross written premium, more than 50 staff and an expanded footprint.
Epsilon chief executive Morgan Long says the three businesses are culturally aligned and bringing them together to gain operational and compliance benefits, plus broader capabilities, makes sense.
“The Wellington and Epsilon teams were writing similar business, so bumping into each other a little bit, and you’re stronger together than you are apart,” Mr Long tells Insurance News. Some team members already knew each other and some had worked together previously. “There’s a mutual level of respect there, and the same on the Aster side,” he says.
The merger of the agencies was announced earlier this year. Sydney-based Epsilon is the largest and longest-established of the three.
Epsilon was a four-person business when Mr Long joined a few years after its foundation in 2001. He has led the agency since 2015 and GWP reached about $105 million before joining with Wellington and Aster.
The agency has a casualty focus, with products including a combined professional indemnity and public liability offering.
It is active in the construction sector, and in property specialises in medium to higher-hazard risks.
Wellington launched in 2018 as a liability specialist and branched out to property in 2020. It is known for a labour force product aimed at businesses such as labour hire and recruitment agencies. Directors Rob Hunt, Peter Gibb, Megan Sheehan and Kevin Corkery are continuing with the combined business.
Aster Underwriting targets the marine, security industry, and pest and weed control sectors. It has been operated independently by Nathan Kerr, with three staff, for more than a decade.
“The ability to tap into a larger group with more extensive resources will streamline things for us and give us additional capacity and knowledge,” Mr Kerr said when the merger was announced. “Together, we can cover many different business classes with decades and decades of experience.”
The agencies are supported by 24 Lloyd’s syndicates and four local insurers, with 12 binders across the three businesses.
Epsilon and Wellington have brought their Sydney staff together into one office and moved Brisbane operations into larger premises. Aster adds its Newcastle base, and Wellington brings a presence in Tasmania and Victoria. The combined business has clients across Australia.
Epsilon had already expanded in specialty before the merger, last year recruiting Michael Di Veroli to head the new division. He has held senior roles with international insurers and brokers.
“If you can pop it on a platform and it delivers three quotes in two seconds, it’s not the sort of business we write.”
Mr Long says Epsilon can take on medium to higher-hazard complex risks that the market may struggle to underwrite, and it will look to provide a sustainable program structure to support risks into the future.
“We’re in quite a unique space where we touch across some of the agency business and also the major insurer business,” he says.
Epsilon operates mainly in the mid-tier area, targeting sectors such as manufacturing, construction and mining. Some straightforward or “vanilla” business is picked up along the way, but the focus is on conversations with brokers and clients on risks for which a deeper dive is required.
“We say to the market, if you can pop it on a platform and it delivers three quotes in two seconds, it’s not the sort of business that we write,” Mr Long says. “I feel we provide a great level of service and a solution, sometimes on a tricky account that the market might not understand or want to support. We’re happy to get down and dirty to find out exactly what the client’s doing so we can make sure we’re writing that business in the most appropriate way.”
Epsilon, which aims to provide consistency through market cycles, maintained its appetite when “rates were going through the roof” and others were pulling back. Currently, the market is cooling a little, and the construction sector has faced some tough economic conditions, but Mr Long says the business remains well placed given its long-term focus and the more complex risks it targets.
“We don’t want to write an account for one year, we want to write it for 10 years, and being sustainable and managing that cycle with our clients, I think, puts us in good stead as the market softens, because a lot of our clients are long-standing,” he says. “We’ve got clients that stretch all the way back to 2001 that are still with Epsilon that have grown drastically over the years, and we’ve managed to grow with them.”
Epsilon has received strong backing from capacity providers, with some binders including insurer support dating back 18 years.
Following the three-way integration, Epsilon, which is part of the Ardonagh-owned Envest Group, will be looking to expand the product range. Acquisitions may be considered, and IT and digital enhancements are on the agenda.
Mr Long says the merger also brings relationships with a broader broker network.
“The business has grown organically, but we are now excited about the next chapter when we get to bring Wellington and Aster into Epsilon and work closely with like-minded underwriters increasing our market offering,” he says.
Originally published at - The power of three – Insurance News Magazine
