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Conning's 2025 Fronting Insurance Study Overview

On June 26, 2025, Conning, Inc. unveiled its fourth annual report on the fronting insurance market, titled "Fronting Model Is Here to Stay… With Some Changes." This comprehensive analysis sheds light on a pivotal segment of the property-casualty insurance sector, detailing the maturation and evolution of fronting companies amidst an increasingly complex landscape.

Growth Amid Maturity

Alan Dobbins, a Director at Conning, emphasized that the fronting model is moving from its nascent stages into a more mature realm. The year 2024 marked a significant milestone, with gross premiums written by fronting companies experiencing a notable growth of 26%, culminating in $19.6 billion. However, this growth belies a concerning trend: many of these companies are still heavily concentrated by their lines of business, their customer bases, and their reinsurance support structures, leading to a stratified market.

Key Findings from the Report

1. Expanding Fronted Premiums: Fronted premiums have surged to account for over 20% of total premiums produced by Managing General Agents (MGAs) and nearly 11% of the entire excess and surplus (ES) market.

2. Improved Loss Ratios: While the direct loss ratio within this sector saw slight improvements in 2024, adverse developments in losses continue to plague many firms. Concurrently, the direct expense ratio has climbed, highlighting rising operational costs that could impact profitability.

3. Shifts in Reinsurer Panels: The dynamics within the reinsurer panels are evolving, with a noticeable increase in the share held by collateralized markets even as some traditional markets scale back their fronting exposures.

4. Retention and Leverage Trends: Premium retention dipped slightly in 2024, contrary to expectations, while leverage among companies rose as they scaled operations.

5. Challenges of Discontinued Business: As many fronts grapple with the repercussions of discontinuing business lines, the impact on both growth and profitability trajectories is increasingly evident.

Dobbins remarked, "The fronting market is transitioning from a race for scale to a race for operational excellence." This observation underscores the necessity for fronting companies to invest more heavily in infrastructure, governance, and stringent underwriting practices as MGAs become increasingly selective and reinsurers demand greater diligence.

Addressing Structural Challenges

The study further elucidates the structural challenges prevalent in the fronting sector, such as concentration risks, difficulties in differentiation, and the limited exit strategies available for private equity-backed fronts. Despite these hurdles, Conning remains optimistic about the future for fronting companies that can demonstrate sustainable profitability and a commitment to operational maturity.

Conclusion

In summary, Conning's 2025 report on the fronting insurance market articulates a clear narrative of growth intertwined with significant challenges. The necessity for operational excellence, alongside adapting to market demands, will be central to the ongoing evolution of fronting insurance. For those interested in digging deeper into this comprehensive report or requesting a full copy, further details can be found at www.conning.com or by contacting Conning directly at (888) 707-1177.