Specialty insurer James River is set to end its relationship with Uber-subsidiary Rasier at the end of this year.
Bermuda-based James River made the announcement on Tuesday evening, informing the market that it has delivered “a notice of early cancellation, effective December 31, 2019, of all insurance policies issued to its largest customer Rasier LLC, and its affiliates”.
Rasier is one of the operating entities of ride-sharing company Uber. In a note earlier this year, Compass Point analyst Bijan Moazami highlighted how Uber accounts for almost 45 percent of James River’s E&S segment’s gross written premiums.
In 2018, James River's E&S gross written premiums totalled $656.5mn.
In its statement released on Tuesday evening, James River explained that it was cancelling all insurance policies issued to its largest customer on 31 December after taking a bruising reserve charge linked to the account.
The bulk of the policies related to this account were due to expire on 29 February, 2020.
James River chairman and CEO, J Adam Abram, said: “This account has not met our expectations for profitability, and we think it best to terminate the underwriting relationship as of year-end.”
James River anticipates pre-tax adverse development of $55mn to $60mn, net of reinsurance and reinstatement premiums “primarily related to its commercial auto line of business… for the 2016 and 2017 underwriting years”.
Between $45mn and $55mn of the reserve charge relates directly to James River’s commercial auto book, with an additional $10mn hit linked to unrelated casualty reinsurance losses, the company said.
Questions over the future relationship between Uber and James River were raised earlier this year by Compass Point analyst Moazami when he suggested James River would lose Uber as a client.
James River’s move comes amid a crisis of profitability in commercial auto underwriting, with claims frequency and severity in the sector having soared. Various companies in the admitted and specialty E&S market are now taking a far closer look at their commercial auto books of business.
Ride-share company Uber hosts the world’s largest network of taxi drivers, with 41.8 million customers actively using the app in the US last year. Its insurance programmes are brokered by Aon.
James River’s Uber deal covers several US states including California and Pennsylvania. Other carriers that provide coverage to Uber drivers are believed to include Allstate, Progressive and Farmers.
The cover is provided to Rasier, an operating subsidiary wholly owned by Uber, and its affiliates.