Accelerant (ARX) Q3 2025: Third-Party Direct Premiums Climb to 32%, Accelerating Platform Diversification
Accelerant’s third-party insurer premium mix expanded to 32% this quarter, signaling rapid progress toward its platform-driven model and fee revenue growth. Strong member additions, robust net revenue retention, and disciplined risk management continue to power organic growth and margin expansion. The company’s outlook remains anchored in its ability to scale third-party relationships and deepen its data-driven competitive moat.
Summary
- Third-Party Shift Accelerates: Platform migration to third-party insurers is reshaping revenue mix and capital efficiency.
- Data-Driven Underwriting: Expanded data ingestion is fueling loss ratio outperformance and member growth.
- Pipeline Signals Durability: Record member pipeline supports confidence in premium and fee growth into 2026.
Performance Analysis
Accelerant delivered another quarter of double-digit growth across key metrics, underpinned by disciplined execution of its two-sided platform model. Exchange written premium reached $1.04 billion, with underlying growth of 29% after adjusting for two atypical member movements. Net revenue retention held at 135%, reflecting strong expansion from existing members—a critical signal of embedded growth and platform stickiness. Member count increased by 17 to 265, up 30% year-over-year, further expanding the platform’s future premium base.
On the capital partner side, third-party direct written premium rose to $336 million, now 32% of exchange written premium—up from 27% last quarter—as new insurers including Lloyd’s and Ozark Specialty were onboarded. The gross loss ratio improved to 50%, outperforming industry norms and reflecting the impact of Accelerant’s granular data analytics and risk selection. Adjusted EBITDA reached $105 million, with margins expanding to 39%, though this included $39 million in irregular investment gains. Excluding these, underlying EBITDA margin was 29%, up from 17% a year ago, showing operating leverage even as the business transitions toward more fee-based revenue.
- Premium Mix Shift: Third-party direct written premium now composes nearly a third of the portfolio, a rapid increase that is structurally reducing capital intensity and shifting revenue toward recurring fees.
- Margin Expansion: EBITDA margin gains were driven by both top-line growth and improved operating efficiency, with underlying profitability up sharply year-over-year.
- Loss Ratio Outperformance: The 50% gross loss ratio, aided by favorable property development, highlights the defensiveness of Accelerant’s small policy portfolio and data-driven underwriting.
Quarterly results reinforce Accelerant’s ability to drive profitable, capital-light growth while deepening its competitive moat through technology and network effects.
Executive Commentary
"What matters for the long run is that Accelerant's platform becomes the rails on which specialty insurance runs. Everyone at Accelerant feels the momentum building in the market. Attracting the best MGAs and making them better with our data and analytics and connecting them to deep, high-quality risk capital pools, ultimately, that's where we'll win and become the leading specialty insurance platform."
Jeff Radke, Co-Founder and Chief Executive Officer
"Our goal is to maximize the revenue associated with our Exchange Services and MJ Operations segments while continuing to keep our net retention near our 10% target. You will see from our segment results for the quarter that we are successfully executing on that strategy."
Jay Green, Chief Financial Officer
Strategic Positioning
1. Platform Migration to Third-Party Insurers
Accelerant is deliberately shifting its premium flow from owned insurance carriers to third-party insurers, with a medium-term goal of having two-thirds of business written by third parties. This transition is unlocking capital efficiency, reducing balance sheet risk, and increasing recurring fee revenue through its 8% exchange services take rate. The onboarding of new partners like Lloyd’s and Ozark Specialty demonstrates both execution capability and the attractiveness of the platform to high-quality risk capital providers.
2. Data Infrastructure as Competitive Moat
The company’s ingestion of unique data attributes more than doubled this quarter, from 23,000 to 57,000, fueling more precise risk scoring and underwriting. Accelerant’s use of AI-driven data agents to process unstructured policy and claims data is enabling granular, real-time insights that directly translate to lower loss ratios and higher member profitability. This data advantage is central to Accelerant’s ability to attract and retain top MGAs, member general agents, and drive organic growth.
3. Organic Growth Engine and Member Expansion
Growth is fundamentally member-driven, with 80% of premium expansion coming from existing MGAs and a record pipeline of $3 billion in annualized premium. The high net revenue retention rate (135%) and continued member additions provide strong forward visibility. The platform’s flexibility to support new products and niche exposures is further enhancing its value proposition and market reach.
4. Risk and Partner Diversification
Accelerant is actively reducing concentration risk, with Hadron’s share of third-party premium declining (expected below a third by Q4 2026) as more partners scale. The company is also cycling out smaller, less strategic reinsurance partners to allow larger ones to grow, ensuring stability and negotiating leverage in its capital base.
5. Fee-Based Revenue Model
The business model is shifting toward a capital-light, fee-based structure, with the exchange services segment generating a stable 8% fee on all premium. As more volume flows through third-party insurers, the company expects lower underwriting segment revenue but higher quality, less volatile fee income. This mix shift is designed to deliver sustainable margin expansion and resilient cash flows.
Key Considerations
This quarter marks a pivotal acceleration in Accelerant’s multi-year platform strategy, with execution on third-party migration, data innovation, and organic growth all tracking ahead of plan. Investors should focus on the durability of these trends and the company’s ability to maintain underwriting discipline as scale increases.
Key Considerations:
- Third-Party Premium Ramp: Execution on new insurer partnerships will determine the pace of capital-light fee growth and revenue mix transformation.
- Loss Ratio Sustainability: Continued outperformance on gross loss ratio is a direct result of data-driven underwriting and portfolio composition; any drift here could impact returns and partner appetite.
- Member Pipeline Execution: Conversion of the record $3 billion premium pipeline is critical for maintaining growth momentum into 2026 and beyond.
- Partner Concentration Risk: Ongoing diversification is reducing reliance on Hadron and strengthening the platform’s stability, but successful scaling of new partners is essential.
- Fee Income Visibility: The transition to third-party premium flow will lower reported underwriting revenue but increase recurring, high-margin fee income—a fundamental shift in the business model.
Risks
The principal risks for Accelerant remain executional: delays in member transitions to third-party insurers, potential loss ratio volatility, and overreliance on a handful of large capital partners during the migration phase. Regulatory approval processes for new products and partnerships could create timing uncertainty. As the platform scales, maintaining underwriting discipline and data quality will be critical to sustaining profitability and partner confidence.
Forward Outlook
For Q4 2025, Accelerant guided to:
- Exchange written premium of $1.06 to $1.1 billion
- Third-party direct written premium of $415 to $430 million
- Adjusted EBITDA of $57 to $62 million
For full-year 2026, management maintained guidance:
- At least $5 billion in exchange written premium
- $2.1 billion in third-party direct written premium
- $269 million in adjusted EBITDA
Management emphasized high visibility into premium flows, robust member pipeline, and continued margin discipline as supporting factors for guidance. The company expects the pace of third-party premium migration to accelerate, with a diversified partner base reducing concentration risk.
Takeaways
- Third-Party Migration Drives Capital Efficiency: Accelerant’s rapid shift to third-party insurers is structurally lowering capital requirements and boosting recurring fee income, supporting margin expansion and platform scalability.
- Data and Member Network Fuel Durable Growth: The company’s data infrastructure and high-quality MGA pipeline underpin industry-leading net revenue retention and loss ratio outperformance.
- Execution on Pipeline and Partner Diversification Critical: Future performance will hinge on the speed of new partner ramp and successful conversion of the record member pipeline into premium growth.
Conclusion
Accelerant’s Q3 2025 results highlight the accelerating transformation to a capital-light, platform-driven specialty insurance model. With strong organic growth, deepening data capabilities, and a clear roadmap for partner diversification, the company is well-positioned to sustain high-margin, recurring fee growth into 2026 and beyond.
Industry Read-Through
Accelerant’s results reinforce the growing importance of platform models and data-driven underwriting in specialty insurance. The rapid migration to third-party capital providers signals a broader industry trend toward capital efficiency and recurring fee revenue, reducing balance sheet risk for intermediaries. Insurtechs and MGAs that can deliver robust data analytics, operational flexibility, and access to diversified capital pools are likely to outperform as traditional carriers face margin compression and rising volatility. The company’s ability to attract and scale multiple high-quality partners—while maintaining underwriting discipline—sets a benchmark for others seeking to build capital-light insurance platforms.