NAPSLO Daily asked wholesalers attending this year's Mid-Year Leadership Forum: What are you doing differently in 2010?

Matt Nichols, president of All Risks Ltd. in Hunt Valley, Md., said 2010 marks a reversal of cautious approaches to hiring and acquiring at his firm.

Looking back on the recent past, he said his firm realized somewhere between late 2007 and early 2008 that growing at the level it had been--25 percent annually over the 15- to 20-year period dating back to the late 1980s--"had a different set of challenges."

"I think everyone went through that--changing maybe a little bit how they hired, altering how long they were willing to give a project, whether it was a hire, a group of hires or an office." Wholesalers generally, and All Risks Ltd. in particular, looked harder at "how long they were willing to allow those projects to continue not making money" throughout 2008 and most of 2009.

Mr. Nichols said the strategy began changing at All Risks Ltd. in fourth-quarter 2009. "The reversal we have had since [then] and into 2010 is really shifting back into high gear with hiring." He added that hiring runs the gamut "from straight out of school [in] our university program, where we hire from insurance-type universities, to hiring seasoned people in the industry."

On that end of the hiring spectrum, he said that "today's environment probably has the best group of people you could look at from a resume experience, with so many people being out of work. So we're aggressively moving into that hiring mode and trying to grow the business organically, something we'd gotten away from over the prior 24 months."

Alan Jay Kaufman, chairman, president and chief executive officer of Burns & Wilcox in Farmington Hills, Mich., said his firm has also stepped up hiring activity. "We have increased our resources in acquiring talent at all levels from college graduates to very experienced brokers."

Mr. Nichols said, in some ways, his firm may benefit from the struggles of competitors in 2010. "So many of our peers out there are making cuts--whether they're looking to sell their operations, or they're looking to pare down because they're owned by a venture capital firm or a bank."

"We're in the fortunate position that we're privately held and still one of the larger brokers in the country, and we're able to continue to reinvest" for opportunities that may bear fruit "three and five and ten years down the road, rather than thinking about simply today," he said.

Asked if the activities of peer firms would prompt All Risks Ltd. to buy any of them outright, Mr. Nichols responded that the group of potential targets is limited. "I think the peers that are cutting back that I would consider are certainly way too large for us to acquire," he said.

Firms that are one-half or one-third the size of All Risks Ltd. "would be the small group of peers that are out there...from a size-of-business standpoint. There's not a whole lot between $500 million and $1 billion in premium--a handful at most. That's the area that we fall in," he said.

"I think that an acquisition would tend to be either a group of people or a small business in a geographic area where we see a fit for ultimate long-term surplus lines business growth," he concluded.

Kevin Westrope, president and chief executive officer of Westrope in Kansas City, Mo., said his firm actually grew about 5 percent in 2009. "That really is a result of just a lot more face time right now," he said.

"Our brokers are traveling heavily and are seeing customers on a pretty regular basis," he said. In addition, "we've always handled our expenses to a level that allows us to keep everybody pretty much employed on a long-term basis," he said.

Mr. Kaufman highlighted cross-selling as a strategy in place at Burns & Wilcox. "We have institutionalized cross-selling in our organization," he said. "Our people now look to make sure that we are writing as much of the available lines of business on a given account [as possible], rather than just a single coverage."

Mr. Westrope noted that his firm entered into the binding authority arena over the last 24 months, with the initial build-out in this segment coming in the states of Florida and California. That was "really an attempt to diversify our revenue stream away from just simply open-market brokerage," he said.

Mr. Nichols said All Risks Ltd., unlike some other firms, already has three premium-producing platforms--brokerage, binding authority and national programs, with roughly one-third of premiums coming from each one.

"Depending on the market, you may have a great opportunity to grow large-account brokerage [or] a great opportunity to grow binding authority," he said. He believes that "today's market is probably most conducive to setting up and driving new program growth."

"We've been particularly focused over the last 12 months on bringing in new programs, bringing in the talent to manage those programs from an underwriting, quote, bind and issue standpoint for our carrier partners, [and] we'll continue that in 2010 where we really push the programs side of the business.

"That gives our brokers, our binding authority people, when they go out and market, something to talk about as a true differentiator--us versus our peers out there, because we've got exclusive products for about 20 different classes of business," he continued.

Programs recently kicked off include an architects and engineers program and a real-estate owned product, he said. The REO product, he said, is one "we had been dabbling in for a number of years, but now we've gone out and hired a full team to run and manage that product. And we've seen significant growth over the last 90 days as the banks have taken on more and more properties that they didn't necessarily intend to own," he reported.

David Price, executive vice president and chief underwriting officer of Burns & Wilcox, observed that "not all of the E&S market is contracting," adding that his firm is focusing on areas of growth such as personal lines.

Mr. Kaufman said, "We are concentrating on product niches where there is less commoditization." Providing an example of a commoditized product, he said "there are dozens of companies that want to write primary general liability, including many in the standard market."

Mr. Price added, "We are delving deeper into our marketing efforts for greater penetration of our agents. We are constantly developing and repackaging new products to meet the needs of the changing environment."

Special Reports /

NAPSLO Brokers Get In Gear For 2010

Related Stories

Recommended For You