Celebrating its 50th birthday this year, Philadelphia Insurance Cos. has found five decades of success by hewing closely to the strategic vision of its founder, James Maguire Sr., who entered the industry as an agent selling life insurance to deaf people during the early 1960s.

“My dad identified that market as an underserved niche where he could differentiate himself,” says his son Jamie Maguire Jr., who now serves as chairman & CEO. “So he set up his own insurance agency and instead of being a generalist, he [focused on] certain areas where he had competitive advantages and developed creative products that set him apart.”

Today, Philadelphia pursues the same specialty strategy, providing P&C coverage to more than 100 niche markets spread among eight commercial sectors including health care, child-care facilities, nonprofits, security-guard services and automobile rentals.

Dedication to understanding its niches thoroughly is the hallmark of Philadelphia’s strategy—and this intimate, hands-on knowledge of the businesses it underwrites extends up into the executive suite.

The company’s second-biggest niche, for example, is sports programs, with Philadelphia offering dozens of products that cover everything from whitewater-rafting guides and martial-arts programs to recreation facilities such as archery ranges.

And its leaders are accomplished athletes themselves: Both Maguire Jr. and President & COO Sean Sweeney regularly compete in triathlons.

“If we’re going to be in that niche, it might as well be a passion,” Sweeney says. “We don’t want to be posers.”

This level of expertise exists across all the lines it underwrites and helps Philadelphia stand out in the minds of its clients.

“They really understand the nature of child care,” says T.J. Comeau, risk manager for day-care provider Bright Horizons Family Solutions. “They’ve established themselves as the player in this business.”

GROWTH STRATEGIES

To fuel its growth, the carrier seeks to expand into three new niches a year, most recently adding sleep-disorder research centers, gun stores and surety bonds to its lineup.

“Everything we do is a stair step off an existing product and niche where we have experience,” says Sweeney.

Philadelphia’s familiarity working with day-care centers and nonprofits, for instance, led it to expand into outpatient mental-health and addiction-treatment facilities.

In finding new niches, Philadelphia also relies heavily on its network of preferred agents—in keeping with the company’s agency origins. “It’s in our DNA,” Sweeney adds.

Internal committees then vet all new products and underwriting and help decide when exiting a market is necessary.

ONE-STOP SHOPPING & QUICK REACTIONS

Philadelphia bundles different products under one umbrella to give its niche clients a one-stop-shop—such as providing automobile policies for day-care operators—while also providing coverage for perils particular to a class of business that some other carriers typically avoid, such as sexual abuse and molestation.

“In the old days you had to go to an excess-and-surplus [player] with those kinds of exposures,” observes Doug Borden, co-founder and managing director of Borden Perlman Insurance, a member of Philadelphia’s preferred-agent network. “Philadelphia can be very creative.”

This bundling of products, analysts say, helps engender customer loyalty. “It keeps policyholders with the company longer,” notes Robert Farnam, senior vice president of equity research with Keefe, Bruyette & Woods. “They’re pleased that there’s something designed specifically for them rather than a standard package.”

Key to Philadelphia’s niche-based strategy is not only staying away from lines of coverage outside its comfort zone—it avoids Workers’ Compensation insurance, for instance—but also reacting quickly when a new niche fails to perform or an exposure becomes too great.

In the mid-2000s, for example, citing increased hurricane activity, it sold a division based in Florida that provided homeowners’ insurance; it also briefly entered the nursing-home arena but soon exited after deciding that sector offered more exposures than anticipated.

“They cut bait and ran,” says one agent in Philadelphia’s preferred network, requesting anonymity in order to speak frankly. “Some brokers might not see that as a positive, but I think it shows the management team is flexible, smart and can move quickly.”

“They’re reactive in a good way,” adds Paul Smith, executive vice president of carrier relations for Willis. “They have a laser-focused approach and they don’t want to be all things to all people.”

Special Reports /

Niche Rich: Philadelphia&rsquo;s Strategy Centers on Discovering, Dominating Specialized Coverages

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Niche Rich: Philadelphia’s Strategy Centers on Discovering, Dominating Specialized Coverages