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Surplus lines market waits to see impact of Berkshire Hathaway specialty unit

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The excess and surplus lines market is still waiting to see the impact of Berkshire Hathaway Inc.'s entry into the market, say observers.

Omaha, Neb.-based Berkshire in June announced the operational launch of Berkshire Hathaway Specialty Insurance, which will focus mainly on U.S. excess and surplus lines business.

Ronald S. Austin, chief operating officer of Los Angeles-based wholesaler Worldwide Facilities Inc., said that while it is too early for it to have had a significant impact, Berkshire Hathaway's entry “will impact the market the same way (as when) any other company that's heavily capitalized enters the market.”

Timothy W. Turner, Chicago-based president and CEO of R-T Specialty L.L.C, a division of the Ryan Specialty Group L.L.C., said: “They're entering the market very methodically and strategically. So far, there's no significant impact.”

James Drinkwater, property/casualty brokerage division president of AmWINS Group Inc. in New York, said Berkshire Hathaway has a “very talented group of underwriters. I think they're going to approach the opportunity that they have now in a very disciplined fashion. There's certainly no rush mandate for them to write a lot of business, but I'm sure they're going to pick their positions and do it successfully.”

“I don't believe that I would say it's had an impact at the moment,” but “it will provide a welcome alternative to certain markets that are currently operating in the E&S sector,” said Randall G. Goss, chairman and CEO of wholesaler U.S. Risk Insurance Group Inc., based in Dallas.

Enrico Leo, vice president at rating agency Moody's Investors Service Inc. in New York, said Berkshire's entrance is more likely to affect larger accounts than the many smaller, niche players that operate in the market.

“The broader question is the entry into the excess and surplus lines by nontraditional players,” said Tracy Dolin, director at Standard & Poor's Corp. in New York. E&S is an easier market to enter because it is “generally written on nonadmitted paper. You don't have as many constraints” as with admitted business, said Ms. Dolin.

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