Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Insurers jostle for position in trying market

Reprints

SAN DIEGO — Risk managers likely will continue seeing attractive insurance pricing through 2016 as insurers reposition themselves in a dislocated commercial property/casualty market.

Mergers as well as executive and operational changes by some major insurers have disrupted the market, and new and existing players are looking to take advantage of the situation.

Meeting at the Risk & Insurance Management Society Inc.'s annual conference this month, traditionally the year's largest gathering of commercial insurance buyers, insurers and brokers sought to position themselves in a changing market that has seen two major insurers — American International Group Inc. and Zurich Insurance Group Ltd. — realign their business after past struggles, while other significant players — Chubb Corp. and Ace Ltd., and XL Group P.L.C. and Catlin Group Ltd. — combined to create Chubb Ltd. and XL Catlin Inc., respectively.

But market moves have not changed pricing, with rates decreasing steadily in the past couple of years in many lines.

“Clearly, we are in a buyer's market. There's an abundance of supply,” said Marc R. Kunney, San Francisco-based president of North American operations at Integro Ltd.

Property insurance buyers are seeing rate declines, multiyear deals and multiyear aggregate limits being offered, said Mike Andler, New York-based executive vice president and property practice leader at Lockton Cos. L.L.C.

“The market continues to be soft, and the forecast is for it to remain soft. Most clients should be looking for a minimum 10% reduction in 2016,” he said.

Despite the soft pricing, the market is changing.

AIG late last year announced it was exiting some lines of business and shedding more than 20% of its senior staff.

Robert S. Schimek, executive vice president and CEO of commercial at AIG in New York, said the strategic roadmap the insurer has laid out shows that AIG will “continue to sharpen our focus and we'll sharpen our focus with respect to the products that we offer, with respect to the clients that we serve and with respect to the geographies that we focus on.”

AIG this year said it was exiting the pollution legal liability insurance market in the United States and Canada — of which it was one of the founders in the 1980s — but Mr. Schimek said that and reductions in other business lines represent only 2% of the insurer's global commercial net written premiums.

The company also will limit the products it offers in some countries, such as various coverages aimed at local customers, but it will continue to offer a full range of coverage for multinational policyholders in all countries in which it operates, he said.

The insurer will also likely end some client relationships, Mr. Schimek said.

“Where we have clients where we are only writing a single line of business, or maybe two lines of business, and that line or those two lines are not profitable, we have to ask ourselves the question of whether we would be better off again sharpening our focus and putting our resources on those clients where we do have a deep, multiline relationship,” he said.

Zurich, too, is making changes to its business. The insurer exited some lines and saw several senior executives leave last year after it announced disappointing third-quarter results, in part, due to losses from the Tianjin, China, port explosions.

“We did have some challenges around accumulations, particularly around Tianjin, that we are working to build better data bases to look at aggregations globally versus regionally,” said Michael T. Foley, CEO of Zurich North America Commercial in Schaumburg, Illinois.

The insurer will more closely examine the structure of the limits it offers, he said.

The changes are “less around whether we are on or off a customer, but (are focused on) actually structuring the transaction, particularly in the global corporate space, in a way that we have the right limits profile,” Mr. Foley said.

In addition, Zurich will examine its pricing structure. “We tier our accounts A, B, C, D where A and B are the best-priced accounts and C and D are less strongly priced accounts ... neither account is better or worse inherently. It's just whether we have the pricing right for the risk we are assuming,” he said.

QBE North America is further removed from its problems in 2012 and 2013 but also is seeking to reposition its business as it continues to recover. The Australian-owned insurer has reduced its total premiums to $5 billion from $7 billion three years ago.

“We repositioned the book of business, but we are now focused on building and growing,” said David B. Duclos, president and CEO of QBE North America in New York. “We are seeing more opportunities and are writing more new business.” It starts with people, he said. “The last six- to-nine months have been fortuitous for us because of the consolidation and companies that have stubbed their toes.”

Opportunities exist, in particular, in directors and officers liability insurance because Chubb and Ace both were big D&O insurers, and buyers don't want aggregation of risk, he said. Similar pressures have resulted in opportunities in professional liability lines due to the merger of XL and Catlin, he said.

Aspen Insurance, the insurance operations of Aspen Insurance Holdings Ltd., also is taking advantage of the market changes, said Mario Vitale, New York-based CEO.

“When you look at all the dislocation that's going on from all the mergers and acquisitions, it is creating opportunities for specialty insurance carriers like Aspen. I think the opportunity for companies like Aspen is in building our talent base,” he said.

Aspen Insurance has recruited several dozen staff in the past five months, including some well-known names in the industry, he said.

The recruits will enable Aspen to take a leadership position in several product lines, Mr. Vitale said.

Italian insurance giant Assicurazioni Generali S.p.A. also is looking to increase its share of the market. The insurer, which had limited its U.S. business largely to employee benefits and travel assistance insurance over the past several years, launched its U.S. commercial insurance business last year at RIMS.

Bill Skapof, executive vice president and chief underwriting officer of Generali's U.S. branch in New York, said it is seeking to offer coverage in select areas, which it plans to expand over the next several years.

Key U.S. market areas in which it is seeking to establish itself include property and construction, he said.

For global property risks, Generali will provide up to $250 million in capacity, Mr. Skapof said. “We want to put up meaningful capacity so that we have an influence on terms and conditions and pricing.”