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Christopher Schaper is CEO of the Schinnerer Group, Marsh & McLennan Cos. Inc.’s underwriting management group that comprises its global managing general agent and managing general underwriter business, including Victor O. Schinnerer & Co. Based in Bermuda, he joined Schinnerer from Montpelier Re Ltd. in September last year, having previously served in management and executive positions at a variety of insurers and reinsurers. Over the past several months, Schinnerer has made several significant moves, including the launch of an alternative capital vehicle, Alternus, which provides property insurance buyers with access to alternative capital, and the purchase of International Catastrophe Insurance Managers L.L.C., an MGA providing property catastrophe coverage. Mr. Schaper recently spoke with Business Insurance Editor Gavin Souter about those moves and Schinnerer’s global strategy. Edited excerpts follow.
Q: What was the thinking behind the launch of Alternus?
A: It was all about the client. What we were seeking to do with Alternus is to bring the benefits of alternative capital to the insurance buyer. Previously, it really wasn’t reaching the actual buyer of insurance, so when we set out it was all geared around trying to figure out how to provide the benefits of alternative capital to the actual buyer.
Q: How does it change what you’re offering to clients?
A: Schinnerer had primarily been more of a liability-oriented market, but Schinnerer is now incorporating both liability and property lines of business, and that allowed us to expand into this area. It also advanced the offerings of Schinnerer to also include the capabilities of providing alternative capital to the market itself. So both of those component parts were areas that created change for Schinnerer relative to the products that it offers to the market, and as we continue to move down the path, we’ll be thinking through both of those areas — how can we better offer property protection to the market, and how can we better offer different sources of capital to the market?
Q: Obviously, you’re launching it at a time when there’s plentiful traditional capital in the market. Is there a need for alternative capital?
A: For the buyers, I think it's important. You need to think about some of the benefits that it brings to the table. Alternus basically picks up 10% of the program that is generally placed in the market, so it’s not picking up 100%. But what it is doing, in terms of providing benefits to the buyer, is enhancing their security. It’s diversifying their panel for the capital that’s protecting them. It is focusing on key areas of protection that they need, providing very specific protection toward property catastrophe exposures. So that’s very important. Also, from a capital efficiency point of view, the capital that’s being applied has been more efficient versus balance sheet capital.
The money that tends to come into the alternative capital side has a different return threshold than balance sheet capital. The balance sheet capital will tend to have higher return requirements, and alternative capital will tend to have lower return requirements. So you’re able to pass on the benefit of that pricing difference.
Q: You recently bought International Catastrophe Insurance Managers; what was the thinking behind that deal?
A: ICAT itself has been around since 1998, and it provides protection, in essence, to small or medium-sized accounts that are heavily exposed to catastrophic risk, whether it’s wind-oriented risk or earthquake-oriented risk. When we looked at ICAT, we thought that this was a very interesting enterprise, and not just for the lines of business that they offer but also how they offer it. They have a very technologically oriented approach that we thought was intriguing.
And between the line of business that they offer, the SME-oriented businesses that they offer to, and how they go about actually utilizing technology in the mechanics of their business, we felt collectively it was a very intriguing combination for us to think about. Given the fact that we’re venturing into the property space, we just felt that it makes sense for us to consider that as part of what we could offer. We also liked the specialization piece. The Schinnerer Group has not and will not seek to be all things to all people; it has always been a specialist enterprise and will continue to do that. We felt that ICAT also offers a specialist platform for property, and as a result of that, we just felt that it was a good enterprise to consider. We felt strongly about their management team and their personnel.
Q: You’re looking to become a global enterprise, but how are you going to do that?
A: Schinnerer’s been around for a long time in the United States, and we also have a sister company in Canada called Encon. In addition to that, we also have an entity called BlueFin in the U.K. and Mees & Zoonen in the EU. We are in Bermuda as well, and then added to that is the ICAT acquisition that we just made. So we actually have five entities that have people, have systems, have product and have premium being written through them on a global basis.
The U.K. and the EU components of the Schinnerer Group are in their earlier stages of development, and so we’re in the process of enhancing what we’re doing there. But they already do have a name and a reputation in their respective markets. So we already have a global footprint, and what we’re doing is we’re enhancing our capabilities through those enterprises, and that’s where the company is moving toward.
Q: Are you looking to expand in any other markets?
A: Over time we will, but right now our focus is on those markets. We’re a global insurance enterprise with over 700 people generating over $1 billion in premium on an annualized basis and seeking to grow.
Q: What’s your vision for the future? What other things do you have planned?
A: We actually think of ourselves more as an insurance enterprise, more as an insurer of the future. We are not encumbered with a lot of the issues that many other insurers have — an overt amount of head count, static capital that can destabilize a firm when they feel they have to deploy it, legacy systems — we don’t have any of that. But we do have a very nimble and knowledgeable base to drive off of, and so when we think of ourselves, we actually think of ourselves really as a global insurance enterprise, really kind of an insurance enterprise of the future, whereby we’re able to access the different core pieces of the insurance industry to develop our business.
Jim Henderson is chairman and CEO of AssuredPartners Inc. in Lake Mary, Florida. Previously a longtime executive at Brown & Brown Inc., Mr. Henderson has led the private-equity owned brokerage’s acquisition-fueled growth since its founding in 2011. Currently ranked as the 13th-largest broker of U.S. business, AssuredPartners last month announced its biggest acquisition to date with the purchase of Torrance, California-based Keenan & Associates. Mr. Henderson recently spoke with Business Insurance Editor Gavin Souter about the acquisition and other issues affecting the brokerage sector, including AssuredPartners’ future under the ownership of Apax Partners L.L.P., its acquisition strategy and continued disputes over noncompete agreements when brokers move firms. Edited excerpts follow.