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3. Steadfast Insurance Co.

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Steadfast Insurance Co. saw its nonadmitted premiums rise 8.5% in 2005, to nearly $1.56 billion, to remain No. 3 on Business Insurance's annual ranking of surplus lines insurers.

Despite a surplus lines market that is seeing some rate reductions, the Zurich Financial Services Group unit reversed slides in both gross and nonadmitted direct written premiums it experienced in 2004. The company's gross premiums increased more than 15% to more than $1.7 billion in 2005.

Steadfast's premium volume was solid mostly due to strong business from its owners, landlords and tenants and its product liability segments, said Jim DeSimone, New York-based senior vp, specialty casualty for Zurich.

Steadfast continues to be a stable provider for these insurance segments because of its experience and claims handling capabilities, which help the company retain and attract customers, he said.

"I think our strengths are our financial capabilities and our services, which are really highlighted by our underwriting, claims and risk engineering," Mr. DeSimone said.

Demand for these coverages is fairly constant with Steadfast typically writing limits in the range of $1 million to $2 million, although it can write up to $5 million in coverage, he said.

The biggest issue the company is currently facing is the shifting of business into and out of the surplus lines market, he said.

"We need to adjust our underwriting expertise and in some cases our policy forms to address the type of business that flows into the market as other business flows out of the market," Mr. DeSimone said.

Owners, landlords and tenants business always shifts between the surplus lines and standard markets, and the same holds true to a lesser extent for product liability risks, he said.

"But the tougher-exposure business will always stay in the surplus lines market," Mr. DeSimone said. "I believe this is just the general ebb and flow of commercial lines business into and out of the surplus lines market."

Commercial customers continue to seek flexibility in the surplus lines market, he said.

"Flexibility of terms and coverages are usually the reasons they come to surplus lines and I would say that's no different in today's market," Mr. DeSimone said.

Despite the constant evolution of the surplus lines market, the company aims to be a consistent service provider for customers, he said.

"We're all about sustainability and profitability over the long run so we will make adjustments when necessary," Mr. DeSimone said.

An important aspect of its consistency is the company's stable relationships with its wholesalers, with Steadfast relying on them to provide up-to-date market intelligence, Mr. DeSimone said.

Having the right partners in the "ever-changing and shifting" surplus lines market is more important than ever and will help make Steadfast a steady and sustainable provider for a long time, he said.