London-based broker Benfield Group Ltd. entered the corporate risk market last year when it launched Benfield Corporate Risk. The unit, which arranges insurance cover for the marine, energy and aviation sectors, now has more than 168 staff in 11 offices. It recently posted first half revenues of £7.6 million (€11.3 million), and—unsurprisingly, given its start-up costs—also posted a first half trading loss of £9.4 million. One year after launching, BIE talked to John Lapsley, chief executive of Benfield Corporate Risk.

Q. How has Benfield Corporate Risk been received by clients?

A. Buyers are benefiting from the additional competition. If you look at the segment over the last 10 years, there has been enormous consolidation with Marsh, Willis, Aon and JLT. We are giving more choice and a fresh approach with enhanced specialization.

Q. At the half-year, you stated Benfield Corporate Risk would not break even in 2006 as anticipated. Why was this and do you expect to be back on track next year?

A. We are on track to break even in 2007. As announced in Benfield's recent interim results, the severe impact of last year's hurricane losses on the pricing of and the capacity for Gulf of Mexico energy risks led to less movement of business between brokers and in some cases has discouraged buyers from entering this market. As a result, this curtailed short-term opportunities in the GOM and slowed our anticipated revenue generation in this market. However, we remain confident about the future growth of the business and are proud of our achievements within only our first year of trading.

Q. Where has Benfield's Corporate Risk's revenue come from so far?

A. There are three areas in particular where we have been extremely strong-blue water hull on the northeast coast of the United States, Japanese energy and the United Kingdom energy independent sectors. For U.K. independents, we have won 10 customers since February. We are the broker for one of the biggest Russian energy companies and we also have quite a potential flow of marine business from Europe. Perth, Singapore and Korea only came on line since last September, so we will only really expect revenue growth in 2007, not 2006. The same can be said in western Canada where we opened an office in Calgary earlier this year. We are also looking at strategies in some developing countries to partner with established brokers, recognizing the business style in local markets. This could be a strong area as we are the largest independent broker for energy, power, marine, aviation and space.

Q. How are things looking for the future?

A. The most important thing in building organic business is to build the pipeline. And we are extremely pleased with the level of commitment we have received from some of the largest companies in the energy and marine sectors. We have lots of lines in the water with bated hooks.

Q. What is the key to Benfield's strategy in the corporate risk market?

A. By concentrating on specialty business we will attract the best people. Specialists want to work in a specialist market. Our strategy is to hire people who understand the industry better than anyone in the market.

Q What else are you working on that will bring a little extra to the Benfield Corporate Risk offering?

A. We have a large slate of projects that we are working on. Modeling and analysis will be a strategic opportunity for Benfield Corporate Risk. The insurance markets have the benefit of our catastrophe modeling, but we want to deliver this to the insured for retaining risk. But like most things, it will take time to become deliverable.

Q. Where does Benfield Corporate Risk stand on the issue of broker transparency?

A. The space in which we are penetrating has been transparent for some time and this is part of the reason it is attractive to Benfield. We win clients by giving the best advice and customers pay more appropriately for good advice. They will pay more for why than how.

Q. What was the biggest challenge in getting Benfield Corporate Risk off the ground?

A. I had not fully anticipated the amount of time and energy that was involved in recruiting a global team. A considerable amount of time was spent on recruiting, which clearly we would rather have spent on sales. However, this was necessary to meet our objective to recruit the best people in the market.

Q. What next for Benfield Corporate Risk?

A. Phase one is completed. We are always looking for good people and watching for opportunities. But it is now time to just get on with it.