Managers at Lloyd’s insurer Beazley’s new U.S. operation are enjoying a warmer reception than expected when approaching underwriters to join the firm. They say that, while recruiting the best has taken longer than expected, underwriters seem keen to work for smaller firms with big ambitions.
Beazley’s U.S. division comprises Beazley Insurance Company, which uses licenses formerly owned by Omaha Property and Casualty Insurance Company to write admitted lines in 50 states, and Beazley USA Services, a wholly-owned managing general agent, which underwrites on behalf of syndicates 2623 and 623 at Lloyd’s. These units wrote gross premiums of US$1.6 million and US$13.8 million respectively in 2005.
Jeff Koenig, CFO and chief operating officer of the U.S. unit, says a growing disenchantment with multiple layers of management at larger firms and the strength of the Beazley brand have served the U.S. division well since it opened for business about nine months ago.
“There are a lot of people who have a pent up desire to work for a start-up,” he explains. “They feel they have been toiling for the large insurance companies, but hearing wild success stories elsewhere. We’re not strictly a start-up because of our 20-year history at Lloyd’s, but we have the entrepreneurial spirit of a new company. You don’t find that very often in the U.S.”
Max Carter, head of distribution and marketing of speciality lines at the company, adds that Beazley has done everything in its power to attract the best underwriters in the U.S. It hired leading headhunters, commissioned studies to determine how much pay was needed to attract staff, and offered performance-related bonuses and stock incentives. It now employs about 80 people nationwide, and hopes to have 130 by the end of 2007. The company, which is headquartered in Farmington, Conn., also wants to open additional satellite offices. It already has a presence in nine U.S. cities: San Francisco; Chicago; Philadelphia; New York; Boston; Atlanta; Charlotte, N.C.; Ponte Vedra, Fla.; and Parsippany, N.J.
The focus of Beazley’s U.S. operation is small- and middle-market risks that do not ordinarily get placed in the London market. These include speciality business, such as directors’ and officers’ liability insurance (50%), onshore and offshore marine insurance (10%), and property insurance – both for large commercial risks (between 25% and 30%) and high-value residential risks in southeastern coastal states (between 10% and 15%). Beazley writes these risks on an admitted basis.
Writing this business compliments its Lloyd’s counterpart, says Koenig. “It helps to diversify our book,” he says. “If rates soften in London, Beazley can reduce its business as appropriate to maintain profit but continue to write U.S. business. Sometimes business that falls off the surplus lines side even migrates to the admitted market, so for us to have that capability gives us protection. It is both a hedge and a complimentary focus for us.”
Beazley US intends to write between US$75 million and US$100 million in gross premium in 2006. The company was capitalized with US$50 million on formation, and received an additional boost of US$10 million in May. It is rated A-minus by A.M. Best.