Managing general underwriter Schinnerer Group Inc., which has rebranded as Victor, is aiming to double its premium income of roughly $1.2 billion as it looks to expand "quite substantially" organically and through acquisition, according to CEO Christopher Schaper.
Speaking to journalists June 5 about the rebrand and new operating model for Marsh & McLennan Cos. Inc.-owned Victor, Schaper said: "From where we are today we are trying to double our size. That's an initial goal and then we will see what that looks like when we get to that stage." He declined to say how long it would take Victor to reach its target, but said the company needed to expand "effectively and carefully," particularly given a highly competitive market where prices for coverage in some lines of business are lower than underwriters would like.
Managing general underwriters, or MGUs, and managing general agencies, or MGAs, underwrite and design insurance products but do not take any risk on their own balance sheets, instead transferring it to insurers or reinsurers. Unlike MGAs, MGUs typically do not get involved in claims handling. Insurers and reinsurers use MGAs to access particular lines of business without having to hire underwriters and set up other infrastructure.
Active in acquisitions
Victor plans to expand both by adding new products and staff to support those products, and also by being "active" in the M&A market. Schaper said: "There are some larger, regionalized MGAs and MGUs that are coming to market or are on the market. We are definitely interested provided they have the right skillsets and they fit properly within the organization. We are not trying to take what we have and just double up on that. Where we don't have certain lines of business, we are trying to bring those lines on to be complementary."
Victor is present in the U.S., Canada, Bermuda, the U.K., Italy and the Netherlands. The initial focus for expansion will be the U.S., U.K. and Europe, Schaper said, adding that Victor was looking into Australia and Asia but that "those will be developed over time."
Schaper said the U.S. market provided the opportunity for Victor to grow "quite substantially" and that there are "tremendous growth opportunities" in the U.K., where the company writes roughly $100 million of premium through Bluefin Underwriting, which Marsh & McLennan acquired as part of its January 2017 purchase of U.K. broking group Bluefin. He described Europe as "an important and a very significant growth opportunity for us."
But growth prospects are more muted in Canada, Schaper said: "In Canada, our existing Encon operation has done exceptionally well and they are very significant in that particular market, so we think there is growth there, but not as significant as what we are viewing to be available in the U.S."
Victor operates in the U.S. through Victor O. Schinnerer & Co. Inc.
Parental support
Although he declined to specify how much money Victor had to spend on acquisitions, Schaper said Marsh & McLennan, which has a roughly $41 billion market capitalization, "is very interested in us continuing to expand so we have tremendous support from a parental point of view. As you can imagine, a company like MMC has tremendous resource to go and purchase companies and they are very active."
