Anotherproperty and casualty insurer is laying the groundwork to enter a high-net-worth personal lines market.
a series of during April to lead its newlycreated venture in the market niche, a business that President and CEO W.Robert Berkley Jr. said has the potential to produce strong risk-adjustedreturns over time.
Thecompany joins Cincinnati FinancialCorp. and several other market participants that have invested anewin the business following ACE Ltd.'s April 2015 acquisition of renewal rights to the high networth-focused personal lines business of Fireman's Fund Insurance Co. and its announcement threemonths later of a blockbuster acquisition of Chubb Corp. in a deal that upon closingin January resulted in the formation of Chubb Ltd.
"Wethink that is a worthwhile investment for the shareholders that will yieldmeaningful returns over time," Berkley said during an April 26 conferencecall, according to a transcript of his remarks. He characterized the size ofthe investment the company plans to make in the business as "meaningful."
S&PGlobal Market Intelligence has not yet obtained product filings heralding W. R.Berkley's market entry, but there is plenty of evidence of peers' efforts to build out theirbusinesses.
ACE,Chubb, American International GroupInc. and Fireman's Fund had ranked among the most prominent namesin the high-net-worth personal lines market prior to the two recenttransactions. PrivilegeUnderwriters Reciprocal Exchange's entry and rapid growth into themarket predated the recent deal-making, and its direct premiums written hit anew high of nearly $490.5 million in 2015.
Otheremerging market participants in addition to W. R. Berkley and CincinnatiFinancial include Central MutualInsurance Co., Ironshore Inc.'s IronshoreIndemnity Inc., National General Holdings Corp.'s andMIC General Insurance Corp.,and Nationwide Mutual InsuranceCo.'s CrestbrookInsurance Co., which rebranded in August 2015 under the NationwidePrivate Client name.
MICGeneral said in a New Jersey homeowners rate filing submitted March 31 that it has been "workingto gather competition information" about a new homeowners product for theaffluent marketplace since introducing it in the Garden State in November 2015.The filing specifically sought to revise MIC General's pricing for jewelry andfine arts, based on a comparison with comparable New Jersey products offered byChubb, AIG and PURE.
CincinnatiFinancial credited strong growth in its personal lines business during thefirst quarter to "steady increases" in the products the companyoffers to its agencies' higher-net-worth clients. ChiefInsurance Officer J.F. Scherer said during an April 27 call, according to atranscript of hisremarks, that the company's entry into high-net-worth business in New York andNew Jersey "has been met with a lot of receptivity by agencies"following the recent consolidation in the marketplace.
"Agenciesdo want to have a choice, a broad choice, to provide to theirpolicyholders," Scherer said.
"We'regetting a decent flow of business," he added. "It's not in our intentto explode onto the scene, though we have had good success. So overall, we'repleased with the progress, steady as she goes. We think that we're going to bepretty successful in this area."
CincinnatiFinancial President and CEO Steven Johnston noted that the company has beenwriting personal lines business for high-net-worth clients "for manyyears," but it has recently increased its focus on the market through theintroduction of the Executive Capstone product suite and the efforts of SeniorVice President of Personal Lines Will Van Den Heuvel, who came to the companyfrom AIG's private client group, to recruit experienced talent.
"Weknew that to really grow this area profitably, we needed to have the righttalent," Johnston said. "The associates we've hired to lead thisexpansion are highly experienced, having averaged more than 20 years ofexperience in the high-net-worth marketplace. They understand its uniquerequirements for inspection of risks, coverage valuation and specialized claimservice."
Thenew Berkley hires include Kathleen Tierney, formerly executive vice presidentand COO of Chubb Personal Insurance, and a trio of executives that also spentmany years working for legacy Chubb.
Johnstonemphasized that Cincinnati Financial's respect for its competitors in the space"is extremely high."
Commentaryfrom the incumbent carriers in the market about the emerging competition couldbe forthcoming during the week of May 2 as both AIG and Chubb are scheduled toreport first-quarter results.