2010 Entrepreneurial Insurance Symposium
The New Landscape; Building Competitive Advantage
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Tuesday, September 14, 2010
Kevin H. Kelley
Chief Executive Officer
Ironshore, Inc.
1
Uncertainty Is The Hallmark Of
The First Decades Of This Century
• September 11, 2001
• Hurricane Katrina
• Credit Crisis
• British Petroleum – Deepwater Horizon
• Unchartered Waters
2
Uncertainty Will Drive Behavior;
Increase Risk Premium
• Drive Syndication / Diversification
• Counter-Party Concerns
• Many Examples:
British Petroleum, Lehman Brothers, AIG, etc.
3
Challenge Of Regulation
• Regulation Will Deal With The Past,
Creating A Different Future
• Managing Size Will Be A Supreme Challenge
• Opportunity Cost Of Compliance Could Be Fatal
4
So What?
“Basic Change Is The Result Of A Confluence Of Forces,
Rarely Just One Force. Always Ask Yourself If There Are
Enough Different Forces Pushing In The Same Direction
Before You Make A Judgment.”
- John Naisbitt
• The Big Will Be Smaller
• Markets Will Be Less Concentrated
Source: Capitalism 4.0
The Birth Of A New Economy In The Aftermath Of Crisis
- By Anatole Kaletsky
5
Market Dynamics Are Shifting
Financial crisis caused instability at many top insurers...
creating significant opportunity to capture business and hire talented professionals
Top Other Liability (Claims Made) Writers
(US$ in millions)
Group
American International Group
2009
DPW
YoY %
Change
Top Excess & Surplus Lines Writers
2009
Market
Share
(US$ in millions)
Group
2008
DPW
YoY %
Change
2008
Market
Share
$2,977
(14.5)%
16.5 %
$7,216
(12.8%)
21.0 %
Chubb Corp.
1,660
(4.4)%
9.2 %
Lloyd’s
6,062
(4.7%)
17.6 %
CNA Financial Corp.
1,411
(2.4)%
7.8 %
Zurich
1,546
(6.2%)
4.5 %
XL Capital Ltd
1,148
(6.2)%
6.4 %
Nationwide Group
1,264
(12.1%)
3.7 %
Travelers Cos
1,069
(4.7)%
5.9 %
ACE Ltd.
1,026
(16.4%)
3.0 %
Zurich Financial Services AG
1,000
2.9 %
5.6 %
Markel
1,006
(10.5%)
2.9 %
ACE Ltd.
846
8.1 %
4.7 %
W.R. Berkley
962
(17.3%)
2.8 %
HCC Insurance Holdings Inc.
714
12.3 %
4.0 %
CNA
713
(6.1%)
2.1 %
AXIS Capital Holdings Ltd.
524
21.8 %
2.9 %
Berkshire
708
(24.0%)
2.1 %
Hartford Financial Services
481
(19.9)%
2.7 %
Alleghany
658
(31.4%)
1.9 %
Liberty Mutual Holding Co.
430
(1.1)%
2.4 %
Argonaut
614
(6.9%)
1.8 %
Arch Capital Group Ltd.
385
1.5 %
2.1 %
AXIS
581
(17.1%)
1.7 %
Attorneys' Liab Assr Society
322
(16.5)%
1.8 %
Arch Capital
471
(26.5%)
1.4 %
Allied World Assurance Co.
306
18.8 %
1.7 %
Travelers
445
(18.0%)
1.3 %
304
31.4 %
1.7 %
XL Capital
406
(10.9%)
1.2 %
$13,579
(3.8)%
75.4 %
Top 15
$23,678
(11.9%)
68.9 %
All Others
W.R. Berkley Corp.
Top 15
All Others
Industry
Source: SNL Statutory Information.
4,420
9.0 %
24.6 %
$17,999
(1.0)%
100.0 %
American International Group
Industy
Source: A.M. Best.
10,687
9.6%
31.1 %
$34,365
(6.2%)
100.0 %
6
Creative Disruption
• Creative Disruption Versus Destruction
• Opportunity Or Threat
7
Traits Needed To Succeed
• Agility And Nimbleness = Pace
• Flexible Operating Strategies
• Innovation
• Efficient Delivery Of Increased Expectations
• Instinct Versus Models
• Economic Models That Match Reward And Risk
8
Building Competitive Advantage
Within This New Normal; The Alpha
• Distribution – Defining The Objective
• Cost – Control
• Product Leadership Ambition
• People – Getting, Developing And Keeping – Culture
9
The Entrepreneurial Class Is
America’s Competitive Advantage
• Entrepreneurialism Changes Lives
• Risk And Reward
• Concepts That Support; The Business Judgment Rule
10
Building An Entrepreneurial Culture
• Performance Based
• Individual Accountability – Small Units
• Ownership
11
Opportunity
• See It
• Seize It
• Create Value From It
12