International insurance business

Rough Notes, Jan 2001 by Zinkewicz, Phil

U.S. managing general agencies gain stronger presence in international markets

At one time, not too long ago, the phrase "international insurance" applied only to the giants of the insurance industry-the alphabet brokers and the major insurers such as AIG and Chubb. Today, most national insurers have established a "global" presence. The smaller brokers, following their clients who now maintain facilities in overseas markets, have also moved into international waters. Now managing general agencies have migrated to the international market as well.

In fact, in recent years, representatives of the American Association of Managing General Agents (AAMGA) have been paying greater attention to developments in foreign insurance markets. The fact is that overseas insurance interests are paying greater attention than ever before to U.S. MGAs. Moreover, during the last few years, representatives of the AAMGA have been traveling overseas to meet with insurance company executives, underwriting members and brokers of the London market in countries such as France, Italy and Egypt,

Len LoVullo, who is president of LoVullo Associates in Buffalo, New York, and president of AAMGA, says that the world is becoming smaller for MGAs. "Reinsurance companies are global in nature, and there are events occurring in other parts of the world that affect reinsurers here and MGAs as well," says LoVullo. "There is a growing concern over natural catastrophes in Europe that affect U.S. reinsurers and MGAs. And there are numerous foreign insurance interests that own or have an interest in American companies. "Over the years," continues LoVullo, "AAMGA representatives have traveled to meet with executives from Allianz and Generali, for example, to discuss global trends in places such as South America and South Africa. Furthermore, those executives were extremely interested in learning how MGAs in the United States operate," he says.

Joe Hutelmyer, president and COO of the North Carolina-based Seaboard Underwriters, says his agency has done business with the London market for about 35 years and that some London reinsurers have been strong players on his liability treaties for the past 18 years. Seaboard was apparently ahead in the game being an MGA with international ties. Seaboard was founded in Burlington in 1957 to provide for the insurance needs of the transportation industry. "The company operates in the United States as an underwriting manager, managing general agency and wholesale broker providing truckers liability, physical damage, motor truck cargo, non-trucking liability and general liability coverage to a select group of independent agents countrywide," Hutelmyer says.

However, also since 1957, Seaboard has been Lloyd's correspondent. "We have a large claim-handling and draft insurance authority with Lloyd's, and we can also write excess auto/umbrella business, minimum premium of $1,000 on small accounts," he says. "One of the things we found out early on is that while it's difficult to establish relationships in the London market, they become long-term once they are established. Domestic carriers' relationships with MGAs seem to be shorter term," he says. "We travel to London at least once a year to maintain our long-term relationships both at Lloyd's and in the company market."

Ron Balcar, production director for the property and casualty division for the Houston-based Myron F. Steves & Co., has also established strong ties with the London insurance market. Myron Steves founded the agency in 1955, and from that time until 1962, the MGA specialized in writing deviated property insurance. Over the years, the firm grew into offering other property and casualty insurance products as well as health care liability. The property and casualty division is an MGA/wholesaler with delegated underwriting authority from its companies to quote, bind and issue a broad range of coverages. Among MFS's leading companies are Lloyd's of London and non-Lloyd's London companies. The irony is that MFS first began doing business in the London market as a result of market dislocations right here in the United States.

"We first started establishing relationships in London in 1990 when standard companies in the U.S. demonstrated that they were not interested in writing the business in which we specialized. I went to London and realized that the London market is capable of doing things that our market cannot do. Underwriters in the London market can put together programs and packages that satisfy our needs when our domestic market turns away. The programs and packages may cost more, but that is the nature of specialty lines business. At least, they are a market that is willing to discuss the issues. It's not a matter of pricing. Underwriters in the London market can figure out a way to get things done."

One Lloyd's broker with which Balcar has established a strong relationship is The Miller Insurance Group. Balcar maintains that this broker has also made a strong commitment with MGAs in the United States.