LLOYD'S SYNDICATE MARCHES INTO THE U.S.

Rough Notes, May 2005 by Zinkewicz, Phil

Beazley is first to open U.S. office to write small to mid-sized commercial risks

"We have weathered some of the most stormy times that Lloyd's has ever seen, and we've still remained profitable. We believe this is due to our disciplined underwriting, controlled growth and a steady hand."

You'll find that boast on the Web site of Beazley Furlonge Ltd., Syndicate 2623/623 at Lloyd's of London. Throughout the huge losses that Lloyd's sustained as the result of the asbestos situation in the United States, throughout the years of lawsuits from disgruntled investors at Lloyd's, throughout the painstaking reconstruction of that venerable institution, Beazley Furlonge has never had a loss year since its inception in 1986. Currently, Beazley writes some $628 million in premiums in the United States, mostly large-scale business written through Lloyd's brokers.

As of March 1 of this year, Beazley extended its commitment in the United States. On that date, Beazley became the first Lloyd's of London syndicate ever to open an insurance operation on this side of the Atlantic to write specialty lines insurance for middle market and upper end small market businesses using U.S. independent insurance agents and brokers as its distribution system.

Heading up the new operation is Nicholas Bozzo, formerly of AXIS U.S., where he was senior vice president, underwriting. Last November, Beazley announced that it was acquiring Omaha Property & Casualty Insurance Co., a 50-state U.S. admitted insurer, in anticipation of the new operation's writings in the United States. Now, Beazley USA is up and running.

Bozzo says that Beazley wanted "to pursue the middle market and upper end of the smaller market in the United States, but recognized that going through Lloyd's brokers was not practical. It required a lengthy communications process and was too cumbersome. Many Lloyd's brokers have a significant amount of larger risks and they do a great job for Beazley," he explains. "But to approach the middle market, Beazley decided that it would be necessary to get closer to the customer and to allow the customer easier access to Beazley specialty lines products. That's when they decided to open an operation in the U.S."

Eliminating the time difference between London and the United States, especially the West Coast, was another reason Beazley chose to cross the Atlantic. "It was simply a matter of taking the best that Lloyd's has to offer and bringing it here," says Bozzo.

A first step, of course, was to amass the underwriting talent necessary to make the U.S. operation work. "In London, underwriting is a lifelong profession," Bozzo says. "In the U.S., most underwriters move into management after five or six years of underwriting. We wanted to hire a seasoned staff of underwriters with a long history of underwriting. That's what we did."

The list of Bozzo's colleagues at Beazley USA is indeed impressive.

* Susan Yeager is the mid-Atlantic regional underwriting manager covering Pennsylvania, Ohio, Delaware, Maryland, DC, West Virginia and Kentucky. She has 20 years' experience with Chubb Specialty Lines and spent the last three years at Marsh USA.

* Densel White is the Southeast regional underwriting manager covering Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee. He has 15 years' experience with Chubb and Marsh.

* Paul Bunone is the Northeast regional underwriting manager covering New York, New Jersey, Connecticut, Maine, Massachusetts, Rhode Island, Vermont and New Hampshire. Paul has 20 years' experience and most recently was with Crum & Forster.

* Jim Seymour is the central region underwriting manager covering Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, Oklahoma, Texas and Wisconsin. Jim has 11 years' experience and joins Beazley from Chubb.

* Carrie Brodzinski is a frequent speaker and author and a quoted expert on executive liability issues and joins Beazley from St. Paul Travelers Bond. Her areas of expertise include employment practices liability and fiduciary liability.

"We have recruited a highly experienced team, which will play a key role in helping Beazley achieve its ambitions in the United States," says Bozzo. "I believe our hiring of experienced senior underwriters to focus solely on the middle and small customer segments of the specialty lines market, where senior underwriting expertise has been lacking, will be an important differentiator in the marketplace."

The lines of business that Beazley USA will concentrate on, according to Bozzo, include errors and omissions, miscellaneous E&O, technology E&O, architects and engineers liability, and employment practices liability. Beazley's distribution system will be independent insurance agents and brokers.

"In this regard, we are being very selective," says Bozzo. "While our competitors contract with thousands of agents and brokers, we're looking for only a few hundred. The reason for this is that we want to be of special value to our brokers and agents, not just another insurance carrier. Moreover, we want them to be of special value to us. When we talk to a broker or agent, we don't ask what that producer has already on the books; we ask what that broker needs to grow the business. If the producer's business grows, then so do we. We want our distribution system to be unique."