Cooper Gay Swett & Crawford (CGSC) is the largest independent (i.e. privately owned by its employees and private equity funds) global wholesale and reinsurance broker. Over 1,400 professionals work in some 60 offices on four continents. “In this globalized world wholesale and reinsurance brokers need global access to markets; you can’t be just domestic anymore,” said its Group CEO Toby Esser in an interview at the Reinsurance Rendezvous in Monte Carlo.
Esser, who directs the group’s operations from its home office in London’s EC3, has been instrumental in putting together a rather unique organization. The combination of the two firms in July 2010 created a global enterprise that places approximately $3.5 billion in premiums in the United States, London and the international insurance markets.
Esser explained that Cooper Gay had a presence in the U.S. prior to the deal with Swett & Crawford, but at one stroke, the combined firms became the biggest wholesale broker in the U.S. by premium volume. It also expanded CGSC’s reach to truly global proportions. And it may have come at a propitious time, as there are signs that the U.S. surplus lines market, after six years or so in the doldrums, may be on the verge of a revival. “It’s starting to change,” Esser said.
He sketched out some plans to augment Swett and Crawford’s sales efforts with better and more “tools,” and indicated that the property insurance market seemed to be looking better. In the long run Esser wants to build up U.S. business to the extent that “we can compete with the large brokers.”
That’s also a possibility in other areas. Esser pointed out that global business from “emerging markets for wholesale and reinsurance brokers is increasing.” He cited Latin America as an example, indicating that “we offer any major retailer access to all of the world’s markets.” As CGSC is also a Lloyd’s broker, it can provide access to the world’s largest insurance market in addition to local markets.
Esser stressed CGSC’s flexibility. In addition to Cooper Gay’s facilities, “Swett & Crawford has its own office and its own products in London.” This expanded reach gives it the flexibility to deal with the needs of any U.S. retailer and place business in the best market. “The additional capacity and more direct access to the reinsurance market for treaties, as well as the surplus lines market, means more products are available in London; there’s more choice.”
Esser dismissed speculation that the hard market/soft market cycle was going to disappear any time soon. “It’s a question of supply and demand. Property cat is going up, or at least it’s not going down.” However, he said that casualty and long tail liability coverage has “been down too low for too long,” which means that capital is being lost. He agreed that there’s currently too much capital in the industry, but said “it’s not enough to cover a capital event.”
Like most of the rest of the industry CGSC sees growth coming from Asia, especially China. “We have pretty good relations in China, but we don’t see much premium; it’s a very competitive market,” Esser said. However, it is a market that’s growing; whereas in the “U.S. and Europe we see very little growth.”
As an international player CGSC has to deal with regulations in a number of different countries, which, Esser noted, makes life difficult. Closer to home, he has little faith that the reform of the UK’s Financial Services Authority (FSA) will inaugurate any significant changes. In his view the current system is “inefficient, intrusive and very expensive,” but he doesn’t see the reforms making “any big changes.”
Even though regulation is a fact of life, especially in the U.S. with 50 different insurance departments to deal with, Esser remains upbeat. The business model CGSC has pioneered seems to be working. If imitation is the sincerest form of flattery, then the fact that other brokers, such as CRC and AMWins, have taken the same path further validates Esser’s faith in the success of CGSC’s business model.