Toby Esser is a truly global executive. As the CEO of Cooper Gay Swett & Crawford (CGSC), he coordinates the broker’s far flung operations in the UK, Europe, Asia and South America, as well as North America, which was recently consolidated under the management team of Swett & Crawford.
Until his company bought the venerable surplus lines broker in 2010, Cooper Gay was little known in the U.S. That changed overnight, but Esser doesn’t intend to slow down. Backed by private equity firm Lightyear Capital, he’s looking for further expansion, while also consolidating the management of CGSC’s operating entities.
Just after this interview, CGSC completed one of those acquisitions when it finalized a deal – subject to regulatory approval from the UK Financial Conduct Authority – with independent Lloyd’s insurance and reinsurance brokerage group Newman Martin and Buchan (NMB), which specializes in energy related coverage. CGSC said it has been working closely with NMB over recent months in preparation for the acquisition.
Esser isn’t particularly worried by the emergence of alternative, or third-party, capital to fund reinsurance transactions. He thinks it’s more or less permanent. “I don’t see it going anywhere anytime soon,” he said; “it’s here for the long term. Undoubtedly it has created more capacity within the reinsurance industry.”
He added: “These days it’s very, very simple to be able to access the alternative markets. This capital is looking to be deployed, and it wants to be in the reinsurance industry; it understands how to judge risk; it understands how to model the risk, and it will be here. I don’t think we should look at it as a threat, we should look at it as a positive solution for our clients.”
After acquiring Swett & Crawford, which will celebrate its 100th anniversary next year, around 50 percent of CGSC’s turnover is generated in North America, with S&C being “the main wholesale broker,” along with operations in reinsurance and through MGA’s. Esser also described the growth in the region over the last 12- 18 months as “phenomenal. We finally saw the end of the ‘soft’ cycle, when we saw prices going down for over 50 months straight.”
As a result CGSC has “seen double digit growth over that period of time. “We’re very happy how it’s performing. So happy in fact that Esser said he is “looking for further acquisitions,” especially MGA’s and “underwriting presence,” as well as open market wholesale brokers.
Esser also agrees with the overall view that the property catastrophe market has become rather saturated, and, as a result rates are declining somewhat, due mainly to “overcapacity and lack of demand.” However, “casualty at the moment is staying strong,” he said, with the caveat that this applies mainly to the U.S. market, “the only market with significant tail.”
As it’s a “big country with enormous exposure and a massive premium base,” coping with U.S. risks is a complicated business. “You need to have experts in different markets,” Esser said. “You don’t have one person trying to handle California earthquake as well as habitational business in New York.” With 30 offices in the U.S. CGSC is set up to handle those multiple types of business.
The same operational method extends across all of the group’s 70 offices worldwide. CGSC works from “hubs.” In Asia it has offices in Hong Kong, Shanghai and Singapore, and is in the process of acquiring an Australian broker, as well as expanding in Korea, Thailand and Japan.
Esser is also upbeat about the Lloyd’s market, and approves of Lloyd’s initiatives to expand business in emerging markets and “to improve on technology. That, I think, is really key,” he said. “It’s really the only market in the world where we’re still handling paper day in day out.” Despite that deficiency, Esser described Lloyd’s as a “key market” for CGSC, where it is considered “the number one Lloyd’s centric broker.”
Asked about the tie-up for Lloyd’s business between Berkshire Hathaway and Aon, Esser said it really doesn’t affect CGSC; however, he sees it as a more or less permanent fixture for the future, “as broker type sidecars are here for the long term.”
From talking to Toby Esser, CGSC will also be here for the long term.