XL E&S President John DiBiasi is the type of insurance professional any company would love to have working for them. That’s why XL’s success in convincing him to leave Scottsdale, Ariz.-based Nautilus Insurance Company last year to head the company’s newly formed Excess and Surplus unit, was a big step towards making it a success.
Some may call it risky to start a new division right after posting $1.47 billion in hurricane related losses (See IJ Web site Oct. 27, 2005), especially in the face of a looming soft market, but that’s just what XL did.
DiBiasi brought more than 30 years of E&S experience to XL and a unique understanding of the managing general agency and wholesale distribution system. Ultimately his business plan, and with it the success of XL’s E&S venture, depends on that knowledge.
Success depends on a deceptively simple strategy, DiBiasi said.
“First hire good people; spend the time necessary [and the money] to attract them,” DiBiasi said. “If you have good people you’ll attract the best brokers.”
His strategy seems to be working out that way. XL E&S, which commenced doing business in March 2006, has the underwriters and the experienced professionals in place. Has it attracted the best brokers?
“We’ve easily had twice the number of wholesale brokers contact us than we will eventually appoint,” DiBiasi said. “That way we can be very selective, and pick the ones who best fit in with our strategy, depending on the markets they handle.”
He also acknowledged the strong presence and backing a company like XL provides “solid ‘A+’ paper, has a lot of horsepower and creates a lot of interest.” The E&S unit now has four fully operational offices — two in Scottsdale, which services California, the West Coast and Texas and the Southwest; Exton, Penn., and New York City. “Our goal by year end is to have approximately 100 wholesale brokers, covering all 50 states,” DiBiasi said. He sees no problem in reaching that goal.
Does the soft market worry DiBiasi? On the contrary, he said.
“We’ve now got the time to get our infrastructure in place,” he said. “We can take advantage [of the slower market] to get the best brokers and create the best systems.” He explained that it requires six to 18 months before all of the problems in any new system and in working relationships with brokers are spotted and solved. In a harder market this becomes far more difficult. “The soft market gives us a bit of breathing room.”
As his experience would indicate, he also takes the long view about market cycles. By his calculations, which he noted were approximate, the E&S market grew 1,500 percent between 1984 and 2004, from around $2.5 billion to $30 billion. Admitted business grew by about 400 percent in the same period to top $96 billion. “Clearly there have been peaks and valleys,” DiBiasi said, “although it will be harder in the next 20 years, it will continue to grow.”
XL E&S’ main goal remains underwriting profits.
“It’ll be tougher for the next three years,” DiBiasi said, “but with decent pricing to compete on I’m optimistic.”
– Charles E. Boyle
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