Whether the market is “soft” or “softening” doesn’t make a difference. There’s still a place for the excess and surplus lines broker in the mix, says Neal Abernathy, CEO of Swett and Crawford, one of the nation’s oldest and largest insurance wholesale brokerage firms. Swett & Crawford, which was sold to a private-equity firm in 2005 by Aon Corp., wrote about $2.8 billion in premium in 2006.
In an exclusive video interview with Insurance Journal’s Publisher Mark Wells, Abernathy says that retail agents should keep all options open when placing coverage for their clients. Even in a soft market climate, the E&S broker may be the best choice for the client, he said.
The following excerpts are from this longer interview. The entire video interview may be viewed at www.insurancejournal.com
What is going on in the marketplace right now?
Neal Abernathy: Well, obviously we’re seeing the market softening. Property is flattening out. Casualty is softening from ’05, ’06, and now headed into ’07 quicker than we had anticipated, candidly. But there are still a number of opportunities for us in the marketplace. Our markets are interested in writing business, so even though the market is softening, there’s still a place for us in the mix, wholesalers in general.
Are there certain classes of business that are hard to place right now, that agents are going to have difficulty placing?
Abernathy: Catastrophe related property is still relatively difficult to place. There’s more capacity than there was, but it’s not the crunch that it was this time last year. So, overall the marketplace is fairly benign I would say, as far as being able to place things. But, the cat property is still fairly difficult to place.
How do you see the role of the excess and surplus broker, or the wholesale brokerage firm, in the retail office today? Is it different than it used to be?
Abernathy: I think it is. You know, in days gone by as the market turned and got softer, more and more retailers looked at that (and thought) they didn’t need the wholesaler. I think now our market responds very well in the softening market. I think if I was a retail broker, I would look at all the alternatives for my insureds to make sure that I had the best deal available for them in the marketplace. And I think to adequately do that, or sufficiently do that, you have to involve a wholesale broker to see if there are opportunities to place that coverage in the non-standard market, as well as in the standard market.
So, it is not just a hard market resource any more?
Abernathy: Absolutely not. If I were the insured, I would want my retail agent or broker making sure that they had canvassed the entire marketplace. And to do that, you’ve got to be talk to the wholesale broker to make sure that you’ve accessed the best underwriters for your coverages.
Tell us a bit about Swett & Crawford.
Abernathy: We’re headquartered in Atlanta, and I tell people, ‘Swett’s either a year old, or 90 years old.’ We were just bought out about 18 months ago by a private equity. But, we’ve been around for 90 years.
You say you’re an independent wholesale broker now.
Abernathy: Absolutely. We’re independent ownership. The employee’s own about 20 percent of the company, so we’re very excited about that.
What’s the premium volume you handle?
Abernathy: Last year in ’06, we did about $2.7 or $2.8 billion of premium. So, we’re significant by anyone’s standards.