William Stovin, president and COO of Markel International, has been going in both directions since 2000. That’s the year its parent, Virginia-based Markel Corp., bought the UK and Lloyd’s insurer Terra Nova. Stovin’s been in charge of both shrinking that business “to its core” and expanding it from that core in the London market and in other markets outside the U.S.
“Our goal is to grow both organically and overseas,” he said in a recent telephone interview. From its London headquarters Markel International oversees U.K. operations which include not only Lloyd’s Syndicate 3000 (2009 capacity $340 million) , but also London market wholesale business, as well as UK retail business, which is operated from its main office in Leeds.
“We cover the whole world outside the U.S.,” Stovin said. Besides the UK offices, his operation has branches in Toronto, Madrid, Singapore and Stockholm. “We want to continue to grow overseas,” he continued, but we don’t really have any hugely aggressive plans; we’re looking for something that is sustainable 15-20 years ahead.”
He explained that any expansion targets are operations that fit with Markel International’s core business. These include specialized property (mostly commercial), specialized casualty, non-marine property, marine and energy and professional liability (the focus of the UK regional offices)
Asked how the current global economic crisis might affect future decisions, Stovin stressed the importance of “balance sheet strength.” In his view those companies that already have strong balance sheets will be in a good position to “rebuild value.” This in turn means they will be well positioned to take advantage of hardening rates in certain sectors, particularly reinsurance.
Stovin also pointed out that Markel Corp and its operating companies are in a good financial position to participate in markets where rates are hardening. Companies will be “looking for quality” in their carriers, he said, and they are aware of the “benefits of [financial] strength.” On the other hand, he believes, as do many others in the industry, that claims will increase as a result of the economic downturn.
On the upside, however, Stovin noted that weaker companies could seek greater strength by becoming part of larger and more financially secure operations, which in turn presents companies like Markel with opportunities for acquisitions on reasonable terms. There are also “a lot of highly qualified people and teams of people, who are looking for jobs,” he added.
Overall Stovin views the economic crisis as a time of “vindication” for those companies, Lloyd’s in particular, who “stuck to their knitting” and didn’t get involved in dealing with dubious financial products, whose collapse has resulted in the current recession.
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