Cooper Gay Swett & Crawford – Looking Forward, Not Back

By | September 19, 2012

Don’t tell Toby Esser, Cooper Gay Swett & Crawford’s CEO, that the global economy is in the doldrums. “We’ve had substantial organic growth over the last 12 months with property up around 20 percent, and an increased market share,” he said in an interview at the CGSC tables at the Café de Paris on a hectic last full day of the Reinsurance Rendezvous in Monte Carlo.

Esser has led Cooper Gay since 2001. The completion of the firm’s acquisition of historic U.S. broker Swett & Crawford in 2010 transformed both of the combined companies. The group ranks as one of the largest independent global wholesale and reinsurance brokers.

It places around $3.5 billion in premiums for clients in the London, US and international insurance markets, and has more than 1,400 employees across four continents. They have an incentive to work hard as CGSW’s “working directors and employees remain the largest single group of shareholders, with directors still actively involved with clients and markets,” according to its web site.
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As Esser noted above, the parlous state of the economy in the U.S., the UK and Europe hasn’t adversely affected the group. “As far as the euro zone’s concerned, there’s been really no effect,” he said; “mainly because we are a wholesale broker, not retail.”

Asked to explain the big increase in property, Esser said it was “not really due to exposure to natural catastrophes,” but was “mainly driven by the reaction to RMS v11” [the revised models that significantly increased loss estimates]. “That led to an increase in pricing.” However, the state of casualty business in the U.S. is a cause for some concern. “With the low interest rates, it’s slowly moving into a negative cash flow position,” he said.

Professional liability coverage, especially D&O in the financial sector, is one of the major factors influencing this market. ” It’s very nervous,” Esser said. CGSW has nonetheless seen some success in placing coverage, as it directs its efforts towards smaller and more conventional banks, where the risks are less.

While the low interest rates and sluggish economy is generally described as a negative factor for the insurance industry, in some ways it offers an advantage to groups like CGSW, which has been able to expand through acquisitions, as market consolidation continues.

“We’ve been expanding, particularly in Latin America, Esser said, singling out Mexico, Chile and Peru, where acquisitions have been made. It is also expanding in Asia, with operations in Australia, India, Singapore and Shanghai. “Right now Asia is our primary area for expansion; we’re looking to acquire businesses with a strategic fit to add to our existing business,” Esser explained.

He also observed that the areas in which CGSW sees potential growth are generally those areas which are subject to natural catastrophes, but where the take up for insurance and reinsurance is comparatively low compared to the U.S. and Europe.

The group is well positioned to exploit those markets through its Cooper Gay Re operation. “We place both facultative and treaty reinsurance,” said Peter J. Gorman, its executive VP. Reinsurance is placed out of his office in New York for both the U.S. and internationally.

Gorman explained that, while it doesn’t compete head on with the major reinsurance brokers, it has developed a “one-on-one strategy” serving primarily Swett & Crawford’s wholesale clients in the U.S., as well as U.S. regional carriers in the international market. “We get involved early on in risk placement,” Gorman said; “for earthquakes, floods, etc. We find the reinsurance cover, or excess cover, and provide a seamless placement service.”

Talking to the people at CGSW one gets the impression that brokers of this size are well placed to offer their clients the same level of service and innovation, frequently only available to the multinationals served by the major re/insurance brokers. As such they perform a very valuable service, especially as they frequently work with growing businesses and those in emerging markets – precisely where the industry needs to grow.

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