Specialty: Insights for the specialty insurance and ... - Ernst & Young

WelcomeWelcome to Specialty— our new twice yearlypublication for specialtyinsurers and reinsurers.Clients often ask me, “Howcan I grow my business in asustained soft market?” AsI travel around many of thespecialty locations, I hearthis more and more, particularly as new capitaland price competition further exacerbate thecycle.The tragic events of tropical storm Sandy, whichcaused so much death and destruction in theCaribbean and Northeast seaboard, highlightthe key role insurance plays in paying claims tohelp neighborhoods, families and businessesget back to normal. However, although somemarket participants expect staggering losses ofUS$20b and beyond, this does not appear tobe significant enough to cause hardening of themarket and a spur to growth.There are many differing views on the waysto achieve growth in these market conditions;however, most CEOs I speak with predict severalcommon avenues. As you will read, expansionto Asian markets remains a strong opportunity:Hong Kong and Singapore offer excellentpotential for new capital and new business,though the infrastructure requirements andrisk management considerations are very much“front of mind” for those with eastern expansionplans. While a change in location footprintis an option, regulatory challenges affect allspecialty locations, albeit in differing ways. Forexample, while Europe continues to secondguesswhen — or even if — Solvency II will comeinto force, Hong Kong is trying to anticipatethe Financial Services Authority’s decision onfund management rebates and the impact on itseconomic and operating models.Given the high priority placed on growth by seniorexecutives, our first issue concentrates on thistheme. What are the best options for growth?Which markets are the most attractive? Whatchanges should be made to operating modelsto facilitate growth? How might companiesinnovate? In the series of articles that follow, weseek to address these questions and more. Wealso speak with one of the industry’s prominentfigures who has grown his business substantiallyin the years he has been at the helm — RobertHiscox. Robert tells us about the most courageousbusiness decisions he has made as leader of hisinternationally successful business and also wherehe sees the future of the market.And finally, on a slightly different note, I’d liketo share my excitement about the creation ofour new global specialty team. We’ve created anintegrated team across a number of locationswhose remit is to focus solely on the businessneeds of specialty (re)insurers — companies willbenefit from our more unified global view ofthis market as we bring the full weight of ourknowledge to create options for the most complexof business issues.We hope that this publication will providesome food for thought as to how players in thespecialty (re)insurance markets can differentiatethemselves and succeed in the uncertain timesthat lie ahead.Shaun CrawfordGlobal Head of Insurance, Ernst & YoungIssue 1 — December 2012 Specialty 1