DAILY
NE WS
DAILY
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WEDNESDAY
September 28, 2016
Fast, smart, eager.
“A history with Argo is a history full of success and a lot of achievements.”
—Maureen Caviston, President, Partners Specialty Group
Protecting businesses with hard-to-place risks, Colony Specialty has become one of the top 10 carriers
of excess and surplus lines in the U.S.
Learn more at www.argolimited.com/midyearreport2016
distribution. E&S intermediaries
would follow this approach with
an increased geographic footprint,
gain efficiencies in operations with
enhanced technology, and focus
on strengthening their skill sets
in particular products to remain
highly relevant to their carrier and
agency partners.
JAMES C.
DRINKWATER
CEO
Am WINS Brokerage
New York, NY
The most obvious
challenges to the E&S
marketplace throughout 2016
have been the continued decline of
rates across most lines of business.
Overall, standard markets are still
encroaching on what is tradition-
ally E&S space and, predictably, the
competitors and capital
— both traditional and
non-traditional, which
has led to downward
pressure on pricing. If
cost structures remain
flat in a declining pric-
ing environment, then
profit margins will be
unfavorably impacted.
With the current and expected
interest rate environment remaining at the low levels experienced by
the industry, investment gains will
not significantly make up the profit
margin difference.
When these conditions exist
where the trend in growth is
declining, competition and capital
is increasing and investment port-
folio returns are negligible, E&S
carriers have to take the oppor-
tunity to create new products,
reduce expenses or expand their
lines between the two have blurred
for the time being. In addition, the
broader marketplace continues to
evolve with the extraordinary level
of investment interest in our space,
driving retailer, wholesaler and
carrier consolidation, as well as
new ways of delivering capital to
support risks.
Despite these
market dynamics, we
are energized by what
can be viewed as a
changing market
environment. Such
conditions always
present us with many
opportunities and I
am a big believer that the whole-
sale model is the most efficient
distribution model for specialty
carriers. Furthermore, we have
SURPLUS LINES continued on page 4 A
Surplus Lines in 2017:
Where Do We Go from Here?
NAPSLO Board Members are asked: What do you consider both the greatest
challenges and most promising opportunities right now in the E&S market?
JACQUELINE M.
SCHAENDORF, CPCU
President & CEO
Insurance House Inc.
Atlanta, GA
The classic balance
between growth and
profit is what I consider
to be one of the greatest
challenges in the E&S segment of
the insurance industry, currently.
While the E&S marketplace has
been growing over the past several
years, the rate of growth has been
declining since 2012, per industry
data from the A.M. Best “2016
Special Report U.S. Surplus Lines
— Segment Review.”
The E&S segment is historically
one of the most profitable segments
of the insurance industry and prof-
its tend to attract capital. There
has definitely been an increase in
