67 WALL STREET, New York - June 6, 2014 - The Wall Street Transcript has just published its Insurance Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Low Profitability and Low Interest Rates - Commercial Line Brokers and Underwriters - Consolidation Trends - Emerging Market Expansion - Analysis Of Personal, Commercial & Reinsurance Subsectors
Companies include: Navigators Group Inc. (NAVG) and many more.
In the following excerpt from the Insurance Report, the President and CEO of The Navigators Group, Inc. (NAVG) discusses company strategy and the outlook for this vital industry:
TWST: When you look across all of the business segments, which ones do you expect to be the best performers over the next year or two, and what are the factors in the macro environment that you believe are creating opportunities in those segments?
Mr. Galanski: That's a great question. While we expect all of our business units to perform well, I would call attention to three in particular and give you some background as to why. While our global marine business is no longer the largest product line for Navigators, it still represents about a third of what we do globally and performed very well for the quarter with a combined ratio of 87%.
We've managed through a couple of years in which very large industry losses impacted the profitability of the ocean marine insurance industry, and when you have the market penetration of that business that we do, you're not immune from participating in those losses. We've taken some underwriting measures to reduce volatility, and historically, ocean marine insurance has been a very profitable business. The combined ratio we generated for the quarter is something we believe is sustainable. Pricing of ocean marine insurance has held up reasonably well. Our ocean marine renewal rates were up 2% in the insurance company in the first quarter and up 3% at Lloyd's. We have a very strong marine franchise, and as the global economy continues to improve, there are opportunities to expand.
While some people might think that most of the marine insurance business in Europe is placed in London, it's really not the case. There are very strong indigenous markets, and it's very difficult to access those markets from London. So we're currently working to form and capitalize an EU-domiciled insurance company and to open underwriting offices in a handful of key Continental European markets, including Rotterdam, Paris, Milan and Cologne. A local presence in those markets with competent and well-respected underwriters will contribute to the growth of that territory.
Secondly, there are meaningful profit opportunities in international D&O and professional liability. We've been in that business for almost 10 years at Lloyd's and expanded our team there beginning in 2009. Today we underwrite international D&O and professional liability in London, Stockholm and Copenhagen. A Continental European presence will accelerate our growth.
Third, is Navigators Specialty, our U.S. excess and surplus lines business unit. We have developed a very strong market position in the U.S. casualty business. We expect to continue to grow our profitable casualty portfolio, and we anticipate adding a small account team, and an excess and surplus lines property unit by the third quarter of this year. Current market conditions provide abundant reinsurance support that will allow us to prudently expand the business without taking undue risk to our balance sheet. It's a marvelous opportunity to expand a great trading relationship we already enjoy with key wholesale brokers across the U.S.
TWST: Can you comment on the strength of your balance sheet at this time, and are there any areas that you are working to improve?
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.