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With the company since 2002, almost from the beginning, when Arch was formed in the wake of Sept. 11 to inject new capacity into the market, it was Lyons who pushed hard for the specialty property/casualty carrier to buy Wexford Underwriting Managers' excess workers' compensation business in January 2007.

The deal helped Arch round out its product line, showed that Lyons wasn't afraid to fight for what he believed was best for the company and signaled to Wall Street that Arch was prepared to spend cash on complementary businesses.

"One thing that I'm going to continue because we've done it in the past and I'm going to push it a little more deeply, and horizontally, is the innovation culture," he says. And Lyons also likes to take credit for pushing for more support for the company's national accounts unit.

An actuary by trade, Lyons is an alumnus of the industry "majors": AIG, Berkshire Hathaway and Zurich Financial. It's fair to say that he has been well trained in spotting new opportunities. New chances today come from looking at the big picture, he says, and acting quickly to exploit the new changes in the marketplace.

"I really believe that the companies that are going to succeed are those that are looking macro, and looking at the forces that exist in the world and in the national economy and what kind of product sets and needs and risks do we see five years out, and begin planning for those now," he says.

Lyons, having worked at AIG, should know. When just about every other company exits a market, AIG often jumps in. "That's a 'heart palpitation' approach to business but they do it like no one else," Lyons says. Could Lyons take Arch down a similar path?

After six years in existence, Arch has so far targeted only the construction, energy, healthcare and real estate industries--albeit with multiple lines; and the time has come for the company to diversify, says Lyons.

"We will look to diversify," Lyons says. "We will also look to provide some complementary product lines, if we can find the right niche. We're not going to go into it just for the sake of doing it." He adds: "Timing is everything. If we think it is complementary and it can expand our product set and perhaps allow more profitable business to be bound, we're going to do it."

Arch's insurance subsidiary has done well primarily as a specialty insurer, in part because its board has allowed management to undertake course corrections very quickly, according to Lyons.

Lyons also says he has no plans to alter the distribution structure through which Arch sells its coverage, sticking with Marsh, Aon and Willis on the retail side, and with CRC, AmWINS, American E&S and others on the wholesale side.

"We don't really see that opportunity," he says. "If we wrote business that was more class-rated--BOP primary packaged policies, areas where there's more pricing control and less judgment--then perhaps. But we're in the judgment business so it's less likely to be automated, which is what is needed to consider going direct."

In a media release announcing the promotion, Dinos Iordanou, president and CEO of Arch Capital Group Ltd., confirmed that the executive changes at the top would mean very little in terms of the firm's operating strategy.

"Our ability to promote from within Arch is another indication of the depth and strength of our management team," said Iordano. "Under the continuing senior team led by Mark, the strategic direction of Arch Insurance will not change."

CYRIL TUOHY is managing editor of Risk & Insurance®.

(Read the rest of the People on the Move newsletter from June 11.)

June 11, 2008

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