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In June, Endurance Specialty Holdings Ltd. appointed James D'Onofrio as executive vice president and head of reinsurance operations for Endurance Reinsurance Corporation of America (ERCA), its reinsurance operation.

The appointment was announced just as the company was closing the books on a healthy second quarter, reporting profits of $149.1 million, up 57 percent from the year-ago period. The quarterly results were helped by the company's reinsurance segment, which saw net written premium soar 38.8 percent to $326.3 million compared with the year-ago period.

Cyril Tuohy: What inspired you to join the insurance ranks in the first place?

Jim D'Onofrio: Actually, my first job out of college was as a paralegal. One of the projects I happened to work on involved a reinsurance subsidiary and that's where I first learned about the business. As I met some of the reinsurance people, it started to pique my interest. Then as I learned more about the business, I liked the fact that it involved two sophisticated parties doing a transaction: the reinsurance company and the ceding company.

What appealed to me was that I like dealing with people and clients plus it was a very good balance of qualitative and quantitative analysis. Initially the qualitative side really interested me as you need to develop a deep understand of the ceding company's business. As the reinsurance company, in most cases you're partnering with the ceding company and that type of mutually beneficial relationship intrigued me, so I decided to pursue reinsurance as a career. My first job was with a company called Constitution Reinsurance Company and we'd focus more on regional companies.

Q: Based where?

A: New York City. Constitution Re was at the time part of Xerox Financial Services and then we were sold to one of the initial private equity companies involved in reinsurance. They purchased Constitution Re in 1995 and sold it shortly thereafter to Gerling. I worked there for several years and went to Axa Re's U.S. operation for a short period. When the opportunity at Endurance came, it was one I couldn't pass up.

Ken LeStrange and I went to the same high school on Long Island. I'd heard of Ken and his great reputation in the industry. He's been a great leader and a person I've enjoyed working with. We've been very fortunate to have a steady leadership team in place for many years and that consistency has helped us develop as a company.

Q: Your new position will require you to spend more time representing Endurance but what is your day-to-day agenda in your new position?

A: Whereas before I headed one of the business units in ERCA, now I'm involved in more products and one step removed from the day-to-day responsibilities of account management. My focus is on managing the overall direction and profitability of much of the ERCA portfolio. This includes the casualty portfolio along with surety, professional liability, personal accident and property. My instinctual role as an underwriter hasn't really changed--it's still to bring the best products to our clients but now my involvement just comes a little later in the process.

When it comes to making a final decision, that's generally where I get involved. I look at where each particular piece of business fits within the individual business unit portfolio and overall how it rolls up on a portfolio basis.

Q: It sounds as if you're spending more time managing other people and dealing with the heads of individual business units.

A: One of the things that attracted me to the business was really getting to know the clients and if anything I expect to expand my interactions and relationships with more clients. We take a very team-oriented approach here and the more smart people we get involved, the better solutions we can offer our clients. I may not be involved in each individual decision anymore but I will help drive what kind of products we offer and how we manage risks.

Different clients need different services. Our relationships at ERCA are often geared towards specialty clients. On the property side, surety and professional liability side, we do write some larger companies but we always try to provide value- added services. We recognize that cost is important to ceding companies but we try to add more to the transaction.

Q: Have you seen the business change since you first entered it?

A: I started in the business in 1991 and it's definitely become much more complex. When I started, the underwriters were for the most part still handling the underwriting and pricing of the business. Now, with the sophistication of CAT modeling and enterprise risk models, most companies have experts to work with the underwriters to utilize these models as part of the due diligence process. When I started at Constitution Re, the underwriters and claims staff were on different floors and would only see each other occasionally. Now we operate with a very team-oriented approach. We're constantly soliciting input from the claims team, our actuaries and the financial staff to better understand our clients' needs and to understand the dynamics of each deal.

The business is much more complicated than it used to be. I've always said that a company's data is their DNA and I'm amazed when I think back to the submissions that we used to get in the early days; they were a couple pages of narrative, hard copy. Now we're getting huge ZIP files and we use the data to the greatest extent possible. Both ceding companies and reinsurance brokers do a great job now getting us a much higher level of data. The better data a ceding company can provide to us, the better price we can provide them.

Q; Any mentors or people that you looked up to?

A: There have been a lot of mentors in my career and I've always been willing to learn from other people. I look at it from the perspective of the companies I've had an opportunity to work with and I really see Constitution Re as my foundation. Constitution Re really taught me the business; I had a lot of interaction with clients at a very early stage in my career. The underwriters took us out on the road to see clients and I got to understand their business and what was important to them. I've always enjoyed going out and meeting clients.

Q: People stay around a long time in this industry.

A: It's a great career. You look at the business and how insurance has evolved and will continue to evolve. It really is an ever-changing industry. From a reinsurance perspective, every deal is different. There are a limited number of products--quota share, excess of loss, CAT, surplus share and aggregate stop loss deals but every deal is different. You can't underwrite business with a template and be successful over the long term. People stay in it because it is a very dynamic industry.

Q: What is the strategy for reinsurance in the next four or five years?

A: We will keep working with our clients to help them continue to achieve their business goals in what is a tough market. Second, I would say we need to continue our diversification. If you write every personal auto writer in the market then you can never outperform the industry. You become an index fund. I don't see that as the role of a reinsurance company. We originally started out with three business units and have added expertise in other areas to develop our portfolio.

Our strategy is to find the best-in-class companies in different segments and we've done a very good job in the areas we're in. It's about supporting those clients that have a similar approach to ours and trying to find a few more of those clients that are best in class in those areas to support our goal of diversification.

There are some areas where there could be opportunity to expand. For example, in the U.S. we would like to be more active in the Midwest regional business, although it's very competitive.

Q: What would you do over given the chance in terms of underwriting or personnel issues?

A: I would have gotten earlier exposure to some of the other disciplines. In the early 1990s if you were an underwriter, you focused on the underwriting area, the policy form, the rating. You did not spend a lot of time on the claims side or on the legal side. Now it's imperative that you have some expertise in these areas. Cross-training is imperative. In reinsurance, there are not a lot of formalized training programs so you have to be a self-starter. You have to be willing to go over to the accounting or claims areas and say, show me your process, let's talk about this claim.

September 1, 2009

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