BY LAWRENCE RICHTER QUINN
The P&C industry is working aggressively to expand its business in excess and surplus (E&S) lines.
E&S premiums increased to $25.44 billion in 2012, growing nearly 11 percent, following a 3 percent increase the prior year, according to Charlottesville, Va.-based SNL Financial, a provider of financial information.
"These increases are especially notable in light of recent history," according to SNL's recent report. "In 2009 and 2010, premiums were on the decline."
Market leader AIG controlled 20 percent of the market in 2012, while Nationwide, the next-largest competitor, had a market share of about 6 percent.
About 21 percent of AIG's P&C business is devoted to E&S, which had direct premiums of $5 billion written in 2012, a decrease of nearly 6 percent, according to SNL.
"AIG is clearly the leader in U.S. E&S lines. They have such a dominant position," said Thomas Mason, senior industry analyst, Insurance, SNL Financial.
Warren Buffett's Berkshire Hathaway, however, has the potential to make some waves now that it has hired away four senior AIG executives. Among those recruited was David Bresnahan, the former president of Lexington Insurance Co., which at $4.23 billion accounted for the vast majority of AIG's E&S premiums last year, according to SNL.
"It's possible that Berkshire Hathaway can build out its operations pretty quickly," Mason said, "but it's a pretty wide gap to close in order to get up there with AIG."
In 2012, Berkshire Hathaway had $404.6 million in E&S direct premiums written, and a market share of 1.6 percent. E&S accounted for just 2 percent of the company's P&C business, according to SNL.
"It really hasn't put much of a focus on E&S in the past," Mason said, but he noted that luring the AIG executives indicated a change was probably in store.
"Berkshire Hathaway can pretty much turn on a dime," he said. "They have tons of money to throw at any particular line that they want to."
September 1, 2013
Copyright 2013© LRP Publications