Houston International Insurance Group (HIIG) CEO Andrew Robinson is targeting the addition of new underwriting teams and renewal rights transactions to capitalize on hard market conditions in a bid to build the carrier out as a top-tier primary specialty player.
The Hanover’s former specialty insurance president was unveiled at the helm of HIIG earlier this week (26 May) in a surprise move that saw the insurer’s CEO Stephen Way step down from the position.
It is understood Way will retain an active role, however, with hands on involvement in HIIG’s transactional property business and a seat on the board of the company he founded and continues to have a meaningful stake in alongside Canadian investment holding company Westaim.
Industry entrepreneur Way formed Southwest Partners in 2007 – which became HIIG in 2010 – after leaving HCC Insurance Holdings, which he led into a leading specialty insurer in the US and internationally.
In an interview with The Insurer, Robinson described Way as a “big insurance personality” who has been “very successful”, adding that the change of CEO is an orderly transition with his predecessor providing ongoing support to the company.
The new CEO said he had been brought in to build out a platform that has recently been bolstered by a $100mn rights issue and a loss portfolio transfer (LPT) provided by R&Q to cut off legacy liabilities.
“The board basically said, look, we think we’re at a launch point, the market’s in a great position. So they went and recruited somebody to build a top-tier specialty insurance company,” said Robinson.
“Fantastic talent is being accumulated, and that’s definitely going to continue. We’ve had an injection of capital, cut off the liabilities… and obviously we have the hard market behind us. It is a very good starting point and we just have to go and do our jobs now”
HIIG’s new CEO Andrew Robinson set for build-out
“Fantastic talent is being accumulated, and that’s definitely going to continue. We’ve had an injection of capital, cut off the liabilities… and obviously we have the hard market behind us. It is a very good starting point and we just have to go and do our jobs now,” he continued.
In his decade at The Hanover, the executive was heavily involved in the buildout of the US insurer’s specialty platform in the US, including team hires and renewal rights transactions, and was the architect of the acquisition of Lloyd’s insurer Chaucer.
But while he would never say no to M&A opportunities, Robinson said HIIG will lean towards team hires and renewal rights types of transactions as it expands its operations into new industry classes and lines of business.
“We’re going to go out and get some great talent. I had a lot of success doing that in the past… by grabbing either books of business and/or teams,” he explained.
The executive said he expects plenty of renewal rights transactions in the sector as dislocation continues and carriers move in and out of lines of business.
“We have to get ourselves positioned for those. When opportunities come available, we want to be in the flow of those and be able to see them,” he said.
Houston, Texas-based HIIG, which grew gross written premium by 26 percent in 2019 to $878.3mn, will continue to focus on specialty business as it grows its book in hard market conditions.
The carrier is currently only in a relatively small number of classes and lines of business and has strong positions in several of those niches where it sees opportunities to grow, including mining.
But Robinson described the expansion opportunity as largely a “blue ocean” for the insurer. He said the initial strategy would be to target seven industry classes to develop a principal focus, writing a broad-based portfolio of P&C lines within those areas.
He added that HIIG would not look to become a cat-heavy underwriter but would look to underwrite and build a book around top property risks in the specialty arena.
In casualty, the portfolio would “run the gamut” from traditional E&S classes to claims-made business along with other specialist classes.
As the insurer approaches underwriting executives and teams, it has the advantage of being able to offer the opportunity to build their business without competing against an existing legacy book of business or restrictions from a distribution perspective, explained Robinson.
“Obviously there are a lot of players out there that are de novo, but not a lot of them have an existing balance sheet, business, systems and structure, as well as our fantastic leadership team,” he added.
The insurer recently added former Great American president and COO Donald Larson to its board. Its senior management team includes president Peter Smith, who was previously CEO of IGI UK and worked with Way at his previous company HCC, and CFO Mark Haushill, who previously held that position at ASI and Argo.
While the carrier will continue to be a big buyer of reinsurance – last year it ceded 52 percent of its written premiums – it will retain a strategy of being a focused gross line underwriter.
HIIG is a particularly heavy user of reinsurance to support its transactional property book, including placements in the facultative market.
Robinson said he would also be looking to deploy technology in a bigger way at the insurer, leaning on his own experience that includes almost three years at investment firm Oak HC/FT as an executive in residence and senior advisor working with several insurtech businesses.
“We certainly want our tech stack to enable us to have an efficient operation,” he commented.
There would be greater use of “superior information” to evaluate risk and allow management to better understand the performance of the business, including responding rapidly to opportunities.
“And then we want to be really outward looking in terms of is there a different way to think about the kinds of risks and the way that we take risks based on what’s happening in the marketplace,” he said.
Select approach to program business
HIIG will take a select approach to growing its MGA and program business as part of the broader buildout of its platform.
The book on a net basis accounts for around 20 percent of the insurer’s total portfolio of business.
CEO Andrew Robinson told The Insurer that the carrier would continue to entertain opportunities to expand its program or MGA written business.
“If we were to do more programs, the programs would have to be distinctive and have truly defensible positions. And our role in that relationship is that we would have to be adding something that gives us franchise value. We’re certainly not shut off from that, but the bar is high,” he said.
The executive said that the program arena is a tougher market to operate in if an insurer is seeking predictable returns.
Robinson added that HIIG had enjoyed success in the program sector, however, and if there were opportunities in areas where it didn’t want to have an in-house underwriting capability it would not ignore those opportunities.