Liberty’s Smith: GRS set for long-run success with strong CR performance in sight

Liberty Mutual’s North America Global Risk Solutions (GRS) business is set up for long-term success and “predictable” results after work undertaken in recent years, outgoing region head Kevin Smith has said, with the unit on course to report its best combined ratio in nearly a decade.

Smith made those comments in an interview alongside incoming GRS North America president Marc Orloff, in which the pair detailed the progress the unit has made in repositioning itself over the last two-plus years due to an influx of talent and renewed underwriting acumen.

Smith came out of a planned retirement in August 2022 to lead GRS North America after stepping away from CNA, noting "mixed emotions” over his latest attempt to retire.

“I'd probably go another five years. My wife has said 'You're going to do it alone if you don't do it now,'" Smith said in jest.

The outgoing executive said he was impressed by the vision that GRS global president Neeti Bhalla Johnson had set out, and the type of talent the unit was planning on onboarding.

“Candidly, the calibre, the quality of the people, the integrity… I was looking for a single trip-wire to say, ‘Okay, give me one reason not to do it’, and I couldn't find one. And by the end of it I said, ‘I’m in.'”

“Absolutely wonderful journey”

Smith called his time at Liberty “an absolutely wonderful journey” with an aim at “synchronising” Liberty GRS’ North American team alongside Bhalla Johnson’s strategy of globalising the business and bringing stronger intersections between business units.

“My job was to come and really fortify the North American team, really bring an outside purview,” Smith explained.

The outgoing executive noted that GRS North America had “many pockets” of the business that had improved dramatically by the time he arrived, as he set out an ambition to accelerate that progress, pointing to work done in the middle-market and financial lines units.

Smith saw it as his responsibility to strengthen GRS North America’s “underwriting ecosystem” to set the business up for success over the long-term, with predictable performance moving forward and “viable combined ratio performance”.

“And so that's really been a big part of the journey. With instituting the right underwriting skills and discipline and then bringing in talent… I think that's one of the things [I’m] really most proud of, the quality of talent we brought in.”

Among the prominent executives that have joined GRS in recent years are Zurich NA's Brandon Fick as CUO for GRS NA, and Paul Larson, who now leads Ironshore’s professional liability business, IronPro.

“All the way through the middle market teams and through financial lines, really deeper down into that organisation – we've been really fortunate to drive really good, deep expertise from all the major players in the industry,” Smith commented.

GRS set to post best results in a decade

The outgoing executive said it was too soon to disclose how GRS’ full-year results would shake out for 2024, but predicted they would be the strongest set of numbers the Boston-based mutual giant has reported in quite some time.

“You look at us today, and our financial performance, [and we] will probably put up the best combined ratio performance that we probably have seen in close to a decade.”

“And so we really have turned the corner from the financial performance side. The mutual is incredibly important, our ability to compound capital, but bringing this talent in now has strengthened our ability to lead with expertise, to lead with risk selection,” he commented.

“What's unique now is our underwriting, which in the past has been a bit volatile. I feel very good about the underlying strengths – the balance sheet strength – but the unique piece here is now the culture,” he explained.

“Constructive, thoughtful” succession plan

Smith said that with the plan for him to be in his current role intended to be for the short-term all along, succession planning and setting up a smooth transition have been paramount considerations.

“This is a constructive, thoughtful decision to have me come in for the time period I was in, in line with what I said I would do. Built into all that other underwriting work we did was to make sure we had a succession plan in place,” he commented.

“I think the timing worked out very well with my transition and Marc feeding in and somebody who's got some runway in that role,” he said.

“We want stability and predictability that mirrors up against the underwriting work that we've done and Marc is going to bring that in spades. He’s run large accounts, and now he's done the middle market business and been really instrumental in turning that around,” he added.

“We have every single product that any client would need”

Orloff said having Smith remain with the business as a strategic advisor for the next year as “critical”.

“We at Liberty have every single product that any client would need. We have the most diverse distribution access, retail agents, retail brokers, wholesale brokers. Our reach is massive,” Orloff declared.

“For us, the future is really about more seamless connectivity. How do we enable more products seamlessly for our clients? That is so critical,” he said.

Orloff said GRS North America would look to be “extremely intentional” in its approach to growth and leveraging Liberty’s global capabilities.

“By doing all those things, and then to overlay that with what is so powerful, is the culture. We're not a culture where there's these political walls between business units and products. We don't have that,” he said.

Smith said Liberty’s GRS business is currently staff “at the right levels” and that the unit would “start leaning into the market”.

“Middle market being the biggest opportunity for us on the relative scale standpoint in 2025 and we're really well positioned there with the changes we've made from a staffing level to to address that as well,” he commented.

“And candidly, as the market presents greater opportunity, our ability to attract talent has been exceptional.”

Orloff said staff that join Liberty “immediately experience the difference” in its culture.

“We're going to be extremely intentional. We have the underwriters that have the bandwidth to go compete and win in the markets where we play,” he added.

Orloff: “No channel conflict whatsoever within the family”

The pair also discussed how Liberty’s GRS business manages operating both in the retail channel and the wholesale segment, which it does through its dedicated E&S operation, Ironshore.

“Our key is, ‘Do we have the accessibility at whichever access point is desired to be used, and do we have the full capability we need to bring to the table there?’”

“I'm less concerned about it being a competition with one another,” Smith continued, saying that a bigger priority is making sure Liberty has both the right product and talent to serve where distribution trading partners choose to access the firm.

Orloff described Liberty’s GRS unit as “an industry leader in both admitted and non-admitted” with “no channel conflict whatsoever within the family”.

“Our vision, more so than to be E&S or not E&S – we see the trend towards E&S. We want to be a specialty insurer. We want to be specialised in what we do,” as he pointed to ambitions to be best-in-class in environmental, healthcare, and P&C, among other segments.

“We want to be risk aware, not risk averse, whether that risk needs to be underwritten on an E&S basis and admitted or non admitted basis,” he explained.

“Those are two massive markets that we effectively compete in, both very successfully,” he added.

“We see the trend, we're leaning into the trend and being extremely intentional about winning on both sides,” he continued.

Smith argued that Liberty is now as well-positioned “holistically” as it has ever been, pointing specifically to its current depth of talent and the work it has done to improve its underwriting.

“We have ongoing challenges in the market, we’re not exempt from that like every other market. But the culmination of our underlying performance has been improved in the last five years, the talent, the work Neeti has done in globalizing the business,” he explained.

“We're making sure we leverage that global capability. I do feel this is the first time we've brought all of those pieces together. So I just think we're as well positioned as we have been as we go into the next three to five years,” Smith added.

Orloff said Liberty’s North America GRS unit will “lead with integrity” and that is has “massive ambition”.

“We will be an integrity led organisation, and we have real ambition to grow and win in the markets where we choose to play,” he concluded.