Best's Review - November 2023 Edition

teammates in the United Kingdom, Ireland and beyond;

the attractiveness of our acquisition solutions; and the

effectiveness of our model. We feel very positive about

our global value proposition as we increase collaboration

and look to make future investments,” CEO and President

Powell Brown said in a statement.

Convex Group Names Bermuda CEO and Group

Deputy CUO Reinsurance

nternational specialty

insurer and reinsurer

Convex Group Ltd.

appointed Paul Simons as

Bermuda chief executive

officer, and Christophe

Chandler as group deputy

chief underwriting officer

reinsurance, effective

Jan. 1, 2024, subject to

regulatory approval.

Simons will continue

to be based in Bermuda

and Chandler in London,

both reporting to Matt

Paskin, group chief underwriting officer reinsurance

and chairman of the reinsurance executive committee,

according to a company statement.

Convex RExCo will be made up of Paskin, group

CUO reinsurance, chairman; Simons, Bermuda CEO;

Chandler, group deputy CUO reinsurance; Roy Foster,

U.K. CUO reinsurance; and Richard Slater, Bermuda CUO

reinsurance, the company said.

Simons joined Convex in December 2022 as

deputy CEO of Bermuda, bringing more than 25 years

of experience in the Bermudian reinsurance market.

Chandler joined Convex in 2019 leading reinsurance

specialty. He has great experience in property and

speciality in the London, Bermuda and European

markets, according to the company.

Paul Simons

Aviva Appoints CEOs for UK & Ireland, Canada

viva named Jason Storah

to succeed Adam

Winslow as chief executive

officer of United Kingdom

and Ireland General

Insurance, subject to

regulatory approval.

Storah, who has been

CEO of Aviva Canada for

four years, will be followed

in that role by Tracy

Garrad, subject to visa and

regulatory approval.

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Jason Storah

Earlier this year,

Direct Line Group hired

Winslow to succeed Jon

Greenwood, acting CEO

since January 2023, as

permanent CEO, effective

in the first quarter of 2024.

Greenwood succeeded

Penny James who stepped

down as CEO and director

in January.

Winslow had led Aviva’s

UK and Ireland general

insurance business since

May 2021. Prior to this, he was CEO of Global Life at AIG

Life and Retirement, now Corebridge Financial, having

successfully held a number of general insurance and life

insurance roles in his eight years at AIG.

In his new role, Storah will continue to report to Aviva

Group CEO Amanda Blanc. He also will remain a member

of Aviva’s Group Executive Committee, as he has been

since 2020, the company said.

Storah has been CEO of Aviva Canada for four years.

He has almost 20 years of experience with Aviva in a

variety of roles. Prior to becoming CEO of Aviva Canada,

he most recently served as chief distribution officer,

where he oversaw broker distribution, partnerships—

including RBC Insurance—as well as Aviva’s direct

insurance business and marketing, according to a

company statement.

Garrad, who transitioned to her new role in October,

also reports to Blanc and becomes a member of Aviva’s

Group Executive Committee.

She has held senior roles in the financial services,

insurance and health care sectors. Most recently she was

CEO of Axa’s U.K. health care business, formerly Axa PPP,

and prior to that role she was CEO of HSBC’s Channel

Islands and Isle of Man business, following a four-year

tenure as the CEO of First Direct Bank.

Tracy Garrad

Arch Reinsurance Promotes Executives

rch Reinsurance Ltd.

named Crystal Doughty

as chief underwriting

officer, property, and

William Soares as CUO,

casualty and specialty.

Pierre Jal, who most

recently served as global

CUO for Arch Re Ltd.,

has assumed the role of

CUO for Arch Reinsurance

Europe. Jal, now based

in Zurich, continues to

oversee underwriting

Crystal Doughty

Executive Changes

strategy across both Arch

Re Ltd. and Arch Re Europe,

according to the company.

Matthew Dragonetti,

who helped found Arch

Re Ltd. in 2001 and has

been president and head

of property since 2017, will

expand his responsibilities

to include leading client-

centric initiatives across

Arch Worldwide Reinsurance

Group, the company said in a

statement.

Doughty joined Arch in 2021 as a senior property

underwriter and has been leading several of Arch

Re’s insurance-linked securities initiatives. Prior to

Arch, Doughty spent 15 years with Markel in various

underwriting and actuarial roles, according to the

company.

Soares has held a variety of senior underwriting roles,

most recently head of casualty and specialty, since

joining Arch Re Ltd. in 2006, the company said.

Jal started with Arch Re Europe in 2007 as an

underwriter/actuary and has held senior underwriting

roles at both Arch Re Europe and Arch Re Ltd., according

to a company statement.

Markel Group Hires Leader for North America

Terrorism Product

arkel Group Inc. named

Andrew Umphress

as head of terrorism

for North America. The

company is bolstering its

global terrorism product

as geopolitical risks grow

worldwide, according to a

company statement.

Umphress is based in

New York and will report

to Ed Winter, director of

terrorism, in London. He

will manage the company’s

terrorism portfolio in the

region and grow the company’s active assailant product,

the company said.

Umphress has more than 13 years of experience as a

terrorism underwriter and manager in the U.S. market. He

was previously a vice president and senior public entity

property underwriter at Munich Re Specialty and before

that was the head of U.S. terrorism at Ambridge Group.

He also served as the associate vice president, war and

terrorism and head of wholesale at Validus.

William Soares

Andrew Umphress

Mosaic Appoints Head of US Cyber Business

pecialty underwriter

Mosaic Insurance

appointed David Drogin as

senior vice president, head

of U.S. cyber. Based in New

York, he will be responsible

for leading operational

and growth strategy

for Mosaic’s U.S. cyber

portfolio.

Drogin is a senior cyber

insurance professional

and lawyer with more than

18 years of experience

across claims, product

development and underwriting.

Previously, he was U.S. Northeast regional manager at

Axis Capital, overseeing a portfolio of cyber, technology

errors and omissions, professional liability and media,

with a focus on both retail and wholesale markets.

He also worked at Ace USA and served as an

insurance coverage lawyer at Wilson Elser, according to a

company statement.

David Drogin

Web Traffic: Visits to US Homeowners

Multiperil Insurance Sites

Progressive leads web analytics

provider Semrush’s ranking of

most-visited U.S. homeowners

multiperil insurer websites.

010,000,00020,000,00030,000,00040,000,000

Hartford Ins Group

Nationwide Group

Travelers

Farmers Ins Group

Liberty Mutual Ins Cos

Allstate Ins Group

CSAA Ins Group

State Farm Group

USAA Group

Progressive Ins Group

Visits

Source:

www.semrush.com.

Reported traffic for September 2023.

Scan for a full listing of Best’s Rankings.

BEST’S REVIEW

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http://www.semrush.com/

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BEST’S REVIEW

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M&A Motivations:

Strategies for

Success, Value

Creation and

Diversiﬁcation

Bill Pieroni

The insurance industry has had

significant growth in the size of M&A

transactions, but do the long-term

results support this acquisition

strategy?

arriers and brokers have consistently

pursued mergers and acquisitions

in order to grow and diversify their

business. In the past decade, the industry

has witnessed significant growth in the

size of M&A transactions.

While it is a prevalent strategy, does it support

consistent value creation for carriers? Additionally,

do the rationales and motivations for acquirers

impact long-term results? ACORD recently

examined nearly 15,000 M&A transactions

over the last 10 years to answer these and other

questions.

Carrier Strategies & Motivations

Though there are many reasons carriers might

pursue M&A deals, ACORD’s research identified

four key sources of buyer motivation across all lines

of business.

•

Core expansion:

These buyers sought to

increase their share across areas in which they

Best’s Review

columnist

Bill Pieroni

is president

and CEO of ACORD. He can be reached at

bestreviewcomment@ambest.com.

BEST’S REVIEW

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NOVEMBER 

already execute—their current line of business,

customer segment, or geography. This was the most

common acquisition motivation among property

and casualty and composite insurers.

•

Scale and scope:

These buyers endeavored

to take advantage of amortized fixed costs and

improve resource access by growing their size and/

or reach. This represented the most common

motivation among life insurers and reinsurers.

•

Capability acquisition:

These insurers

pursued the acquisition of companies possessing

tools or resources for optimizing the risk, cost and

time associated with developing key capabilities—

technological or otherwise.

•

Diversification:

These insurers were intent

on optimizing their portfolios by investing in new

revenue and earning sources. This produced widely

divergent outcomes in different lines of business.

At Large

mailto:bestreviewcomment@ambest.com

Outcomes & Value Creation

Interestingly, the outcomes of these deals were

considerably different across lines of business, even

if the carriers were motivated by the same central

principles.

In aggregate, P&C carriers experienced higher-

than-average returns after M&A transactions in

all four motivation categories—in fact, 70% of

the P&C deals studied created value over the

course of the 10-year analysis period. However,

life insurers faced difficulties regardless of the

rationale behind the deal, with just 36% of all

M&A transactions in this segment creating value.

Reinsurers experienced mixed results, creating

value in just half of acquisitions overall, with high

performance limited mostly to deals motivated by

core expansion.

Diversification

Interestingly, diversification was by far the most

successful motive among P&C insurers—driving

average TSR appreciation more than twice as high

as the other rationales—but less successful in other

lines of business. For life insurers, diversification-

motivated acquisitions destroyed more than four

times as much value as other transactions.

Clearly, there is no one-size-fits-all option in

M&A strategy—in fact, for some, the best decision

may be to avoid these deals altogether. Those who

seek to create value post-M&A must first assess

their unique set of circumstances—the lines of

business in which they operate, their motivating

factors, and more—in order to make an informed

decision that will enable them to thrive in the long

term.

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Midsize

Businesses Face

Full-Size Risks

Alex Wells

Middle market companies must

navigate many of the same

challenges as larger corporations,

but often without adequate

resources to address them.

he 200,000 midsize businesses in the

United States generate $10 trillion in

combined revenue and almost a third of

the private sector gross domestic product,

according to the National Center for the

Middle Market. Their greatest strength is often their

flat organizational structure and agility, which allows

them to quickly respond to customer needs and

marketplace opportunities.

They are essential businesses that form the

backbone of the U.S. economy and are exposed to

the host of economic, legal, social, regulatory and

natural catastrophe risks we hear so much about

today.

Midsize businesses and large enterprises have

distinct characteristics that can lead to differences in

how they experience and respond to various risks.

Some reasons why midsize businesses might feel the

impacts of risks differently include:

•

Resource constraints:

Midsize businesses often

have fewer specialized resources dedicated to unique

operational risks compared to large enterprises.

•

Focused geography:

Large enterprises are more

likely to have operations spread across different

regions or even countries, providing diversification

that reduces the impact of localized risks.

•

Specialized or limited supply chains:

Large

Best’s Review

contributor

Alex Wells

is head of U.S.

Middle Market, Zurich North America. He can be

reached at

alex.wells@zurichna.com.

BEST’S REVIEW

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NOVEMBER 

enterprises are better able to diversify their vendor

partners while maintaining economies of scale.

•

Assets that are less liquid:

Midsize businesses

frequently operate with fewer cash reserves and,

therefore, have less time after a disruption to recover

before experiencing an impact to their business.

The unique risk profiles of midsize businesses—

not large enough to have specialized risk

management, legal and operational teams, but

far too complex for standardized off-the-shelf

solutions—require insurers to develop equally

unique approaches to help manage their risks.

One way that insurers can do this is to focus on

specific industries—technology, financial institutions,

professional services, real estate, manufacturing,

etc.—and develop in-house expertise that understands

the unique pain points of each company within

those industries. This leads to efficient solutions that

Risk Adviser

mailto:alex.wells@zurichna.com

are still customized to a business’s unique attributes,

including industry and geography.

The Impact of ‘Nuclear Verdicts’ on Midsize

Companies

The specific concerns of midsize companies will

vary depending on the industry. But a common, and

growing, concern that is threaded throughout nearly

all industries is the rise in exceptionally high jury

awards.

Also known as “nuclear verdicts,” they are

becoming more common and are being driven,

in part, by aggressive plaintiff attorneys who are

increasingly financing litigation through a new

business model in which third-party investor groups

provide capital to law firms involved in personal

injury and liability litigation in return for some

financial recovery once the lawsuits are resolved.

Combined with other societal trends, the use of

litigation financing drives what is commonly referred

to as “social inflation.” Some of these societal trends

hinge on the value of money and plaintiff attorneys’

ability to convince a jury that someone who was

wronged by a corporation is due a hefty payout.

All the factors that make midsize businesses more

vulnerable to risks than their larger counterparts

come into play here, including limited resources

to defend against lawsuits and limited finances to

absorb a loss. Large verdicts will result in massive

payouts that likely far exceed a midsize company’s

insurance coverage.

This reality may prompt insurers to think

twice before providing coverage or seek rate hikes,

particularly for lines of coverage susceptible to

nuclear verdicts, including commercial auto, medical

malpractice, and directors and officers liability.

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Contents

RESPECTED

AUTHORITY

• Workers’

Compensation

• Florida Market