Overview and Introduction to The Hanover Insurance Group

Transcription

1 American Institute of Professional Association Group Insurance Administrators Fall Conference Denver, Co September 19-21, 2012 Overview and Introduction to The Hanover Insurance Group Gerry Merritt, President Hanover Professional Liability 1

2 AIPAIGIA Conference & The Hanover Welcome & Thank You for the Opportunity Gerry Merritt The Hanover At a Glance Our Unique Strategy Professional Lines Capabilities Investing in Expertise & Distinctive Offerings Extending into (Misc.) Professional Liability Leveraging Program Capabilities Strategies for Writing Total Accounts Announcing a New Strategic Partnership Questions Dave Sessions Rusty Manzo All

3 The Hanover. Since 1852 Extraordinary History Founded in 1852 to provide fire insurance and have withstood the test of time One of the oldest P&C insurers in the U.S. And one of the 40 oldest companies listed on the New York Stock Exchange Track record of demonstrated financial strength, paying dividends every year - for 160 years Well Positioned in 2012 Chartered - April 1852 Significantly broadened product offers to address the evolving needs of businesses Best place to work by Business Insurance past two years Excellent ratings by A.M. Best A leading provider of property and casualty insurance in the United States, Significant capabilities and local presence International; membership in Lloyds of London One of most dynamic U.S. P & C companies 3

4 The Hanover - At a Glance Headquartered in Worcester, Mass - Write business nationally - all 50 states With $4.1 billion in revenue The Hanover is a Fortune 1000 company Ranked among the top 25 property and casualty insurance companies More than 5,000 employees, working from over 45 field locations Unique value proposition as Best Company for Partner Agents because: Intense focus on product innovation/distinctive product mix Unparalleled local responsiveness and expertise True commitment to partnership Sell exclusively through a select group of independent agents & brokers Well Positioned in Professional Lines: Delivers product and underwriting expertise in professional liability, providing specialized insurance & risk management solutions for lawyers, accountants, design professionals & many other professional services Offers a solid portfolio of management and executive liability products and services 4

5 We ve Built A More Balanced and Diversified Book Of Business Specialty 3% Commercial Lines 31% Personal Lines 66% UK Motor 5% Personal Lines 34% Commercial Lines 27% U.S. Specialty 15% (Written Premium) $2.2 Billion * Forecast, with Chaucer annualized Reinsurance 4% 2011 Growth CL Core +9% Specialty +18% PL Grow States +7% $4.1 Billion International Specialty 15% 5

6 Specialty has been a key to growth and to Commercial Lines overall success Direct Written Premium In Millions $812 $38 $38 $100 $108 $200 $28 Healthcare Management Liability Hanover Specialty Industrial Surety $59 $26 $33 $300 Professional Liability Marine AIX Program Business

7 We ve Created A More Distinctive Position In Most Of Our Businesses 7

8 The Hanover s Journey Continues We have transformed our entire organization to be the best positioned ever in our 160 year history! Penetration Era Rebuild Era Shoring Up The Foundation Transformation Era Growing Capabilities, Geographies, & Scale to Become More Relevant Accelerating Profitable Growth with Winning Agents across Multiple Markets & Products

9 Products Distinctive Capabilities Relevance Selective Distribution & Partnerships Cornerstone of The Hanover s Strategy Tools + = That Drive Agent Economics Focus Penetration Positioned For Success Results Limited Distribution Advantage 14,000 Number of Independent Agents 12,000 8,000 8,500 2,500 = Franchise Value 9 Travelers Liberty The Hartford Chubb Hanover

10 Hanover Professional Portfolio (HPP) 4 Dedicated Centers of Professional Liability Expertise: LAWYERS ACCOUNTANTS. Plus an Expert Team Handling Management Liability ARCHITECTS & ENGINEERS MPL for 150+ PROF CLASSES MANAGEMENT LIABILITY D & O, FIDUCIARY/CRIME, ETC

11 Hanover Professionals E&O - Highlights Lawyers Professional Liability TARGET APPETITE: Focus is small to mid-size firms (1 to 50 attorneys) with little to no area of practice severities The most desired firms are 1-9 attorneys UNDERWRITING & MARKET TRENDS: After nearly a decade of soft market conditions, the cycle is turning Although a technical correction has begun, there is still far too much capacity for a true hard market BUSINESS PRIORITIES: Continued conversion of renewal book to the new/enhanced Hanover product Drive new business from new program opportunities, which is also adding quality business into portfolio

12 Hanover Professionals E&O - Highlights Architects and Engineers TARGET APPETITE: Focus is small firms (ratable billings up to $10Million) and mid-sized firms on special acceptance basis as ballast is built; Prohibited classes: soil engineers; marine engineering; nuclear projects, petrochemical projects; chemical engineering; mining engineering UNDERWRITING & MARKET TRENDS: Post-Lehman economic downturn has been particularly hard on this class; exposure base has been severely eroded resulting in significant limits compression Initial signs of recovery are percolating up and market conditions are starting to improve despite too much capacity BUSINESS PRIORITIES: Continued focus on specialist agent current relationships, while continuing to cultivate new ones Improving yield rates and ease of doing business - by development of a shorter application and adding risk management capabilities

13 Hanover Professionals E&O (Cont.) Accountants Professional Liability TARGET APPETITE: Focused on small ($500K revenue) and mid-size ($500k to $15M revenue) accounting firms UNDERWRITING & MARKET TRENDS: High concentrations of large blocks of business with top 10 markets Rates have been somewhat redundant for the past 7-10 years but most markets have depleted their redundancies and some rate uptake is underway This class is ripe for disintermediation from established markets to markets seeking to penetrate BUSINESS PRIORITIES: Concentrating on specialist agents with large blocks of business Investing in technology to efficiently process the expected volume

14 Hanover Professionals E&O (Cont.) Miscellaneous Professional Liability TARGET APPETITE: Actively pursuing 30+ high priority classes of professions Total appetite of 150+ professions UNDERWRITING & MARKET TRENDS: $3.5B total market; 80% under-penetrated; High margin business that presents superior growth opportunities for agents and carriers BUSINESS PRIORITIES: Program opportunities > actively seeking, developing and launching Targeted Distribution with both Specialist and Generalist Agents & Brokers Improving ease of doing business and increasing our premium per UW metric

15 Contact Information Gerald Merritt President Hanover Professional Liability Adam Bennett National Sales Director Hanover Professional Liability Kevin Sullivan Vice President Lawyers Professional Liability (Small Firms 1-5) Patricia Dougherty Chief Underwriting Officer Lawyers Professional Liability (Mid-sized Firms 6+) Moya Mendes Specialty Underwriter Accountants Professional Liability Katherine Dimit Vice President Architects & Engineers Professional Liability Robert Drohan Vice President Miscellaneous Professional Liability David Sessions Assistant Vice President Miscellaneous Professional Liability

16 Summary: Key Points of Why The Hanover The Hanover is a Strong and Vibrant Carrier Broad and Distinctive Portfolio of Offerings Significant Investments in Professional Liability: Talent Products Capabilities Ease of Doing Business Focus on a Selective Group of Top Agents & Brokers Program Business is a Growth Engine

17 Miscellaneous Professional Liability Programs David Sessions, AVP Hanover Professional Liability 17

18 Let s Level Set Factors Driving Why You Are Successful Understanding of the industry and the players Program Competency Process expertise Excellent working relationships Product Knowledge Service oriented 18

19 Professional Liability Strong & Growing Demand Professional Liability is not just for Doctors, Lawyers, Architects and Accountants anymore Many more classes being characterized as professionals It s no longer nice to have Professional Liability is becoming the most important coverage these professionals can carry. Reputations are at stake. Lawsuits are increasing Most states require certain professions to carry Professional Liability More and more customers are asking for proof Bigger demand is coming from contract requirements Most companies that bid on a job are being contractually required to show proof of professional liability

20 Why MPL - Why The Hanover? MPL opportunity applies to many classes, such as Property Managers, Employment Agents, Marketing and Management Consultants, Travel Agents, Payroll Processors and Third-party Administrators, Graphic Designer, Printers, Publishers, etc. National, yet selective distribution for more franchise value Experts - underwriters, legal and claims professionals, all seasoned experts capable of helping Hanover stand out in the marketplace Right products we have them or we will develop them Experience in growing programs leveraging expertise

21 The Hanover s MPL - Program Strategy Closely work with agents to get successful programs off the ground Focus on specific classes and create programs around them Specially crafted coverage hook is only available through this program, creating demand. Exclusivities available for specific class coverages Assist with or drive in marketing strategies & tools Educate potential Insureds on exposures and how our product closes those gaps Provide risk management services

22 MPL Program Benefits Significantly Increased Revenues Increased demand Lower costs of procuring Dramatic increase in hit ratios And improved renewal retentions Program agent has a competitive advantage in marketplace Higher retention with more lines of business with customer A strong professional Liability program is an excellent breeding ground to sell other lines of coverage Leverages your experience & capabilities to further grow your operation

23 What Makes The Hanover s MPL So Appealing? Limited distribution, franchise value Start Up no min book of business is required to start a program Speed to Market - We can deliver a start up program in as little as 60 days Access to Key Decision-Makers Minimal red tape, Hanover is flat, lots of autonomy National company admitted in 48 states (HI, AK are surplus lines)

24 Our MPL Strategy is working Here s Proof That It Works: Mortgage Field Services Contracting Company 3 months between 1st contact & program launch Premium volume first 4 months = $1.2 million Executive Search Association Partnered with agent to offer unique coverages to the members and add value to the membership First contact in May 2012, Marketing launched July 2012

25 MPL Summary Key Points You represent exactly the kind of value-creating agencies, brokers and program administrators with whom we want to partner MPL is an excellent area to expand into, to achieve agency growth in a competitive marketplace You have the system infrastructure already in place for extending it to MPL We have the product expertise to create coverage demand in the MPL market We have a proven track record, we are the right company to be your partner

26 Total Account Solutions Leveraging The Hanover Small Business & Program Expertise Russell Manzo Group Affinity Manager 26

27 Small Commercial Affinity Programs Why Affinity Programs Are Growing: Leveraging Expertise Ability to be more relevant to target customers Selling Differentiation Offering unique & customized offerings Being More Efficient Enhanced acquisition & retention, at lower costs Building Your Brand Recognition as THE expert in target industry one more thing In addition to custom products & expertise, Customers want to simplify their experience, preferring one contact for all their insurance needs Maximizing Your Program Opportunities: Total Account Solutions Satisfies Customer preference on ease of doing business And brings significant benefits to agents Increased Revenue per customer Increases Retention Built in Referral Base 27

28 Why Partner with The Hanover in P&C Strong in both Small Commercial and Programs Very Selective distribution creates franchise value Individualized & Customized Program Development Coordination as one company approach - No Silos Unique tools to assess opportunities Optimizer Dedicated Underwriting and Consolidation Teams Program Management Resources, with Local agent relationships

29 Further Leveraging Our Unique Capabilities Concierge Service Center Providing extraordinary service on our agent s behalf Unique Agent/Program telephone number Extended service Hours 7 a.m. to 9 p.m. ET Co Branded Agent materials Dialogue Letters Will help handle Professional Liability & Agent Coordination

30 Leveraging Unique Capabilities Market & Sell on Agent s Behalf Co Branded Sales Campaign Program Introduction letter Agency Endorsement letter Telephone Follow-up Inbound/Outbound Monthly Progress Reports

31 Differentiated Program Products Tailored Business Owner s Policies for Professionals Specialized Program Broadening Coverage Forms Workers Compensation Plans for Professionals Availability Dividends Special Affinity Program Claims Handling Joint Loss Agreement Ability to Customize Loss Control Services

32 Strategies & Tactics for Market Penetration Real-Life Success Story with Fortress Partnering with Fortress A Strategic Alliance for a Total Account Solution Professional Liability/P & C Product Partnership Available Only to Fortress-Hanover Agencies Unique P & C Coverage Hooks Enhanced Program Coverage WC Group Dividend Triple Branded Marketing; Fortress, Hanover, Agent Specialized Claims Handling

33 Market Positioning One Comprehensive Customer Solution Specifically Developed for Oral Surgeons & Dentists Distributed Through Selective Group Of Agencies Combines Agency Professionalism and Company Expertise Goal is to become the Preferred Insurance Provider for Oral Surgeons & Dentists in the US Thank You Fortress/OMSNIC for Your Partnership

34 Why The Hanover is Your Better Choice Differentiated Professional & MPL Product Offerings Dedicated Underwriters with Significant Expertise Proven Strength in Small Commercial and Programs Total Account Solutions One Company approach for ease of doing business Selective Distribution, partnering for franchise value