MGA moves beyond its transportation roots,
prepares for changes in market cycle
By Brett Hanavan
Edward Maucere (seated) is principal owner and president of London American General Agency. His son, Mark Maucere, is the agency's executive vice president.
London American General Agency is a San Diego-based managing general agency that serves as a market for a variety of E&S market niches--primarily in California. It utilizes several carriers, writing various programs and handling everything from policy underwriting and issuance to customer service.
Edward Maucere, principal owner of London American, and his son, Mark, the firm's executive vice president, characterize their MGA as solidly rooted in underwriting, and they are proud of the close relationships they maintain with their broker partners. "The majority of our management team and most of our staff have at one time or another had underwriting backgrounds," says Mark, adding that their broker partners take seriously their role in submitting complete applications.
In the 16 years that Ed has been the principal owner of London American, the overall P-C market has been mostly soft. Now that the market has hardened, London American has new opportunities to capitalize on its E&S market expertise. However, the agency is approaching the current market with the same determined underwriting emphasis that has contributed to its steady growth within its specialty markets.
London American also features a new approach for an MGA--allowing several broker partners who work essentially as contracted sales staff to develop and oversee their own books of business. However, 80% - 85% of London American's business is contract business.
"What we have as a managing general agent combined with brokers is unusual," Mark Maucere says. "I'm sure it has been done this way before, but we feel we have to create control of underwriting decisions that are made. At the same time it allows establishment of relationships with retail agents that we didn't have before."
Among London American's E&S specialties are coverage for various transportation risks--including truckers and limousines; artisans; contractors; products liability, professional liability, D&O liability, executive liability, umbrella (excess liability); and workers compensation.
London American historically has focused on commercial transportation as its bread and butter, writing limousines, charter buses, environ-mental transportation, fleets of 11 or more, and local/intermediate trucking. Today London American's diversification beyond transportation is responsible for much of its success.
A retail agent, Ed Phelan, founded London American in Los Angeles in 1964. At that time the agency specialized in equine coverage. Phelan chose the name after he found it necessary to place equine business almost exclusively with Lloyd's in the London market. In 1981, John Lowenstein and Jasper Taormina purchased the agency and moved the operation to Anaheim, California. Edward Maucere bought the agency in 1986, and in 1989 moved the business to San Diego. It is now thriving in its 13th year there, having grown from five to 45 employees including its contracted sales staff.
In addition to the San Diego base, London American's brokers work from satellite offices in Palm Springs, Sacramento, and elsewhere in San Diego in its Ocean Beach district. It also has specialty operations in Nevada and Phoenix, Arizona.
Focus on expansion
As owner and president, Edward Maucere maintains relationships with key contacts at carriers as well as serving as overall advisor to the management team. He is a respected veteran of the E&S business and recently served as president of the California Insurance Wholesalers Association (CIWA).
Ed says that London American is in the middle of designing and drafting a new business plan which will focus on long-term growth. "The plan will focus on continued growth and stabilization of existing markets," he explains. "Our objective is to maintain profitability with our carriers as we do during soft markets. We also want to expand with additional brokers as sales partners. This will give us a different mix and diversification."
Ed adds that London American is looking for opportunities for acquisitions and wants to develop wholesale markets in California, Arizona, and other states in the near future.
Ed emphasizes that growth has to be adequately supported by technology and the intangible people skills that it takes to manage profitably. In technology, he says: "There are just too many variations. Every company operates differently on how it handles technology. There is no uniform system. This has to be more of a uniform system in order to keep expense ratios down and reduce costs overall. Carriers are moving in that direction, but they aren't there yet. Right now if you put 10 carriers in this room, you might get 11 ways of doing things."
Fearless management style
Mark Maucere believes that managers have to be fearless in their approach to the profitability side of management and in dealing with people.
"The biggest thing I've learned is that managers must manage and [you] have to let them do what they do best," Mark says. "You can guide them, but the minute you try to micro-manage, you're stepping on what you've brought them in--or trained them--to do. I try to keep a watchful eye without micro-managing. It is a philosophy I've learned from Ed.
"The biggest thing is taking stock in people and caring and nurturing. People have integrity and that is what we want to foster," Mark says. "Today's workplace is the extended family. These philosophies and the interpersonal relationships from others outside the London American family are a motivating force, dishing up pride and excellence."
London American's leaders: Team Building 101
Members of London American's management team are as diversified as the niche products they write. Chris Christian, a 17-year veteran, is the senior vice president for London American's professional liability line of business. She oversees underwriting and loss control information.
Christian served as operations manager of the San Diego branch of RLI Insurance, where she learned to underwrite nonprofit directors and officers insurance, health care organization directors and officers coverage, and health care errors and omissions coverage.
After six years with RLI, Christian moved on to create her own facility and joined London American in 1997. She started its professional liability department using her own underwriting facility with Scottsdale Insurance Company for managed care organization errors and omissions, directors and officers, and extended practices liability. To allow for additional growth in these lines of business, Christian soon began brokering these lines as well.
Finally, in July 2000, Christian opened a London-backed facility for nonstandard, nonprofit, health care, and other professional organization directors and officers, errors and omissions and extended professional liability.
"We've grown to a projected $3.2 million in premium for 2001," Christian says, "And, we project $6 million for 2002, $2 million in underwritten business, provided capacity remains available, and $4 million in brokered business.
"I anticipate my responsibilities remaining relatively stable in the foreseeable future, although we're planning to grow my book to the point where we will comprise 30% of the agency's revenue," Christian says. "That will require additional staff, so unfortunately, I will need to spend more time managing personnel and a little less time actually brokering and underwriting."
Rochelle Cordova is vice president for London American's property/casualty underwriting. She controls all property/casualty business, underwriting for it, profitability and loss information. She is responsible for creation of manuscript property/casualty forms and develops new programs.
Cordova joined the London American's management team in May 1999, entering as the commercial underwriting manager. She was promoted to director of underwriting in July 2000, and most recently was promoted to vice president last August. She oversees all property/casualty underwriting operations including London American's in-house brokers and underwriters, its transportation department, and administrative staff.
"Mark and Ed are highly proactive in the marketplace," Cordova says. "They are always looking for new, profitable programs in areas that aren't or haven't been heavily saturated. Ed sells our agency based on our expertise. Chris [Christian] is the professional liability expert and I have 23 years of experience in commercial multiline insurance. Our entire underwriting staff was selected based on their expertise in the business."
Cordova says that London American's challenges and responsibilities as an excess/surplus lines broker are to maintain and strengthen relationships with current markets--a view that mirrors and confirms the business attitude of both Ed and Mark.
"This means even better responsiveness to our carrier's expectations," Cordova adds. "Quick response time to their queries, adherence to underwriting and pricing guidelines, and of course, profitability are all part of the challenges." And, she adds, "We're nothing without our retail partners."
Cordova's focus on underwriting skills rides the crest of this vision.
Mark Maucere has been a catalyst in the agency's recent growth. He spent months developing business and marketing plans which resulted in vital change in the organization.
"What we have as a managing general agent combined with brokers is unusual. . . . At the same time it allows establishment of relationships with retail agents that we didn't have before."
--Mark Maucere
"In-house underwriters need basics such as rating capabilities and knowledge of underwriting exposures, but today they have to be more creative than ever before," Cordova says. "They have to search for profitable ways to write a risk. Should the risk be packaged with one carrier, or would it behoove the insured and our markets to divide the risk among different carriers? There must be a balance between meeting the needs of the insured, agent and our carriers. Underwriters should share expertise with their clients and educate them on the variances between different carriers and contract wording. I believe we have such an in-house underwriting staff."
Of Mark Maucere, Cordova says: "He has been the catalyst in our recent growth and is bold in his business dealings. He isn't afraid to jump in, but I will say, feet first rather than headfirst. Mark is fearless, but not reckless."
Denis de Baroncelli was brought in recently as vice president of business development to help London American look for opportunities in growth areas. He oversees the creation of new relationships with insurance carriers, reinsurance carriers and intermediaries, and he oversees some aspects of marketing. He also assists in the development and creation of brokerage facilities.
"My responsibilities with London American are not in the traditional marketing sense," de Baroncelli said. "I develop business north and south. North is leverage. We create and maintain carrier and reinsurance relationships. South is to deal with and profile retail agents, develop new programs and specialty classes of business."
de Baroncelli is currently working on an artisan contractors program that will be filed on a nonadmitted basis. He says it will target the typically tough-to-price, tough-to-place, small-sized contractors who have difficulty in finding coverage and handling rate increases.
de Baroncelli also maintains responsibilities that have him overseeing business acquisition that includes large, complex accounts, customer development, and market management. "I'm involved in new business growth, joint ventures, and acting as intermediary at the next level down on behalf of London American," de Baroncelli says.
As for challenges, both current and future, de Baroncelli says it's all in managing the process. "Working out details, negotiations, managing information, acquiring and managing it, profiling and identifying customer needs, and melding that to company and reinsurance carrier requirements are what its all about.
"Our opportunities are nationwide, and business relationships are being based on this concept," de Baroncelli adds. "They're in the East and the Midwest. We are working to build an audience of contacts. I spend at least half my time traveling and nurturing those relationships with companies and clients. I grew up to be a professional facilitator."
Asked about difficulties in the market stemming from the September 11 terrorist events, he says, "It sounds like a commercial, but I believe the qualified, professional general agents and wholesalers who have earned a reputation will do well." He refers to London American and a passage in its marketing material: "Irrespective of the type of business or product, our corporate philosophy is to always maintain the highest standards of integrity--our reputation is the currency we value most."
"This is true," de Baroncelli says. "We are a strong regional market. We are quiet but specialized. We will be, by optimizing our intellectual capital, ultimately a recognized organization at the national level."
Long-term accomplishments and the need for speed
Edward Maucere will tell you that London American's main accomplishments have come through the relationships it has with its carriers and reinsurers. It works with Scottsdale Insurance, writing trucking, transportation, and limousine programs. For contractor business, London American writes with Environmental and Casualty, a Georgia-based carrier. It also writes with Markel Southwest, Century Surety, Miller North America, and several London-market markets, including Lloyd's and First City.
In this fast-paced world, who needs more speed? London American does. London American's WSIB Motorsports wholesale insurance program (part of London American General Agency of Arizona, Inc.) is now capable of providing custom coverage for motorsports operations through Chubb Group of Insurance Companies. Among its clients is Cheever Indy Racing--an Indy-style race car team, led by Eddie Cheever--that typically competes at the Indianapolis 500.
After purchasing London American General Agency in 1986, Ed Maucere has grown the firm from five to 45 employees and has expanded its markets.
Securing new business is what it's all about. With the hardening market, Mark Maucere said his management team is constantly planning to make adjustments based on insurance's roller coasting cycles.
"We ask how will we deal with obstacles while assuring benefits in the future," Mark says. "If the cycle changes, we must capitalize on what the benefits are and engage the issues, ride the downturn, and with all that going on we must engage in preparing for the next cycle. We build capital, secure horizons for new markets, while maintaining current ones."
Mark makes it clear that technology is at the top of London American's list as well. London American is in the process of launching a new Web site that will allow for more interfacing with agents. The site eventually will include having the ability to handle products online.
However, Mark points out: "Even with the Internet playing a critical part in doing business, face-to-face contact in the property/casualty industry is still so important. I like to think that meeting and talking with people and the relationships that come with it are still valuable ... Insurance, even in 2002, is and will be a paper environment, even though the industry as a whole is taking good steps in a 'paperless' direction."
A view from the top
Edward Maucere's experience in insurance is vast and broad. He has surrounded himself with quality people and built a quality team.
Of his son, Edward Maucere says: "Mark has more energy in his little finger than most people have in their entire body. He is incredibly organized and his mind can visualize changes in sequence. His biggest dimensions are his youth, education, and a new style he brings to management. He focuses on technology and mixes it well with people skills. He is the key to why we're here today."
Mark left the company in 1991, and after earning his MBA degree returned to London American. Mark spent three to four months developing business and marketing plans. The hard work resulted in recommendations for a vital change and diversification that sent London American down the path it is on right now. It immersed itself in several new product lines, got into the professional liability property/casualty side of the business, and continued to focus on transportation niches. London American has not looked back.
"Now, with the September 11 tragedies, the market had already begun turning hard. I felt it would never get that difficult," Ed says. "The industry had a substantial amount of capital, but September 11 took a big huge chunk out of it." In characterizing today's hard market, Ed says: "Instead of its being hard like in the 1980s, it is more like the 1970s. There are perhaps some extremely difficult times ahead for the industry."
Whatever turns the market takes in the years ahead, London American, with its father-son team of Mauceres and the professional staff they have assembled, will be eager to embrace the challenges and opportunities in the markets they choose to serve. *
For more information
London American General Agency
Web site: www.londonamerican.com.