The Fireman's Fund McGee Marine Underwriters management team is spearheaded by (from left): Arthur E. Moossmann, Jr., president and chief executive officer; Joseph P. Maher, Jr., CPCU, senior vice president and chief marketing officer; and Michael J. Miller, executive vice president and chief operating officer.
"Created to lead" is an ideal description of the powerhouse created by the combination of marine underwriting manager Wm. H. McGee & Co. with Fireman's Fund Insurance Company and its marine division. Representing a combined total of some 250 years of experience in the challenging marine insurance market, and backed by the resources of global giant Allianz, Fireman's Fund McGee Marine Underwriters (FFMMU) has its sights firmly set on achieving a leadership position in its chosen markets. To learn why these two premier players chose to join forces, and how they're leveraging their strengths to meet customer needs, we'll talk with three top executives of the newly formed entity: Arthur E. Moossmann, Jr., a respected marine insurance industry veteran who came on board last year as president and chief executive officer; Michael J. Miller, who serves as executive vice president and chief operating officer after a 27-year career with Wm. H. McGee & Co.; and Joseph P. Maher, Jr., who brings 28 years of experience with Fireman's Fund to his current position of senior vice president and chief marketing officer.
Going for growth
What factors motivated Fireman's Fund and McGee to consider a combination? "Each company has quite a long history--more than 100 years in the marine business--and it's safe to say we both had probably reached a plateau," Mike Miller responds. "Fireman's Fund was looking for ways to grow its marine insurance operation, and McGee, as an underwriting manager, recognized the advantages of being aligned with a parent that had shown a very strong commitment to the marine business. The books of business complemented one another, so there was no need for a dramatic shift in underwriting approach, which would mean a loss of business." Another motivation, he notes, was the cost savings that could be achieved by bringing McGee into the Fireman's Fund infrastructure. "The fit was a natural for Fireman's Fund and its parent, Allianz, because of their stated intention to become one of the top five markets in each of their chosen lines of business," Miller adds. "The combined organization also allows for the establishment of brand recognition in the marine market."
With $320 million plus in gross written premium, FFMMU ranks as the sixth leading writer in the commercial marine insurance market, comprised of ocean marine, inland marine and related property. "We believe we're the number one ocean cargo market in the United States," Joe Maher explains, "and in overall ocean marine we probably rank about fifth because our hull and P&I (protection and indemnity) writings aren't yet at the same level as our ocean cargo book."
"Our overall vision is to be the leading provider of marine- and inland marine-related products by 2004, measured in terms of both consistency of profit as well as market share."
--Art Moossman
President and Chief Executive Officer Art Moossmann views New York Harbor, one of the world's leading ports for the oceangoing vessels and related risks insured by Fireman's Fund McGee Marine Underwriters.
Combining forces
Merging two organizations with distinct identities, cultures and traditions is no easy task and creating an efficient operating structure for McGee and Fireman's Fund certainly presented a number of strategic challenges. Art Moossmann explains: "When examining the two operating cultures of Fireman's Fund and McGee when they were functioning independently, I think it's fair to say that McGee had a fairly centralized decision-making philosophy. It had a network of branches; however, most major decisions were made at its home office, located in New York City." In contrast, he continues, "Fireman's Fund had a much more decentralized operating philosophy, wherein underwriting authority and decision-making authority resided in the field offices. In bringing the two organizations together, there was somewhat of a cultural conflict."
How was this difference resolved? "The strategic direction we agreed on was that, because of the size of the combined company, it made sense on several fronts to pursue a decentralized decision-making structure," Moossmann responds. "Given the geographic breadth of the United States, with 24 field offices we felt more confident that underwriters who knew their local territory were in a better position to understand the unique requirements of their customers and producers. We use a highly decentralized decision-making model that operates through a network of regional and branch-managed delivery points." To promote consistency, Moossmann adds, "We have line of business executives in our home office who ensure that we're performing effectively in each of the various subclasses of inland and ocean marine underwriting."
In a bold departure from tradition in the marine insurance market, FFMMU chose to place both its ocean marine and inland marine business under a single management team. "In most companies these lines of business are managed separately, so one way we distinguish ourselves is by combining them in one profit center," Moossmann explains. "We see this as a competitive advantage because it gives our agency force single point-of-sale and decision-making access."
How are customers and producers responding to the new organizational structure? "I think we've made significant progress in integrating the two entities into a decentralized operation," Joe Maher says. "Not only our employees but, equally as important, our customers and the independent brokers and agents who distribute our products see the advantages of working with us under the new structure, so we feel good about the fact that it's being accepted and that we're moving forward."
Mike Miller, executive vice president and chief operating officer, brings 27 years of experience with Wm. H. McGee & Co. to Fireman's Fund McGee Marine Underwriters.
Dedicated to shared values
Corporate mission statements often tend to be lofty declarations of ideals that look great on paper but that may be difficult to achieve in the real world. Not so at FFMMU, whose mission and operating philosophy are clearly articulated, practical and diligently pursued in the day-to-day business routine. "Certainly being a unit of Allianz worldwide and, in the United States, being part of Fireman's Fund, our mission and operating philosophy dovetail very closely with theirs," Moossmann explains. "We're guided by a value-based system for our employees, customers and producer business partners that addresses how we want to be perceived and what we are committed to delivering in the marketplace." [The sidebar at the top of the page outlines the nine Shared Values that drive the organization's decision-making process.] He continues, "Our overall vision is to be the leading provider of marine- and inland marine-related products by 2004, measured in terms of both consistency of profit as well as market share."
Underwriting stability
As with its mission and values, the underwriting philosophy of FFMMU tracks closely with those of its parent organizations, Mike Miller explains. "Consistent with Allianz's and Fireman's Fund's philosophy, we want to be positioned as one of the top five providers in each of our chosen market segments," he says. "In those market segments, we want to achieve a consistent profitable return and be a stable force in the marketplace rather than a flash in the pan." How does this commitment translate into day-to-day underwriting activities? "To promote stability, we continually seek to build our expertise in areas that support our underwriting efforts, like claims technology and data management. This will allow us to distinguish ourselves from our competitors," he responds.
Senior Vice President and Chief Marketing Officer Joe Maher, a 28-year veteran of Fireman's Fund, is excited about Fireman's Fund McGee's aggressive, innovative and directed marketing approach.
"Directed" marketing philosophy
How does FFMMU seek to position itself in the challenging marine insurance marketplace, where it encounters competition from both specialty underwriters and generalists that tend to move in and out as market conditions change? "Overall, our marketing philosophy is to grow aggressively and profitably using an approach that leverages our marine expertise and the financial strength of Allianz and Fireman's Fund," Joe Maher responds. "A good way to describe our marketing philosophy is 'directed': directed at the marine insurance customer. We have professional marine underwriters and claims specialists whose only job is to focus on the marine customer. We know our customers' business, and we continually strive to meet their needs in responsive and innovative ways. To sum up, I'd characterize our marketing approach as aggressive, innovative and directed."
Within its marine insurance specialty, FFMMU offers a broad array of products. On the ocean marine side the company writes cargo risks; target prospects include importers, exporters, distributors, freight forwarders, manufacturers and suppliers and retailers and traders. Additional ocean marine coverages available are hull, P&I, yachts and other marine liabilities, including charterers, wharfingers, stevedores, marina operators and marine terminal operators. In inland marine, FFMMU writes approximately 250 classes of business; target risks include construction, technology and transportation. The third major segment of the company's business is marine-related property risks.
A key advantage for FFMMU, Art Moossmann points out, is inherent in its role as a specialist. "One of the benefits of marine insurance in general, and certainly one of the linchpins of our operation, is the flexibility of being able to identify an individual customer's commercial risk transfer needs and tailor coverages to address those needs," he comments. "In most instances there are no standardized, one-size-fits-all forms that are offered to the customer on a take it or leave it basis. This flexibility allows our experts to work with the producer and the customer to put together a program that achieves a win-win for all parties."
Brokers and agents are key
In this era of insurer consolidation, brokers and agents across the country are experiencing the loss of markets as well as being subjected to an array of other pressures from their remaining carriers. In this environment, how does the newly integrated Fireman's Fund McGee Marine Underwriters view its relationship with independent producers? "As a result of the acquisition, our combined producer force across the country totals about 2,500," Joe Maher responds. "They range in size from the national brokers to small retail operations. We look for producers who can deliver the kinds of business we seek, and who need a stable market, staffed by marine professionals. And, as Art mentioned, we like producers who don't want a cookie cutter approach, but who value our ability to tailor select coverages for their customers."
Marine insurance is a highly specialized field where the casual player may not feel comfortable. "We tend to go to producers who have marine expertise, but we believe we also can provide solutions to producers who have marine customers with specific needs, and we encourage those producers to come forward," Maher says. "Obviously we can't write just one small account for a producer; we'd like to have a flow of business over time and develop a profitable relationship that accrues to the benefit of all parties: the customer, the producer, and Fireman's Fund McGee."
With its network of U.S. branch offices and the global reach of Allianz, with offices in 58 countries, Maher says, "Our ability to deliver worldwide coverage from a local platform is unique in the U.S. marketplace. In addition to carefully crafted products, we provide national advertising, local claims and loss control expertise and virtually as much capacity as is available in the industry." What's more, he adds, "We offer competitive pricing and a very attractive compensation package that rewards producers who give us the type of business we're seeking."
At a time when many insurers are pursuing alternative distribution channels, FFMMU remains firmly committed to independent agents and brokers. "We distribute our products exclusively through independent agencies, which range from small storefront operations to very large producers like Marsh and Aon," Art Moossmann says. "Our goal is to be one of the top three markets of choice in each of the agencies we do business with."
E-commerce initiatives
Like most insurers, FFMMU is exploring ways to use the Internet to the best advantage of its customers, producers and employees. It's one of the first marine insurers to issue certificates of insurance to its ocean cargo customers via the Web. Plans are in the works to expand the company's use of the Internet to communicate with producers, provide sales support and speed transaction processing. "We're planning to put virtually all of our brochure and policy information on the Web, so our agents can find out in seconds what kinds of coverages we offer for a particular client and also view a checklist of related coverages that a client might need," Maher explains. "Eventually we want to have all of our applications online, as well as claims and loss information. We're also exploring the idea of providing links on our site to marine service providers, such as container distributors and logisticians who plan ocean trips. In turn, these providers would have a link to us on their Web site so their customers could contact us for information about marine insurance."
Innovative use of the Internet is part of a broader strategy FFMMU is pursuing, Moossmann emphasizes. "We're looking at the Web and e-commerce as more than just a means of issuing policies and providing access to information," he says. "Our objective is to really add value to what we offer the marine insurance customer. To do that, we're working to understand our customers' needs and deliver meaningful products and services."
Market trends and outlook
Like virtually every other line of property/casualty insurance, the marine insurance marketplace has endured a long siege of intense competition, depressed rates and less than satisfactory results. What's ahead in this complex market, and how will Fireman's Fund McGee Marine Underwriters respond to emerging trends?
"Across all marine lines, we're seeing a firming market," Mike Miller responds. "It's not a hard market, in the sense that there's a lack of capacity or players; we still see plenty of capacity and companies that are willing to write the better accounts in each market segment. Our expectations are that the price firming we've seen in the past six months will continue into 2001." Historically, the marine market has been characterized by the entry and exit of carriers that are drawn to the market when it's performing well and tend to leave when results deteriorate. "When these companies get into the business up to their necks, they reassess their reasons for getting involved and often realize they don't have the commitment or the resources to stay the course," Miller explains.
Overall, rate increases for marine insurance are approaching 10%; he notes, however, "I don't believe this is enough. Over the past three to five years, we've seen significant deterioration in rates and deductibles as well as broadening of coverages. The effects of these changes have shown up in poor underwriting results reported. I don't believe the current rate increases are in line with the exposures that are being presented." Miller cites additional factors that are affecting the marine market. "In the last three to five years we've also seen consolidation on the company side, which has increased the pressure to write business," he comments. Further, "Inexpensive reinsurance has fueled growth in volume without maintaining underwriting discipline."
What challenges lie ahead for Fireman's Fund McGee in this volatile marketplace? "To be a leader in the marine segment, we'll need to demonstrate consistently to our customers that we're committed to understanding their needs and delivering products and services that are meaningful to them," Miller responds. "We'll also need to leverage our expertise and competency in a way that will allow us to achieve profitable growth while at the same time bringing down insurance costs. This will involve improving the efficiency of our loss control efforts and claims service." What's more, he adds, "Technology needs to become a competitive advantage in serving the marine insurance customer. Finally, if our company is to be successful, the face it shows to the market must convey a sense of urgency and the drive to be number one."
As Fireman's Fund McGee Marine Underwriters moves ahead, Art Moossmann says it will pursue strategies for advancement in several key areas, all directed at achieving profitable growth while controlling expenses, especially those that are passed on to the customer. One such strategy is product expansion: "We'll be moving into the excess marine liability field, and we're currently putting together the infrastructure for that initiative. Second, we'll continue to pursue a prudent acquisition strategy, in line with the value Allianz and Fireman's Fund place on the marine insurance business. Third, we'll continue with our technology initiatives, trying to provide the kind of user-friendly environment to producers and customers that will make us the company of choice to do business with." Finally, Moossmann says, "We'll continue to motivate and challenge our staff to stay abreast and ahead of the market in terms of their underwriting and claims handling knowledge, because at the end of the day, it really comes down to who has the best players. We're committed through our value-based statement to motivate and reward leadership and top performance. Quality people are the foundation of our future."
As a newcomer to Fireman's Fund McGee, Moossmann comments, he's impressed with the caliber of its staff. "Our people are passionate about what they do. They're dedicated, they're professional, and they're highly motivated to do the job for us. I'm pleased to be on board-I'll tell you, there's no place I'd rather be." *
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For more information:
Fireman's Fund McGee Marine Underwriters
Two World Trade Center
New York, NY 10048
(800) 235-6029
www.firemansfund.com
Our people are our competitive advantage. We value and reward:
* Action--We have a bias for action and a willingness to take risks that will allow for innovation and will make things happen. It is our responsibility to become involved and encourage others to use creativity to constantly search for a better way.
* Courage--We have the strength to confront the conventional, take risk, admit mistakes and carry out the hard decisions. With firmness of mind and will, we pursue excellence without compromising our values.
* Teamwork--We believe that teamwork can achieve what individuals cannot. The diversity of style, approach and skills available in our entire organization must be leveraged to achieve success. Essential to this is a mutual loyalty and respect and the need to both listen to and talk with each other. Success is everyone's responsibility.
* Sensitivity--We care about our customers, employees, producers, and the communities in which we live and work. We treat others as we would want to be treated--with mutual respect, understanding and trust.
* Hard work--We value hard work as an important part of becoming the best. We recognize that success is earned through working smarter for continuous improvement. We look for opportunities to make work fun and enjoyable and to celebrate our successes.
* Clear thinking--We acknowledge that ours is a complex and highly competitive industry in which the wisdom of decisions made today often cannot be evaluated for many years. We must consistently exercise the discipline of thinking things through, yet remain a company of ideas, willing to take risk.
* Competitive spirit--It takes competitive spirit to build a world-class organization. We have a passion for winning, a commitment to achieving our goals. We aggressively pursue that which provides us with a competitive advantage.
* Honesty and integrity--We maintain honesty and integrity in the achievement of success. Dealing with customers, employees, producers and the general public is done with the highest professional and personal standards. A well-founded reputation for honesty and integrity is itself a priceless asset.
* Professionally minded people--Our strength is the talent, will and character of
our people. We provide equal opportunity to grow and encourage continuing professional development. Enhancing expertise and skill building are necessary ingredients in achieving and maintaining our objectives.
For more information:
Fireman's Fund McGee Marine Underwriters
Two World Trade Center
New York, NY 10048
Phone: (800) 235-6029
Web site: www.firemansfund.com