Starr performer

Veteran underwriting manager C.V. Starr & Company makes its mark in excess casualty

By Elisabeth Boone, CPCU

Combine a proud legacy with financial strength and specialty underwriting savvy, and what do you get?

An entity that answers to that description is C.V. Starr & Company, a leading underwriter of excess commercial casualty risks. Established in San Francisco in 1953, C.V. Starr & Company is one of seven specialty agencies owned by parent company C.V. Starr & Co., Inc., a global investment firm whose origins go back to a venture created in Shanghai by Cornelius Vander Starr in 1919. The other agencies are Starr Marine Agency, Inc., Starr Aviation Agency, Inc., Starr Technical Risks Agency, Inc., Starr Global Accident & Health Insurance Agency, Inc., Starr Underwriting Agents Limited, and Starr Underwriting Agents (Hong Kong) Limited (Starr Agencies). The Starr Agencies produce annual gross premiums of approximately $1.5 billion and employ some 500 people worldwide.

C.V. Starr & Company produces excess casualty insurance (umbrella, excess umbrella, and self-insured retention programs) in specialty classes that include public entity and residential and general construction. The agency also produces a significant amount of general business across a broad base of industries.

Heading up C.V. Starr & Company is Jeffrey Hafter, who joined the firm in 2001 and in June of this year was promoted to president, where his strong background in excess casualty underwriting makes him ideally suited for his new post. A 20-year veteran of the industry, Hafter previously served as executive vice president with responsibility for developing the company’s East Coast expansion and supporting the parent company, C. V. Starr & Co., Inc., in the acquisition and development of new agencies. Prior to joining C.V. Starr & Company, Hafter held senior management positions with Chubb and AIG.

With a successful track record in California spanning over 50 years, C.V. Starr recently embarked on a plan to expand its presence nationwide.

“Up until a year or so ago, C.V. Starr & Company was predominantly a West Coast company,” Hafter says, “with our headquarters in San Francisco and offices in Los Angeles and Seattle. With operations in Chicago and Philadelphia, we certainly had a national presence, but we were best known for our products and services on the West Coast,” he explains.

“About a year ago, we decided we needed to be local, so we opened offices in Atlanta, Boston, Dallas, and New York, and we plan to open a Houston office in the very near future,” Hafter says. “We create our niches based on need and expertise, and we sell our expertise in those niches. To do so, we need to be local so we can understand what each market needs.

“As an MGA, we focus on distribu-tion and on being close to the client to provide the high level of expertise and service that sets us apart in the marketplace,” Hafter declares.

“The people we have brought on as we expand our distribution bring a tremendous level of knowledge, which enhances the expertise we already have within our existing operation,” he remarks.

Within its specialty of excess commercial casualty, C.V. Starr & Company writes a wide variety of account types, including municipalities; government agencies; joint power authorities; water utilities; commercial and residential contractors and subcontractors; heavy and light manufacturing including product liability; public transportation including bus and rail; private transportation including tour buses; public and private schools; and logging and sawmill operations. In-house capacity for most classes is $25 million.

Currently, Hafter says, C.V. Starr & Company serves as the under-writing manager for three carriers. “We represent Everest National for the preponderance of our book with respect to contracting and public entity as well as general business. Everest provides us with capacity of $10 million. We also represent AWAC (Allied World Assurance Company, a Bermuda-based insurer and reinsurer), with participation that brings our capacity up to $25 million.

“Finally,” Hafter says, “we represent Chubb for a primary residential contractor policy. Chubb provides us an existing platform to get into areas of the business that we haven’t historically pursued but for which we possess technical underwriting expertise.”

Trends in the market

Because of its focus on public entity and contracting risks, C.V. Starr & Company’s underwriters have keen insight into the trends and developments taking place in those markets.

“In the public entity world right now, there’s a real movement toward controlling costs,” Hafter observes. “At the same time, there’s a tremendous demand for the services public entities offer. There’s a significant amount of growth within cities, counties, and towns that is generating demand for new services. As you look at the marketplace in general, and as you look at specific public entities, it’s clear that this is a niche that requires a high level of understanding and expertise.

“For underwriters, the ability to understand the changing needs of public entities is key,” Hafter continues. “Our ability to deliver the products and services they need helps us differentiate ourselves in that marketplace. One way we support municipalities is by helping them work through their claims operations and claims reviews. We also support them with our actuarial services and our ability to evaluate their current and historical loss patterns.”

On the contracting side, particularly with respect to residential construction, challenges abound.

“In the residential market, new housing starts are down and there’s trouble in the subprime mortgage market,” Hafter comments. “What we tend to hear about are the large homebuilders that drive a significant amount of construction across the country. That’s generally not our target market. We’ve seen a slowdown as builders review their inventory and their plans going forward.

“At the same time, there’s still a tremendous amount of construction being done throughout the country,” Hafter continues, “and I think in many pockets it’s actually quite strong in both the residential and commercial sectors.” A key growth area on the residential side, he notes, is planned communities: housing developments that offer an array of recreational amenities and conveniences.

By listening to its customers, Hafter says, C.V. Starr & Company is able to identify their needs and respond with appropriate products and services. “We’ve created a new form, which is offered through Chubb, that addresses the legislation that is sweeping across the country with regard to states’ right to repair laws,” he notes.

These laws require home owners to take certain steps before pursuing legal action against a builder. The policy is currently available in each of the 31 states that have adopted a version of the right to repair law and provides coverage for contractors affected by the legislation. “This is another way in which C.V. Starr & Company is differentiating itself in the marketplace,” Hafter asserts. “At this point, no one else is offering this coverage, which we have structured to respond to state laws.”

What’s more, he adds, “C.V. Starr has many more products on the drawing board. Our objective is not only to support our existing business but also to bring our expertise and coverages into new arenas.”

Distribution is key

An essential ingredient in the success of any insurance intermediary is its distribution force. “Certainly retailers play a vital role in what we bring to the table,” Hafter says, “whether it’s directly with us or through wholesalers they may choose to use. Our ability to reach out to both distribution platforms, and understand what our clients are asking for, is helping us create additional niches within our markets.

“The expertise that resides within our organization is broadly spread across all lines of casualty, not just those in which we specialize,” Hafter explains. “We see opportunities not just within our existing segments but across the spectrum of risks. Where we really seem to have a following is within those niches where we’ve always maintained a stable market, whether it’s an up cycle or a down cycle.”

Commenting on current market conditions, Hafter observes, “In the marketplace we have today, I see some carriers moving into areas where they may not have the same level of expertise as a specialty underwriter. I think companies like C.V. Starr, which have consistently been doing this business year in and year out, have a strong following and will always be able to capitalize on opportunities in those niches. I don’t see us losing much business to the standard markets,” he says.

“Most of our business is written on admitted paper,” Hafter adds. “Our expertise and experience allow us to underwrite all of our different classes through the retail and wholesale communities, who have been our strong supporters. What we bring to the equation is our organization-wide knowledge and experience, and our commitment to all levels of our distribution force.

“Our retailers and wholesalers know we have the experience and ability to underwrite this business profitably, and that’s really what our clients are seeking. To be the underwriter of choice, you have to have the product, the service, and the expertise,” Hafter declares. “That’s why we and our sister agencies are industry leaders.” *

For more information:
C.V. Starr Co.
Web site: www.cvstarrco.com