Special Section sponsored by TMPAA

American Safety Insurance

Program categories written include, among others: excess & surplus, specialty programs

When American Safety Insurance (ASI) entered the program business market in 1996, one of its first ventures was a pest control program for a small Louisiana insurance company that sought to expand into other states. Brad Isaacson, ASI’s director of specialty programs and alternative risk, says, “We’ve since expanded our program writings, finishing 2007 with 17 programs and over $70 million in gross written premiums. We seek programs that generate between $5 million and $20 million in written premiums, where program managers have an established track record of underwriting a specialty book of business and are willing to participate in underwriting risks.”

ASI has two core segments. One, its excess and surplus lines: property, construction, environmental liability, surety, and a specialty casualty unit focusing on products liability and excess and umbrella coverages. Second, the alternative risk transfer (ART) segment that features a Specialty Programs Unit and an ART Unit, which includes funded products and a new ART Solutions product.

“Our ART Solutions product is offered to risk retention groups, captives and small insurance companies who can benefit from access to ASI’s A.M. Best “A” rated paper,” says Isaacson. “Ideal candidates have expertise in underwriting a specific class of general liability, professional liability, or excess or property business, and seek to grow through increased capacity or access to our paper. Many have lower ratings because their capital structure does not reflect their underwriting profitability within their market of expertise. ART Solutions clients can also access traditional and structured reinsurance from American Safety Reinsurance, Ltd., a Bermuda-based reinsurance carrier, to provide capital relief.”

To further develop relationships with key reinsurance intermediaries and brokers, Richard Wigmore recently joined ASI as the national business development manager of their U.S. ART Unit. Wigmore has more than 20 years of experience designing, developing and implementing a wide range of ART products.

The Specialty Program Unit’s typical program is a general or professional liability. “We recently added property capabilities and are looking for profitable relationships in that business line,” states Isaacson. “Some current examples of the programs are general liability and pollution for pest control operators; real estate agents E&O for small agencies; bail bonds; package and liquor for restaurants and taverns; general liability for residential and commercial contractors; general liability for wrap-ups and specific projects; federal employees errors & omissions coverage; PTA/PTO general liability and professional liability; dealers open lot coverage; excess auto insurance for pizza delivery and other nonowned auto risks, among others.”

ASI can write programs in the 45 states where American Safety Indemnity Company is an approved surplus lines carrier, and in 47 states through its admitted company, American Safety Casualty Insurance.

According to Isaacson, the soft market has not materially affected ASI’s business. “ASI writes property and casualty business in underserved markets where there is less competition. Targeted classes are usually more difficult to place risks. They’re not adequately served by standard markets. While overall conditions in property and casualty have softened, we’ve not experienced the same degree of softening due to the specialty nature of our business.”

Accordingly, the softening market has not affected ASI’s model of risk participation. Jason Sears, national business development manager for the Specialty Program Unit says, “...by luck or design, we have partnered with program managers who intimately know their business and have a desire to take risks. Typical structures involve our rent-a-captive, a wholly owned captive, or some other risk-taking vehicle assuming a pro-rata portion of expected losses. This structure potentially allows program managers to earn underwriting income, which further incentivizes prudent underwriting. Excess of loss insurance is typically purchased to mitigate any single event. We have corporate treaties in place for program business; however, programs can be placed outside the treaty on a program specific basis.”

Sears notes that ASI actively explores new program opportunities. “Our fully staffed platform moves quickly on program opportunities. Typically, program business is marred with poor communication and unexpected time delays and expectations. Our goal is to deliver quickly and clearly on program managers’ and reinsurance brokers’ expectations.”

New business lines include self-storage, motor truck cargo, auto physical damage, any homogenous niche, general liability, and habitational, to name a few. ASI has a near nationwide nonadmitted and admitted platform, and seeks partners where we can grow together profitably.

Isaacson summarizes, “We see program business as an excellent means to identify new specialty niche areas that can enhance ASI’s position as a leading provider of insurance for specialty risks in underserved markets. We are interested in partnering with program managers who have proven underwriting expertise in these specialty areas.” *