Navigators boss eyes global growth goals post Hartford deal
The boss of US re/insurer Navigators believes the company will go from strength to strength under the ownership of The Hartford—especially in its international operations and its reinsurance unit—as it rolls out a wider range of products and is backed by an even bigger balance sheet.
Stan Galanski, the president and chief executive officer of Navigators, told PCI Today that the portfolios of the two companies are very complementary, with little overlap. While broadly true in the US domestic market there is almost no overlap globally, as The Hartford has very little presence outside the US.
“If you look at the three segments, they are mostly complementary,” Galanski said. “In terms of our global reinsurance business, there is no conflict. We expect that to continue as it is perhaps boosted by a bigger balance sheet. We saw it as a growth engine before the deal, and we definitely see it as a growth engine now.
“For the international business segment, there is also no conflict; instead, we see opportunities here to roll out additional products. In the US, the two portfolios are also complementary, we just need to figure out the best way to go to market.”
The Hartford will acquire Navigators for $2.1 billion in a deal expected to close towards the end of the first quarter of 2019.
Galanski said initial discussions have begun on how best to integrate the two companies, a discussion that, he said, is “focused on growth and the future rather than cutting jobs”.
He expects to remain in charge of the insurer’s speciality and international operations.
“The Hartford has identified the fact that success in this industry will increasingly be determined by developing specialised expertise and niche products.
“I don’t mean the traditional lines described as speciality, such as marine or aviation, but across the board, you will do better if you have deeper expertise and a real specialism,” Galanski said.
“Together, that is what we can offer clients. There will be many opportunities to develop and drive knowledge-based products and specialties.”
Bigger footprint
In terms of the global operation, he said the plan is to take the footprint Navigators has, which includes offices in France, Italy, Belgium, Sweden and Denmark, and add additional products offered by The Hartford.
For example, he said, The Hartford’s business owners’ policy (BOP), developed for small businesses in the US, could be well received in Europe, via Navigators’ platforms there.
It has recently boosted its presence in Europe with the acquisition of Bracht, Deckers & Mackelbert, a specialty underwriting agency, and its affiliated insurance company, Assurances Continentales–Continentale Verzekeringen, both based in Antwerp, Belgium.
Galanski said Navigators has always opened new offices with a view to taking existing speciality products to new markets.
“That is exactly what we can continue to do with a broader portfolio,” he said.
He reiterated the company’s commitment to the Lloyd’s market, where it operates via Navigators Syndicate 1221, but he noted that the market’s commitment to reducing the cost of doing business there must continue and its influence could wane in some lines of business.
“It is the largest speciality market in the world and I believe it will remain the epicentre of things such as marine and energy,” he said.
“But there will be other areas where its influence will retract. We have already seen that in the direct fac market, for example.
The cost of operating there has increased steadily over the past decade. There is a substantial regulatory burden, the commission fees are high, and London is also an expensive place to do business.
“It has been a perfect storm in some ways, but it is also a dynamic market and it will reinvent itself. It used to be a very entrepreneurial place where smaller companies can start; maybe it can eventually get back to that.”
On the reinsurance side, he stressed that Navigators has never tried to compete with the biggest reinsurers; instead, it sees it as a way of targeting speciality lines and making its expertise available in markets and on lines where it is impractical to enter on the primary side.
“This is a strategy that has worked really well for us, giving us access to some great business that we would never see if we tried to compete as a primary insurer,” Galanski said.
“We have always been a growth company and taking that mentality and energy into The Hartford will be very exciting,” he said.
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