Navigators CEO describes Lloyd’s issues as he targets business locally

Navigators CEO Stanley Galanski has described how London has become an increasingly challenging market and explained why he believes that targeting local markets directly in continental Europe is the way to go.

Navigators’ international business, the majority of which comes from the London market—and in particular, the Lloyd’s market, produced “unacceptable” underwriting results in 2017, largely as a result of the poor performance of the property and marine protection and indemnity businesses underwritten in London, Galanski said in the insurer’s 2017 annual report.

The combined ratio for the international insurance segment was 114.4 percent, an 8.2-point deterioration from that of 2016.

“Over the past few years, London has become an increasingly challenging market, with the combination of excess capacity, broker consolidation and a heavy regulatory burden contributing to an expensive operating environment,” Galanski explained. An increasing share of the market has been directed to high-commission broker-arranged facilities, which minimizes individual risk underwriting by commoditizing the product, he said.

“Our International Marine operating segment results were disappointing, as traditionally profitable product lines like cargo and specie failed to produce an underwriting profit,” Galanski said.

Navigators is now seeking opportunities writing business locally in continental Europe, taking advantage of its recently acquired operations in Belgium.

“As a specialty insurer with extensive expertise in product lines such as marine liability and management and professional liability, we believe one of our best opportunities for growth lies in taking these products directly into local markets across continental Europe,” Galanski said.

“These markets present profit potential for business that is underwritten locally and is not placed in London,” he added.

Navigators has been underwriting ocean marine insurance in Antwerp since 2005 and opened offices in Rotterdam, Milan and Paris in 2014. In December 2017 the insurer entered into an agreement to acquire specialty underwriting agency BDM and specialty insurance company ASCO. BDM underwrites on behalf of ASCO, its affiliated insurer, and other insurers through insurance pools it manages.

Navigators plans to consolidate BDM and its existing continental European underwriting operations, with ASCO becoming the principal insurance company for those operations following the completion of the transaction. “The acquisition positions us well post Brexit, and we expect to be better able to serve our policyholders with a Navigators-branded and owned insurance company that is domiciled in the European Union,” Galanski said.

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