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HAVING JUST CELEBRATED THE FIRSTyear of its Australian operations, Bermudianspecialty insurer Ironshore is moving into 2013with a bold offering destined to shake up riskplacement in the top end of town.

Established in 2007, Ironshore has an impressive pedigree. Founded by formerMarsh executive Bob Clements, a founding father of the Bermudian market who was instrumental in the creation of (re)insurersAce, XL and Arch, Ironshore operates from offices in Bermuda, the US, the UK, Ireland,Canada, Australia and Singapore.

Unlike many of its Bermudian counterparts, it is singularly an insurer anddoes not operate in the reinsurance market.

Signalling its intentions to grow by attracting the best people, the company appointed as its Group Chief Executive KevinKelley, the former chairman and chief execu-tive of AIG-owned US excess and surplus linesinsurer Lexington.

That 2008 coup was followed in 2009 withthe acquisition of Lloyd’s insurer Pembroke, acompany founded in 2003 by former under-writer at Lloyd’s insurer SVB (now Novae)Mark Wheeler, who subsequently became chiefexecutive of Ironshore International, underwhich the Australian division sits.

The local operations are run by ManagingDirector David Rogers, an American with anAustralian wife whose background includesstints at Marsh, Chubb and Endurance. MrRogers has worked for Ironshore since 2007,most recently as Mid-West Regional Executive,founding the company’s Chicago office.

Unquestionably a niche-within-a-niche operation, the specialty insurer is focused on asmall number of product lines where it believes it can provide innovative solutions andbuild a competitive advantage. It is even moreparticularly focused on servicing the international expansion of companies in developedeconomies, with the mining, oil and gas indus-tries a key sector currently.

“We want to be the go-to people to sort outcross-border exposures,” Mr Wheeler toldInsurance News. Since its beginnings, Ironshorehas grown strongly, following the few moneytrails in today’s global economy.

“If we want to grow our business we have to

be in the places where GDP is growing,” MrWheeler says.

He also laughingly explains that being adestination on the international marathonmap is also a consideration in the equation foroffice openings. Along with Ironshore’s entireSydney staff he is in training for this year’sSydney Marathon. Joking aside, the company istaking advantage of those booming regions topost growth that is more akin to a sprint than amarathon.

From gross written premium (GWP) of$US317 million in its first year of operationsin 2007, the group recorded GWP of$US1.65 billion last year and is forecasting$US2 billion for 2013.

Local GWP sits at around $US50 millioncurrently, but Mr Wheeler has ambitiousgrowth plans for the local business with a GWPtarget of $US150 million by 2016 and a 2-3%market share in each of its specialised businessclasses.

In Australia those specialised businessclasses include mergers and acquisitions

(M&A) insurance, professional covers, political risk, structured trade credit, globalproperty and environmental covers for verylarge corporate clients.

“If brokers don’t need to pick up thephone and call outside Sydney they don’t needus,” is how Mr Rogers describes the type of busi-ness Ironshore writes. Its Australian risks arepredominantly placed into Pembroke, its100%-owned syndicate at Lloyd’s, a marketwhich is frequently the final destination forsuch top-end-of-town business. Due to the sizeof this business it is often syndicated, under-written by several different carriers to spreadthe risk.

In what they believe to be a first by a globalinsurer for the Australian market, Ironshoreplans to introduce local syndication early this year, offering “pre-syndicated blocks of capacity” across all of its local business lines.

Mr Wheeler says this will provide thelocal market with larger limits than thoseIronshore can currently provide. Ironshorewill take the top layers on such locally syndi-

The game-changerAn insurer in its infancy has plans to revolutionise the way large hard-to-place business is written in AustraliaBy Michelle Hannen

Marathon man: Mark Wheeler, Chief Executive of Ironshore International

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cated risks, placing them into its Lloyd’s syndicate, and will bring in “non-aligned” underwriters to join in on the risk furtherdown the slip. But the business will be serv-iced locally and claims response will be local,effectively keeping the risks in the Australianmarketplace.

Such local syndication is not new toIronshore, with Mr Kelley identifying an increased appetite for syndication among multi-national clients in 2009, in response to growingconcerns among companies about counterpartyrisk and continuity risk following the global financial crisis.

“[Clients] don’t want big blocks of capacity with one, two or three carriers,” he saidin 2009. “I think they want option s and alterna-tives, and that’s the niche I think we’ll fit in themarketplace.”

The concept has already been piloted byIronshore in Canada to what Mr Wheeler describes as an “excellent reaction” and he saysdiscussions to date have garnered “a lot” of interest from carriers in taking on the lower layers.

Mr Rogers describes the initiative as a potential “game-changer”.

It is a fit with the company’s local strategy ofidentifying business that is under-served in theAustralian market, examining the opportunitiesoffered and the potential for innovation andthen hiring local expertise and expanding infra-structure to support the development of thoseproduct lines.

That formula was followed to a tee last yearas the company grew its M&A division, which fuelled Ironshore’s growth in Australia duringits first year.

Providing warranty and indemnity cover –protection for both buyers and sellers should issues like debts, pension or tax liabilities or environmental issues emerge in the future – forlarge local deals is indeed a specialist area.

AIG is the only other market for comparable cover in Australasia, and MrWheeler says in its first year of businessIronshore has taken an impressive 50%market share. Demand for the products,which he says “unlock difficulties in the trans-action”, were primarily driven last year byprivate equity deals, and Ironshore’s successin the marketplace stemmed from the appointment last January of former ChartisAustralian M&A practice leader and seniorM&A lawyer Katherine Simmonds.

Apart from overseeing the growth of theM&A division, she is Executive Director ofIronshore Australia, serving on the company’slocal board.

Keen to expand on its strong foothold inthis area, Ironshore subsequently hired tax accountant and lawyer William Lewis to expand its offering focusing on tax policies.“This is a unique niche within the transactionalliability area and there are only a few companiesglobally that have the in-house expertise thatIronshore has created in Australia,” Mr Rogerssays.

In line with its strategy to hire market-leading experts, Ironshore appointed formerMarsh and QBE political risk specialist IanRouse in December to lead its Australian political risk, political violence, war and terrorism business lines.

Mr Rogers says that with Mr Rouse on boardthe area has been earmarked as its new avenue

for local growth and will enable Ironshore to expand its offering for Australian-domiciledbusinesses with international exposure to polit-ical and terrorism perils.

Locally, political risk meets the Ironshoreniche criteria of having a high technical barrierto entry and few competitors, with only twoother markets in Australia for these types ofcovers. The company is hoping to impose itspresence on the market quickly.

One of Ironshore’s largest internationalbusiness lines is directors’ and officers’ cover,but Mr Rogers says they only write a “handful” oflarge policies in Australia, primarily due to thecompetitiveness of rates in the local market.

He says that despite taking a “wait-and-see”approach to the professional lines market –which also includes professional indemnity – thecompany “will continue to stay close to this busi-ness and be ready to move when the marketneeds capacity”.

Other Ironshore Group lines that the localoperation will continue to monitor are surety,aviation and marine, Mr Rogers says.

Globally, Ironshore also writes specialty liability, energy, medical malpractice, personalaccident, residual value and excess liabilitycovers, all of which can be provided to itsAustralian clients by leveraging off the com-pany’s wider expertise.

Mr Wheeler says that is becoming increas-ingly common among global insurancebusinesses; the company is not arranged in“silos” but around solutions, and business isshared across the group.

The fact that Ironshore reports its figuresoutside the US as a combined international entity helps facilitate this collaboration.

Growth in Australia – and throughout Asia –could also come through acquisition, with MrWheeler specifying local managing generalagencies (MGAs) that specialise in professionallines as his key targets.

He says the Ironshore approach to any dealwould be to test the waters with a minority stakefirst before proceeding to full ownership.MGAs are a key source of business forIronshore, and Mr Wheeler says they representa good fit culturally as well; they are often runby innovative entrepreneurs, which fits theIronshore mould. ��

“ This is a unique niche within the transactional liability area andthere are only a few companies globally that have the in-house

expertise that Ironshore has created in Australia.”

Australia Managing Director David Rogers

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