The reason for that is an increase in population, he said, citing a projected jump of 70 million people in the same timeframe. "There's still going to be a housing shortage. In addition, there's a lot of infrastructure around the United States that is going to need repair," he said. "When you look at the construction industry, as a whole, and even housing in particular, it's going to be a growth area over the next five-to-10 years."

Turning to the competitiveness of the property-casualty market overall, he said, "it's like the stock market--it's very difficult to time the insurance market."

"Right now, we're probably paying underwriters to take more of a defensive position than an offensive position," he observed. "We realize that, but our strategy is to be in place and to be able to capitalize on the market strategies when they do present themselves."

With the comment, Mr. George pretty much summed up the thinking of Ironshore CEO Robert Deutsch, two other leaders of new underwriting divisions at Ironshore, and seven more executives interviewed for this edition of NU at four other start-ups--Valiant Insurance, Max Specialty, Montpelier U.S., and Naxos.

"If you wait until the hard market is imminent and try to build into that, chances are you'll miss the majority of the opportunity that that presents," said Valiant CEO Gary Dubois, noting the speed bump that the U.S. regulatory environment presents for companies seeking licenses, approvals, and excess and surplus lines authorizations.

Like Mr. George, Mr. Dubois highlighted the need for executives of soft market start-ups to commit to a process of "patient development."

"If the parent company is truly prepared to take a long-term perspective, then arguably the timing is actually ideal for us," he said, noting that boards of directors have to buy into the strategy as well.

On a personal level, Mr. Dubois said, "I think you learn from the success and failures that you've had," noting that he had experienced the early days at Reliance National and Liberty Insurance Underwriters, the specialty division of Liberty Mutual, during the course of a 24-year career in specialty lines.

"If you look at the timing now relative to 1999," when LIU started up, there may be "a good parallel to what we'll see happen over the next few years," he said, pointing to 1999 as the depth of the last soft market.

"Our growth at LIU from 1999 through the latter part of 2001 was solid, not extraordinary, but we did lay that groundwork, that infrastructure, that acceptance and credibility in the market," he said, adding that "when conditions turned in 2001, we were really ideally positioned to take advantage of that," noting that LIU was about a $1 billion operation at its peak.

SEEKING NEW CHALLENGES

The executives also expressed common themes when giving their reasons for jumping from the comfort of prior positions at established companies to new E&S ventures in any market, citing the adrenaline rush of new challenges and the lure of small entrepreneurial, specialty-only operations.

Also high on the list for Mr. George and Mr. Dubois was the attraction of working with industry icons--Ironshore's founder, Robert Clements and Ariel's chairman, Don Kramer--with track records of attracting good people and smart capital to start-ups.

Mr. Clements is known to the industry for having founded several Bermuda-domiciled insurance and reinsurance companies, including ACE Ltd., XL Capital Ltd. and Arch Capital Group Ltd., while Mr. Kramer--the former vice chair of ACE Ltd.--was also founder and chair of NAC Re, founder of Tempest Re and later president of ACE Tempest Re.

Management team leaders like Mr. Dubois and Dick Nenaber, president of Montpelier U.S. Insurance Company in Scottsdale, are also no strangers to start-up building processes.

"I seem to have a track record of being able to start successful E&S insurance companies," said Mr. Nenaber, an apparent understatement for someone whose resume reveals a 31-year history of the E&S industry in Scottsdale.

Mr. Nenaber, who started in the E&S business in 1977 with Great Southwest Fire Insurance Company, also co-founded Western Heritage Insurance Company in 1986 (after a one-year stint managing the binding authority division of Swett & Crawford in California). When Nationwide bought Western Heritage's parent, Allied Insurance Group, he went on to reorganize Fulcrum Insurance Company, then a unit of Sorema, into a binding authority company.

Together with Stan Kott, CEO of Montpelier US, Mr. Nenaber later started Wellington Specialty Insurance Company. The entire U.S. operation of Wellington Underwriting Inc. went from a $10 million operation in 1999 to just under $300 million in 2006, according to Mr. Kott--who also reported that Wellington's U.S. platform made an underwriting profit in all of those years.

After Catlin purchased Wellington, Mr. Kott--who had a relationship with Montpelier Re Chairman Anthony Taylor dating back to Mr. Taylor's days at Wellington--capitalized on the opportunity that opened up when Mr. Taylor's Bermuda-based property-catastrophe reinsurer serendipitously decided to expand into diversifying U.S. businesses, Mr. Kott noted.

For Scott Bayer, who signed on as senior vice president of Valiant's casualty division in May, the sheer pleasure of digging into underwriting files was a draw that pulled him away from a nine-year stint at LIU. "I was involved with nine offices. My day-to-day underwriting was very limited," he said, describing his prior position.

"Here you're talking about getting your hands dirty, getting into files again, making decisions on individual deals," he said.

"To me, that's what it's all about--the idea that now I'm looking at accounts, putting manuals together, putting rating models together, hiring people, and knowing that these are the things that four or five years from now" will really determine the success of the company.

Matt Dolan headed up medical professional liability divisions at Chubb Executive Risk and One Beacon Professional Partners, a unit of White Mountains, before becoming president of IronHealth, a recently formed health care liability division at Ironshore.

"Inevitably, as a specialist invested in specialty lines liability, you find yourself competing for the resources and attention of a large p-c organization," Mr. Dolan said.

The idea of being part of a business where the focus is specialty is very appealing, Mr. Dolan said. "You're able to lay the framework for an organization whose reason for being is specialty lines opportunities," he said.

He added that the idea of creating an approach from scratch, extracting lessons learned, and building an organization "that's infused with the most recent and best view on how to do it right," is another enticement for entrepreneurial individuals involved in specialty lines.

The vision of starting with a clean slate--or, more precisely, "a clean balance sheet"--also fueled the thinking of Robert Piller, president of IronSelect, the newest division of Ironshore, targeting excess-casualty business. "There are no legacy issues," said the former senior vice president of umbrella liability for Zurich North America.

Large companies also struggle with legacy systems, Mr. Dubois noted, describing how his new team of underwriters and chief of claims can have tangible constructive input into information technology development at the outset. "You don't have to go back and fix it later, when it's a much more complex task," he said.

COMPETITIVE ADVANTAGES

Going forward, Mr. Dolan said the fundamental challenge for new U.S. specialty players like IronHealth will be making sure producers "have a full appreciation of the meaningful differences" between their approaches and those of other specialty players.

While Mr. Dolan highlighted "meaningful product enhancements" (such as evacuation coverage for medical facilities faced with disease outbreaks and natural catastrophe risks), and Mr. George highlighted a "true underwriting culture" as a distinguishing feature of Ironshore's businesses, CEO Robert Deutsch focused on the fact that individuals in each of Ironshore's divisions are energized by an entrepreneurial spirit--and willing to take equity risk to prove it.

"[Bob] Piller is not going to get rich on his base salary," he said, referring to the newest divisional head at IronSelect. "He'll cover his bills. He's going to get rich if he does his job right. He'll get rich on performance bonuses and equity ownership," according to Mr. Deutsch, who added that "for people willing to take that kind of entrepreneurial risk, Ironshore is a fantastic home."

Mr. Deutsch also listed creativity and responsiveness among Ironshore's key competitive advantages. "We are a non-bureaucratic organization. When clients speak with underwriters, those underwriters are empowered to make decisions. There are no committees," he said.

"If it makes underwriting sense, we'll do it. There's no black box," said Mr. George.

Summing up characteristics of employees finding a home at Valiant, Mr. Dubois said "they tend to focus more on technical underwriting than premium flow."

"I like underwriters who enjoy the profession of underwriting and understand the dynamics [beyond] just selling a policy"--knowing the coverages, appropriate pricing levels and how to "interact effectively with claims, with actuarial, with finance."

"We look for individuals who enjoy putting all of those parts together," he said, adding that this requires "a balance of discipline and relationships in the market."

At Montpelier, personal relationships within the company and with customers built over decades-long careers in the E&S segment will drive the success of the U.S. platform, executives say.

"Every underwriter we have hired, we have known, worked with or done business with in the past," said Bud Lockwood, president of Montpelier Underwriting Inc., another component of the Montpelier U.S. platform, which is a wholly-owned managing general agency authorized to issue insurance contracts on behalf of Montpelier Syndicate 5151 at Lloyd's.

"Our mantra is that we're a group who know each other, and while we're starting in a soft pricing cycle, we're actually doing business with people we've known for years and years," said Mr. Kott. "So although we don't have any renewals, it's as if we do, because we've always built our operation on the strength of personal relationships and knowledge," he added.

"We don't compete on price. We don't typically compete on product features," Mr. Kott noted. "What we really do is make it comfortable for our customers to want to do business with us."

"People want to do business with people they can rely on, people they have faith in--and that goes back to the relationships that we've developed with the general agents in the United States," Mr. Nenaber added.