Since joining United America in May 2007, Mr. Frakes, with the support of United America's board of directors, has led an effort to build on the existing assets of the organization. This has included the creation of an additional division within the United States, called Diamond State Group, the addition of key business leaders and a significant investment in technology.

Part of the rebuilding effort has meant shrinking the top line of an organization ranked as the 18th largest surplus lines group–with $380 million in direct E&S premiums for 2007–according to a report on the surplus lines market by A.M. Best. The report was distributed at the annual meeting of the National Association of Professional Surplus Lines Offices, Ltd. in September.

At Aspen Specialty, which didn't even make the A.M. Best list of Top 25 U.S. E&S carriers with less than $200 million in direct E&S premiums, the prospect of growing the business was part of the attraction for Nathan Warde, president of Aspen Specialty. He joined the firm from Arch in April 2007.

“The U.S. business is underdeveloped and we see the U.S. specialty market being very attractive,” said Mr. Warde, who noted that Aspen's CEO Chris O'Kane had outlined a disciplined strategy to grow Aspen's U.S. business.

“There's an opportunity in the United States to continue to grow Aspen's worldwide footprint,” he said. “We've done very well in the U.K. We've done very well in Bermuda and we have a great asset here in the United States.

He added, “We're looking to develop that further and continue to build on what is, by most accounts, a relatively small business.”

“We want to grow just like everybody else, but we want to do it smartly,” he said, adding that a “specialist underwriter culture” drew him to a position at Aspen.

Referring to Mr. O'Kane's frequent public remarks about maintaining underwriting discipline, Mr. Warde commented, “We don't get into areas we're not good at. We bring knowledge to the table and with that knowledge we can get a better margin on our business.”

“I believe in that wholly. That's a firm foundation,” he said.

Mr. Warde noted that Aspen is working to broaden its risk appetite from one that was previously narrowly focused on habitational business by leveraging the expertise of its specialty underwriting team in other areas, like professional liability.

Both Mr. Warde and Mr. Frakes described their firms' changing risk appetites during separate interviews with National Underwriter in September at the NAPSLO meeting. While reduced producer plant sizes are also common to the initial stages of their rebuilding efforts, there is much that is different about their strategies and those of other E&S executives, revealed in the interview summaries below.

“We bring a lot of underwriting expertise to the table. That's really what we trade on– our expertise and our relationships,” Mr. Warde said, noting that one of his first tasks at Aspen was aimed at further strengthening relationships between Aspen underwriters and wholesaler producer partners.

“I have a very strong philosophy that there's added value to a producer who's appointed with us because we're not trying to be everything to everybody, and we're not appointing every producer out there,” Mr. Warde said, explaining an early decision to reduce Aspen's producer network significantly.

“We had a number of producers who were using us more to block the market as opposed to using us for real opportunities,” he said. “If you can manage that to a degree, it adds value to the producers who are doing business with us,” he said.

Mr. Warde explained that Aspen appointments are specific by line of business. “So for property, we'll appoint a broker, and if they happen to have a casualty side of the house, they may or may not have an appointment” for casualty, he said. Wholesale brokers “tend to specialize by line, so we want to make sure we're really getting the business from the sources that are aligned with our risk appetite,” he said, distinguishing the approach from an open brokerage arrangement.

Aspen doesn't have the resources to invite brokers to bring all business to the carrier, then sifting through to figure out where it goes. “We're really trying to align our resources with the resources of the producers that have the type of business that we're interested in,” Mr. Warde said.

Moving on to describe Aspen's changed risk appetite, Mr. Warde first explained why he chose to deemphasize what was once a dominant book of primary habitational business, including garden-style apartments and condominium properties.

“The price level has deteriorated to such a level that you're below burn costs. You're just not going to be profitable in that business over the long term,” he said, referring to premiums which do not cover past losses.

“To me, when National Underwriter has an article about issues in the marketplace, you can look to that class and it's the poster child of everything that could be wrong,” Mr. Warde said.

Aspen's results reflected its narrow focus on primary habitational business, he said, noting that when this business made up a majority of the U.S. insurance property book, the attritional loss ratio (exclusive of major catastrophe losses) was approaching 70 percent. Now that ratio is running below 20 percent, he said, reporting that the property book today is much more diversified among a variety of occupancies and evenly split between primary and excess of loss participations.

“We are very conservative in our line size, but where it makes sense to expand our line size, we have done that,” he said. “Producers are finding Aspen to be a flexible player” that can fill holes, he said.

Mr. Warde said that the property team is open to tougher classes where Aspen has some in-house expertise. “We won't entertain business where we don't have expertise. So we're not doing petrochemical-type business,” for example.

On the casualty side, “we've had a very good foundation,” he said, noting that casualty is now about 60 percent of the Aspen's U.S. specialty book overall. Aspen's casualty underwriters, many of whom have 20-plus years of experience, have built a traditional E&S casualty business, he said, noting that a focus going forward will be to apply underwriting expertise to the development of new products and coverage extensions that address the needs of producers.

There are areas where the overall market is “pushing back, but where there might be a way to provide coverage in a sensible disciplined way,” he said, noting, for example, that a producer meeting with Aspen underwriters at NAPSLO was looking for a very specific professional liability product.

Although Mr. Warde declined to give a lot of details, he said the producer is a small regional producer that specializes in professional liability. “For us to be able to sit down with our producers and help develop a product that answers a need adds value not only for the producer, but it adds tremendous value for us,” he said, noting that adding a product to the portfolio that Aspen's underwriters have helped to design gives an added level of comfort to the carrier.

Aspen Specialty is the trade name of the group's surplus lines management companies which operate across the United States–Aspen Specialty Insurance Management Co., with offices in Atlanta, Boston, and Scottsdale, and Aspen Specialty Insurance Solutions, LLC, located in Pasadena. All offer both property and casualty products currently on the paper of Aspen's UK affiliate, Aspen Insurance U.K. Ltd, rated A XIV by A.M. Best.

“That rating level is very competitive with those of our peers,” Mr. Warde said.

Recalling his days at Arch, Mr. Warde said, “We went from zero to $1 billion,” referring to the growth in premiums for Arch's U.S. insurance segment since the company opened its doors in 2002. “When I look at where Aspen Specialty is today, the opportunity is huge,” he said.

At United America, Mr. Frakes noted that defining the roles and distribution methods for the U.S. operations was a key initiative, and one of United America's biggest accomplishments in 2007.

Two of the divisions, United National Group and Penn-America Group, came together in a merger deal completed in January 2005. Mr. Frakes told NU in prior interviews that one of his initial goals was to clarify distinctions between the two units.

“Basically, we've gone down the path of expanding the scope of the organization's distribution and product offerings. Our focus is to build an organization in the United States that is concentrated on the wholesale insurance marketplace.”

“By establishing separate divisions, we are now structured to cover products across the entire wholesale market spectrum,” Mr. Frakes said.

Penn-America Group, led by Scott McDowell, who has 32 years of insurance industry experience, continues to be focused on the binding authority world.

Describing some subtle changes, Mr. Frakes said Penn-America is moving away from “doing binding authority in an individual box, where everybody gets the same product.” Instead, the division is “starting to tailor offerings to the capabilities of individual producers,” he said.

In addition, Penn-America has created a small brokerage unit to handle risks that fall outside of the agent's traditional binding authority. Mr. Frakes explained that such risks might be in classes that Penn-America normally writes, but they may require a little bit more of the insurer's own underwriting expertise.

Diamond State Group, headed by David Myers, who also has 32 years of experience in the insurance industry, is devoted to middle market brokerage business, Mr. Frakes said.

Among his other responsibilities, Mr. Myers has devoted a significant portion of his time to decentralizing the organization's brokerage operations. In addition, Diamond State has recently hired individuals based in Los Angeles, San Francisco, and Chicago. Additional geographic areas are also being considered.

“Brokerage business was not a major component of United America's business strategy in the past, however, it is a significant piece of what we will do over the long term,” Mr. Frakes said.

The third U.S-based division is United National Group, which recently hired Scott Reynolds to spearhead its program operations. Mr. Reynolds has over 20 years of experience in the insurance industry. Mr. Frakes said Mr. Reynolds' unique background, which includes actuarial experience and building a sizable volume of program business, is a distinguishing asset for United National.

“United National had a history of fronting business and is now reorienting its strategy to take on more risk,” he added.

Other activities aimed at strengthening United America–those involving the termination of individual agents and the pruning of unprofitable business–are essentially complete, but they have continued to affect the top-line this year, Mr. Frakes said. “We've still got three or four quarters to fully roll off some of that business,” he said.

In addition, Mr. Frakes said he has taken “a very hard line relative to property,” particularly in the Southeast.

“Property rates in the Southeast are not adequate for us to deploy our capital to get the returns we're seeking,” he said.

While United America has not exited the Southeast property market, the company has set a pricing floor below which it's not willing to write. “That's resulted in a fairly significant drop off,” more in Penn-America than anywhere else, he said.

Looking ahead, United America looks to grow in other areas, including commercial automobile. “I've looked at the portfolio, and our senior managers agree that this is one capability we did not have in place,” he said. “We've got a major effort underway to expand our commercial auto capabilities” for areas other than trucking, he said.

With that product initiative underway, Mr. Frakes reported that United America has also built an internal product development organization, and that the company continues to invest in service capabilities to support the underwriting divisions, including a full service in-house claims organization.

“We recently signed a major contract to upgrade all our policy administration systems,” he added. Even in a soft market, members of management and the board “have been completely supportive of continuing to build the organization.”

Looking to the future, the “keys to survival” for all U.S. specialty insurers will be “to have good infrastructure, good systems, knowledgeable personnel, and good processes in place,” he said.