With so many carriers pulling out of high-risk sectors and those risks now being shifted back to the E&S market, do you see those risks staying there, or is it a cyclical thing?

I would like to say that business moving back to the E&S market will stay for the long term. However, having done this for 25 years, I know that sooner or later parts of the business will move back to standard carriers. As rates increase, terms tighten and profit margins increase, the business becomes a target for standard carriers willing to write it for less and include it in their portfolio of coverage.  

Watching the market begin to tighten over the past six months and looking at the business slowly being corrected (versus sharp spikes typical of past hard-market cycles), there is some discussion of that slower turn assisting in keeping the business in the E&S market for longer periods of time. Of course, carriers that are able to diversify their portfolios will have greater account retention over time to protect against such migration of business.

Philadelphia Insurance Cos. has differentiated itself in the insurance marketplace by offering such a wide variety of niche coverages. How much is this strategy currently applied to the E&S market, and what unique coverages can you see being written in E&S that may present new avenues of opportunity? 

Philadelphia has experienced tremendous success in identifying niche insurance opportunities, and there is no reason the E&S side of the house will vary from that strategy. The Philadelphia E&S operation will approach opportunities in a continued niche approach that is thoroughly discussed internally before being released. 

How would you strike a balance between carrier desire for more market share against the need for more thorough underwriting in order to prevent losses?

[That's] the great question of market share versus underwriting profit. The easy answer is underwriting profit trumps market share 100 percent of the time. Now, with that said, how do companies survive without premium growth? How do companies survive with expense ratios that overshadow loss ratios? They can't. 

You answer this question by simply working hard in identifying as many opportunities as you can that justify a minimum profit-margin opportunity. Get out there, mix it up, and find those opportunities that allow you to grow profitably. If it was easy, anybody could do it.

—Interviewed by Shawn Moynihan