Business Insight: OneBeacon Financial Services

May 12, 2017

Business Insights: OneBeacon Financial Services

Financial Services is a broad industry category, but like all OneBeacon specialties, this business reflects a specific niche we know well, namely community banks.

OneBeacon Financial Services was an early start-up during the journey to specialty. Formed during late 2005, these community-banking specialists built a portfolio of professional liability products from the ground up. A small book of property-casualty business was folded in to complement their capabilities. Once open for business, the group carefully refined its scope from both a geographic and distribution perspective.

Community banks mirror specialty principles, as they manage lending portfolios with a deep understanding of the local clientele, their needs and the surrounding economy. In turn, they are typically serviced by independent insurance advisors that also specialize in this segment, a hallmark OneBeacon opportunity. Furthermore, the business is habitually stable, with banks led by long-standing executives and retail agents repre­senting accounts for extensive periods. That consistency carries over to the OneBeacon team, which has worked together for many years and is well-known throughout its select markets.

Perhaps more than other OneBeacon specialties, Financial Services works directly with its policyholders. “Because of the high level of specialization and confidentiality in our business, we have relationships with our insureds,” noted OneBeacon Financial Services President Craig Collins. This includes affiliate membership in state banking associations, a forum for knowledge exchange as well as professional camaraderie.

This homespun atmosphere was nearly upended by the 2008 financial crisis. For OneBeacon, patiently focusing on stable, known geographic territories and steadfast adherence to its “under-writing comes first” operating principle enabled successful navigation of this period of uncertainty. “Predictive modeling was a critical resource for us during this time,” added Vice President Gary Tannenbaum. The portfolio’s underlying strength, coupled with its long-term viability, translated to an expectation of ultimate underwriting profitability. Fast-forward to 2016 and those projections are a firm reality.

Today, this group is one of the major community- banking markets, differentiated by its seamless integration of commercial package and specialty coverages. And in spite of a decade of OneBeacon history, there is still an entrepreneurial atmosphere within the group. “It’s still an exciting environment,” noted Vice President Tammy Placzek. “We have the flexibility of working for a smaller company, and are able to opportunistically add products and grow.”

The overall financial services environment continues to evolve, largely driven by technology and competition. The advent of online banking, for example, and the corresponding exposure to cyber risk, has resulted in new coverage needs. As well, the emergence of technology-based financial institutions known as “fintech” entities may represent a sea change for this industry. “We’re conservative underwriters,” reinforced Collins, “so it’s ‘wait-and-see’ for now.” However, as these companies become more regulated, they are poised to become the new banks of the future.

Community bankers assign a high-level of confidence to carrier stability and expertise, which creates a significant competitive advantage for OneBeacon. By remaining current and operating with integrity, OneBeacon Financial Services is well-positioned to remain a significant player in this segment for some time.