A strong proposition
Paul Summers, former head of international at GC Fac, who stepped into his new role at McGill and Partners on 6 April, says the firm’s financial structure drives ‘total collaboration’
Paul Summers, head of international, McGill & Partners
You’ve had top jobs in the facultative reinsurance divisions of both Aon and Guy Carpenter – what made you want to move to a start-up broker, and why McGill and Partners in particular?
I enjoyed my roles at both Aon and Guy Carpenter and for me there had to be very compelling reasons to decide to move on.
Although I was at Guy Carpenter for a shorter period of time, it’s never a simple decision to leave a business that you care about and where you forge many great relationships. But to me the McGill and Partners opportunity was exactly how I personally envisaged the most effective model that a broking house could be.
The vision at McGill and Partners is so focused on clients and colleagues, who of course are our most important assets. We have a simple financial structure eradicating multiple P&Ls – and subsequently silos and internal conflict. This drives total collaboration throughout the firm with everyone pulling in the same direction.
There are no barriers to trade, with colleagues having the freedom to work globally, ensuring that our clients will always receive the best possible solution irrespective of where that may exist.
Couple this with the credibility of our management team – led by Steve McGill and John Lloyd – along with the significant financial commitment and support of Warburg Pincus and our partners, and it is a very strong proposition. This is a unique firm – a boutique, independent, global broker with no legacy and being built at scale.
This is clearly a challenging time even for well-established broking businesses – how would you describe the challenge of building new business relationships given the ongoing coronavirus situation?
There are a number of aspects to this. As a start-up business with no legacy nor conflict of interest we believe we can be a real asset to clients during this difficult time and indeed over the long term.
We have the latest hardware and cloud-based software, which makes communicating and transacting seamless. Our ability to move quickly and efficiently to advise and transact provides a new alternative to the market. We couple that with a differentiated value proposition and there is a compelling partnership to discuss. Naturally, the inability to travel is not ideal but already we are seeing a host of new, exciting opportunities, which is a very encouraging start. Clients are excited about the dynamic team we are building and way we plan to go about things, which we feel is unique.
On that subject – how are you looking to build out in terms of territories?
Outside of London we currently have offices in New York and Miami, and we anticipate building on our facultative capabilities in both those locations over time. We are a global firm with deep relationships and where there is benefit to our clients we will operate from our hubs, but remain open-minded with no restrictions on how the future landscape may look.
What classes of business will the fac unit focus on?
We will be looking, over time, to reflect the majority of the lines of business that exist within McGill and Partners on the retail and wholesale side with complementary expertise from a facultative perspective.
[McGill’s core business lines are currently: complex property and casualty, energy and power, marine and cargo, aviation and aerospace, structured solutions, financial and special risks; and reinsurance.]
In addition to straightforward spot fac, do you have any plans to work on hybrid solutions/facilities?
Very much so. Since my Aon days, I’ve always had a lot of passion for them, and the evolution of facilities and the hybrid side has moved with time. The possibilities are so much greater with respect to the willingness and understanding of markets/carriers to look at more complex hybrid initiatives.
We’ve seen that there’s a much greater understanding of the benefits from a carrier perspective of diversification of facilities, of automation of facilities, and of aggregate management. When we blend that with our analytical capabilities and expertise, we can really start building some long-term, effective solutions for our clients.
We’re looking at how cedants buy their portfolios of fac and how we can make it more efficient for them. Can we provide an automated solution, which has the benefit of scale and value to it? It’s also a great repository for management information and data gathering.
What is your outlook for the fac reinsurance market in 2020/2021? It seems like current rating momentum is set to continue?
Yes, we would agree with that. We’ve seen the correction begin in most lines of business over the last 12 months, so certainly do not see that momentum slowing now.
Prior to the coronavirus outbreak, there were still many corrective measures being taken. Now the uncertainty around its implications, in macro and micro terms, is really yet to be fully understood. So that could, in turn, have a significant impact on the pace of change.
Our experience to date is that the volume of fac business is exceeding expectation. We are somewhat in uncharted territory as a market owing to uncertainty in general, the potential scale of insured losses, reserve requirements over coverage and asset hits to balance sheets – to name just some. We do anticipate fac and reinsurance in general will be in high demand.