The specialty market, which includes specialized, unusual and often hard-to-place risks, has been a busy area for insurers in the last several years. Several insurers have expanded their reach into the arena and a few start-ups have been launched.

One of the biggest moves in specialty lines so far this year was OneBeacon's decision to sell its personal lines business to The Tower Group and solely concentrate on its specialty lines business. Once concluded, this sale will complete OneBeacon's transformation to a specialty lines carrier. According to Carmen Duarte, vice president of corporate communications for OneBeacon, the sale of its personal lines business is a good step forward for the company.

"We believe that in the long term, we lacked the scale to effectively compete in personal lines, and that there are more compelling profitable growth opportunities in specialty," Duarte said. "We are well positioned with our existing specialty units and excited about our future."

Mike Miller, CEO of OneBeacon, said the sale will free up significant capital and reduce the insurer's catastrophe exposure.

OneBeacon will retain all of its specialty lines including the collector car and boat business produced through Hagerty Insurance and the personal lines assigned risk business written through AutoOne. OneBeacon's Specialty Lines include 12 other classes of business that target specific market segments including professional liability, ocean marine, property and inland marine, and technology, to name a few.

The carrier has also already introduced new specialized coverages so far in 2010 including technology E&O through OneBeacon Professional Insurance and @vantage for construction through its property and inland marine business.

The Hanover

The Hanover continues its investment in specialty lines with its recent launch of Hanover Specialty Industrial, which will include two businesses for high-hazard industrial clients: Hanover Specialty Industrial Property (HSIP) and Hanover Specialty Insurance Brokers (HSIB). The two businesses will work together to provide property, general liability, products liability, pollution, excess liability and other coverages.

HSIP will work with over 30 new classes of business that manufacture, process, distribute or store high-hazard products or involve high-hazard processes. HSIB will provide programs through relationships with specialized insurance companies and that complement The Hanover's core products for industrial businesses.

In January, the company began to expand West and appointed 200 new agents as part of that expansion. The company also said it would continue to grow its business through acquisitions.

In addition, The Hanover partnered with an employment practices and labor relations firm at the end of March to expand its management liability practice services and also unveiled a suite of management liability solutions within its Hanover Professional Portfolio.

The recent specialty expansions follow The Hanover's plan to "focus on improving product offerings in specialty lines, and providing greater access for agents to those markets," which CEO Fred Eppinger discussed with Insurance Journal last year.

New and Young Players

Meanwhile, a new specialty carrier, Naxos Avondale Specialty Casualty Inc., launched at the end of last year. It is headquartered in Boston and accepts business exclusively from wholesale brokers.

Also new, Kinsale Insurance Co. will focus on commercial property/casualty and professional liability nationwide and is backed by two private equity firms. The E&S headquarters is in Virginia.

While these carriers take strides in the specialty lines race, Beazley continues its five year path in the market, where it has already reached over $300 million in premium.

Beazley USA celebrated its five year anniversary in the U.S. specialty lines business in March, and shows no signs of slowing down. According to financial data from the company, its architects and engineers business brought in $80 million in gross written premium (GWP) last year, technology and media brought in $63 million and management liability brought in $59 million. All three divisions were up from 2008.

The company decided to expand into the U.S. five years ago because it wanted to get more of the small and middle-market accounts.

"The thought was that we weren't getting the business we wanted directly into London and we were missing out on some of that business," said Kieran Dempsey, underwriter and member of the Beazley U.S. Management Team. "We thought if we expanded into the U.S. directly with an underwriting team that would help. And it has worked very well."

The company has continued to grow since despite the softening market conditions, especially with its media and tech products.

Beazley USA's specialty lines focus includes architects and engineers, lawyers, professional liability, management liability, public, private, and nonprofit D&O, healthcare, and technology and media. It also writes property but that is a relatively small part of its book, according to Dempsey.

Dempsey says the company is smaller than many U.S. specialty carriers, but it has the ability to adapt and is always looking for new opportunities, especially in the current soft market.

Part of that is going into new niche areas where it can apply rigorous underwriting, says Dempsey, such as the new environmental products it introduced at the end of last year. It also opened a new accident/health office in Minneapolis in February and expanded its architects and engineers division in mid-April.

"We try to be at the forefront of coverage and be innovative with product expansion and product development," said Dempsey. "We have a high level of underwriting expertise and can customize coverage to insureds needs. We have come to the point in the soft market where pricing is where it is, everyone has the same. So we have to differentiate ourselves in other areas."